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 June 30, 2002
                                       OR
          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


<TABLE>
<CAPTION>
       Commission File           Name of Registrant; State of Incorporation; Address of        IRS Employer
       Number                    Principal Executive Offices; and Telephone Number             Identification Number
       ---------------------     ----------------------------------------------------------    ------------------------
<S>                              <C>                                                         <C>
       1-16169                   EXELON CORPORATION                                            23-2990190
                                 (a Pennsylvania corporation)
                                 10 South Dearborn Street - 37th Floor
                                 P.O. Box 805379
                                 Chicago, Illinois 60680-5379
                                 (312) 394-7398

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

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

       333-85496                 EXELON GENERATION COMPANY, LLC                                23-3064219
                                 (a Pennsylvania limited liability company)
                                 300 Exelon Way
                                 Kennett Square, Pennsylvania 19348
                                 (610) 765-8200
</TABLE>

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

         The number of shares  outstanding of each registrant's  common stock as
of August 1, 2002 was as follows:

  Exelon   Corporation   Common  Stock,   without  par  value     322,874,719
  Commonwealth  Edison Company Common Stock,  $12.50 par value    127,016,398
  PECO Energy Company Common Stock,  without par value            170,478,507
  Exelon Generation Company, LLC not applicable


<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
                           Consolidated Statements of Income and Comprehensive Income                             5
                           Consolidated Statements of Cash Flows                                                  6
                           Consolidated Balance Sheets                                                            7
                  Commonwealth Edison Company
                           Consolidated Statements of Income and Comprehensive Income                             9
                           Consolidated Statements of Cash Flows                                                 10
                           Consolidated Balance Sheets                                                           11
                  PECO Energy Company
                           Consolidated Statements of Income and Comprehensive Income                            13
                           Consolidated Statements of Cash Flows                                                 14
                           Consolidated Balance Sheets                                                           15
                  Exelon Generation Company, LLC
                           Consolidated Statements of Income and Comprehensive Income                            17
                           Consolidated Statements of Cash Flows                                                 18
                           Consolidated Balance Sheets                                                           19
                  Combined Notes to Consolidated Financial Statements                                            21

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS                                                                             46
                  Exelon Corporation                                                                             46
                  Commonwealth Edison Company                                                                    72
                  PECO Energy Company                                                                            84
                  Exelon Generation Company, LLC                                                                 96

  ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                                           106

  PART II.  OTHER INFORMATION                                                                                   110
  ITEM 1.   LEGAL PROCEEDINGS                                                                                   110
  ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                 110
  ITEM 5.   OTHER INFORMATION                                                                                   110
  ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K                                                                    111

SIGNATURES                                                                                                      117

</TABLE>

                                                         2
<PAGE>


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

Forward-Looking Statements
         Except for the historical  information contained herein, certain of the
matters discussed in this Report are forward-looking statements that are subject
to risks and  uncertainties.  The  factors  that could cause  actual  results to
differ materially include those discussed herein as well as those listed in Note
8  of  Notes  to   Consolidated   Financial   Statements,   those  discussed  in
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations--Outlook" in Exelon Corporation's 2001 Annual Report, those discussed
in "Risk  Factors"  and  "Management's  Discussion  and  Analysis  of  Financial
Condition  and  Results  of  Operations"  in Exelon  Generation  Company,  LLC's
Registration  Statement  on Form S-4,  Reg.  No.  333-85496  and  other  factors
discussed  in  filings  with  the  Securities  and  Exchange  Commission  by the
Registrants.  Readers  are  cautioned  not to  place  undue  reliance  on  these
forward-looking statements,  which apply only as of the date of this Report. The
Registrants  undertake  no  obligation  to  publicly  release  any  revision  to
forward-looking  statements to reflect events or circumstances after the date of
this Report.










                                        3
<PAGE>



















                          PART I. FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS








































                                        4
<PAGE>


EXELON CORPORATION
<TABLE>
<CAPTION>

                                      EXELON CORPORATION AND SUBSIDIARY COMPANIES
                              CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                                      (Unaudited)

                                                           Three Months Ended June 30,    Six Months Ended June 30,
                                                           ---------------------------    -------------------------
(in millions, except per share data)                                   2002       2001           2002          2001
---------------------------------------------------------------------------------------------------------------------

<S>                                                                  <C>        <C>              <C>        <C>
OPERATING REVENUES                                                   $3,519     $3,616           $ 6,876    $ 7,439

OPERATING EXPENSES
     Purchased Power                                                    699        754             1,311      1,385
     Purchased Power from Unconsolidated Affiliate                       60         12               116         22
     Fuel                                                               364        409               860      1,098
     Operating and Maintenance                                        1,070      1,134             2,137      2,192
     Depreciation and Amortization                                      332        362               667        740
     Taxes Other Than Income                                            181        153               367        321
---------------------------------------------------------------------------------------------------------------------
         Total Operating Expense                                      2,706      2,824             5,458      5,758
---------------------------------------------------------------------------------------------------------------------
OPERATING INCOME                                                        813        792             1,418      1,681
---------------------------------------------------------------------------------------------------------------------
OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                  (241)      (289)             (490)      (581)
     Distributions on Preferred Securities of Subsidiaries              (11)       (12)              (23)       (23)
     Equity in Earnings of Unconsolidated Affiliates, net                 9          7                22         25
     Other, net                                                         194         44               222         99
---------------------------------------------------------------------------------------------------------------------
         Total Other Income and Deductions                              (49)      (250)             (269)      (480)
---------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND CUMULATIVE
   EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES                           764        542             1,149      1,201
INCOME TAXES                                                            279        227               427        499
---------------------------------------------------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN
   ACCOUNTING PRINCIPLES                                                485        315               722        702
CUMULATIVE  EFFECT OF CHANGES IN ACCOUNTING
   PRINCIPLES  (net of income taxes of $90 and $8 for the six
   months ended June 30, 2002 and 2001, respectively)                    --         --              (230)        12
---------------------------------------------------------------------------------------------------------------------
NET INCOME                                                              485        315               492        714

OTHER COMPREHENSIVE INCOME (LOSS) (net of income taxes)
       SFAS 133 Transition Adjustment                                    --         --                --         44
       Cash Flow Hedge Fair Value Adjustment                            (21)       (28)              (78)       (43)
       Unrealized Gain (Loss) on Marketable Securities, net             (72)        31               (87)       (72)
---------------------------------------------------------------------------------------------------------------------
         Total Other Comprehensive Income (Loss)                        (93)         3              (165)       (71)
---------------------------------------------------------------------------------------------------------------------

TOTAL COMPREHENSIVE INCOME                                           $  392     $  318           $   327    $   643
---------------------------------------------------------------------------------------------------------------------

AVERAGE SHARES OF COMMON STOCK OUTSTANDING - Basic                      322        321               322        320
---------------------------------------------------------------------------------------------------------------------
AVERAGE SHARES OF COMMON STOCK OUTSTANDING - Diluted                    324        324               324        323
---------------------------------------------------------------------------------------------------------------------

EARNINGS PER AVERAGE COMMON SHARE:
     BASIC:
     Income Before Cumulative Effect of Changes in
         Accounting Principles                                       $  1.50    $  0.98          $  2.24    $  2.19
     Cumulative Effect of Changes in Accounting Principles               --         --             (0.71)      0.04
---------------------------------------------------------------------------------------------------------------------
     Net Income                                                      $  1.50    $  0.98          $  1.53    $  2.23
---------------------------------------------------------------------------------------------------------------------

     DILUTED:
     Income Before Cumulative Effect of Changes in
         Accounting Principles                                       $  1.50    $  0.97          $  2.23    $  2.17
     Cumulative Effect of Changes in Accounting Principles               --         --             (0.71)      0.04
---------------------------------------------------------------------------------------------------------------------
     Net Income                                                      $  1.50    $  0.97          $  1.52    $  2.21
---------------------------------------------------------------------------------------------------------------------

DIVIDENDS PER COMMON SHARE                                           $  0.44    $  0.42          $  0.88    $  0.98
---------------------------------------------------------------------------------------------------------------------


                                    See Notes to Consolidated Financial Statements
</TABLE>



                                                          5
<PAGE>


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

                                                                                          Six Months Ended June 30,
                                                                                        -----------------------------
(in millions)                                                                                2002              2001
------------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net Income                                                                         $     492           $   714
     Adjustments to Reconcile Net Income to Net Cash Flows
      Provided by Operating Activities:
       Depreciation and Amortization, including nuclear fuel                                  848               939
       Cumulative Effect of a Change in Accounting Principle (net of income taxes)            230               (12)
       Net Gain on Sale of Investments (net of income taxes)                                 (199)               --
       Provision for Uncollectible Accounts                                                    67                60
       Deferred Income Taxes                                                                  (10)                7
       Deferred Energy Costs                                                                   49                 7
       Equity in Earnings of Unconsolidated Affiliates, net                                   (22)              (25)
       Net Realized Losses on Nuclear Decommissioning Trust Funds                              21                24
       Other Operating Activities                                                             115               (78)
         Changes in Working Capital:
          Accounts Receivable                                                                (259)               68
          Inventories                                                                         (42)              (12)
          Accounts Payable, Accrued Expenses and Other Current Liabilities                    342               280
          Changes in Receivables and Payables to Unconsolidated Affiliates, net                12                --
          Other Current Assets                                                                 (6)              (19)
------------------------------------------------------------------------------------------------------------------------
Net Cash Flows provided by Operating Activities                                             1,638             1,953
------------------------------------------------------------------------------------------------------------------------


CASH FLOWS FROM INVESTING ACTIVITIES
     Capital Expenditures                                                                  (1,028)             (937)
     Acquisition of Generating Plants                                                        (443)               --
     Enterprises Acquisitions, net of cash acquired                                            --               (39)
     Proceeds from the Sale of Investment                                                     285                --
     Proceeds from Nuclear Decommissioning Trust Funds                                        889               621
     Investment in Nuclear Decommissioning Trust Funds                                       (943)             (655)
     Note Receivable from Unconsolidated Affiliate                                            (75)               --
     Other Investing Activities                                                                47                12
------------------------------------------------------------------------------------------------------------------------
Net Cash Flows used in Investing Activities                                                (1,268)             (998)
------------------------------------------------------------------------------------------------------------------------


CASH FLOWS FROM FINANCING ACTIVITIES
     Issuance of Long-Term Debt                                                               701             2,058
     Retirement of Long-Term Debt                                                            (697)           (1,153)
     Change in Short-Term Debt                                                                110              (949)
     Dividends on Common Stock                                                               (280)             (312)
     Change in Restricted Cash                                                                (26)              (16)
     Proceeds from Employee Stock Plans                                                        60                51
     Other Financing Activities                                                               (10)               --
------------------------------------------------------------------------------------------------------------------------
Net Cash Flows used in Financing Activities                                                  (142)             (321)
------------------------------------------------------------------------------------------------------------------------


INCREASE IN CASH AND CASH EQUIVALENTS                                                         228               634


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


CASH AND CASH EQUIVALENTS AT END OF PERIOD                                              $     713           $ 1,160
------------------------------------------------------------------------------------------------------------------------

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

                                     See Notes to Consolidated Financial Statements
</TABLE>




                                                            6
<PAGE>

                        EXELON CORPORATION AND SUBSIDIARY COMPANIES
                                CONSOLIDATED BALANCE SHEETS
                                        (Unaudited)

<TABLE>
<CAPTION>
                                                            June 30,      December 31,
(in millions)                                                   2002              2001
-----------------------------------------------------------------------------------------
ASSETS
<S>                                                        <C>               <C>
CURRENT ASSETS
     Cash and Cash Equivalents                             $     713         $     485
     Restricted Cash                                             398               372
     Accounts Receivable, net
         Customer                                              1,978             1,687
         Other                                                   196               428
     Receivable from Unconsolidated Affiliate                    107                44
     Inventories, at average cost
         Fossil Fuel                                             206               222
         Materials and Supplies                                  308               249
     Deferred Income Taxes                                        76                23
     Other                                                       354               272
-----------------------------------------------------------------------------------------
         Total Current Assets                                  4,336             3,782
-----------------------------------------------------------------------------------------

PROPERTY, PLANT AND EQUIPMENT, NET                            14,654            13,781

DEFERRED DEBITS AND OTHER ASSETS
     Regulatory Assets                                         6,237             6,423
     Nuclear Decommissioning Trust Funds                       3,060             3,165
     Investments                                               1,658             1,666
     Goodwill, net                                             4,971             5,335
     Other                                                       705               708
-----------------------------------------------------------------------------------------
         Total Deferred Debits and Other Assets               16,631            17,297
-----------------------------------------------------------------------------------------

TOTAL ASSETS                                               $  35,621         $  34,860
-----------------------------------------------------------------------------------------
</TABLE>


                      See Notes to Consolidated Financial Statements

                                            7
<PAGE>

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


                                                                                         June 30,      December 31,
(in millions)                                                                                2002              2001
---------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
<S>                                                                                     <C>               <C>
CURRENT LIABILITIES
     Notes Payable                                                                      $     470         $     360
     Long-Term Debt Due within One Year                                                     1,772             1,406
     Accounts Payable                                                                       1,164               964
     Accrued Expenses                                                                       1,339             1,182
     Other                                                                                    527               505
---------------------------------------------------------------------------------------------------------------------
         Total Current Liabilities                                                          5,272             4,417
---------------------------------------------------------------------------------------------------------------------

LONG-TERM DEBT                                                                             12,591            12,879

DEFERRED CREDITS AND OTHER LIABILITIES
     Deferred Income Taxes                                                                  4,204             4,303
     Unamortized Investment Tax Credits                                                       308               316
     Nuclear Decommissioning Liability for Retired Plants                                   1,379             1,353
     Pension Obligation                                                                       313               334
     Non-Pension Postretirement Benefits Obligation                                           878               847
     Spent Nuclear Fuel Obligation                                                            851               843
     Other                                                                                    866               725
---------------------------------------------------------------------------------------------------------------------
         Total Deferred Credits and Other Liabilities                                       8,799             8,721
---------------------------------------------------------------------------------------------------------------------

PREFERRED SECURITIES OF SUBSIDIARIES                                                          613               613

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
     Common Stock                                                                           6,990             6,930
     Deferred Compensation                                                                     (1)               (2)
     Retained Earnings                                                                      1,421             1,200
     Accumulated Other Comprehensive Income (Loss)                                            (64)              102
---------------------------------------------------------------------------------------------------------------------
         Total Shareholders' Equity                                                         8,346             8,230
---------------------------------------------------------------------------------------------------------------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                              $  35,621         $  34,860
---------------------------------------------------------------------------------------------------------------------

                                    See Notes to Consolidated Financial Statements
</TABLE>




                                                          8
<PAGE>


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

                                                            Three Months Ended June 30,   Six Months Ended June 30,
                                                            ---------------------------   -------------------------
(in millions)                                                          2002       2001           2002          2001
---------------------------------------------------------------------------------------------------------------------
OPERATING REVENUES
<S>                                                                  <C>        <C>              <C>        <C>
     Operating Revenues                                              $1,469     $1,517           $ 2,773    $ 2,921
     Operating Revenues from Affiliates                                  12         13                23         55
---------------------------------------------------------------------------------------------------------------------
         Total Operating Revenues                                     1,481      1,530             2,796      2,976
---------------------------------------------------------------------------------------------------------------------

OPERATING EXPENSES
     Purchased Power                                                      6          1                12          2
     Purchased Power from Affiliate                                     547        585             1,079      1,193
     Operating and Maintenance                                          191        210               386        396
     Operating and Maintenance from Affiliates                           29         38                71         70
     Depreciation and Amortization                                      133        168               268        334
     Taxes Other Than Income                                             73         69               146        141
---------------------------------------------------------------------------------------------------------------------
         Total Operating Expense                                        979      1,071             1,962      2,136
---------------------------------------------------------------------------------------------------------------------

OPERATING INCOME                                                        502        459               834        840
---------------------------------------------------------------------------------------------------------------------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                  (127)      (143)             (252)      (284)
     Distributions on Company-Obligated
       Mandatorily Redeemable Preferred Securities of
       Subsidiary Trusts Holding Solely the Company's
       Subordinated Debt Securities                                      (7)        (7)              (15)       (15)
     Interest Income from Affiliates                                      8         17                16         45
     Other, net                                                           6          5                13         14
---------------------------------------------------------------------------------------------------------------------
         Total Other Income and Deductions                             (120)      (128)             (238)      (240)
---------------------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES                                              382        331               596        600

INCOME TAXES                                                            151        149               236        271
---------------------------------------------------------------------------------------------------------------------

NET INCOME                                                              231        182               360        329
---------------------------------------------------------------------------------------------------------------------

OTHER COMPREHENSIVE INCOME (LOSS) (net of income taxes):
     Cash Flow Hedge Fair Value Adjustment                              (14)        --               (16)        --
     Unrealized Gain (Loss) on Marketable Securities                     (2)        --                (2)        (4)
---------------------------------------------------------------------------------------------------------------------
         Total Other Comprehensive Income (Loss)                        (16)        --               (18)        (4)

TOTAL COMPREHENSIVE INCOME                                           $  215     $  182           $   342    $   325
---------------------------------------------------------------------------------------------------------------------

                                    See Notes to Consolidated Financial Statements
</TABLE>





                                                          9
<PAGE>



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

                                                                                          Six Months Ended June 30,
                                                                                        -----------------------------
(in millions)                                                                                2002              2001
---------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                     <C>               <C>
     Net Income                                                                         $     360         $     329
     Adjustments to Reconcile Net Income to Net Cash Flows
      Provided by Operating Activities:
       Depreciation and Amortization                                                          268               334
       Provision for Uncollectible Accounts                                                    11                18
       Deferred Income Taxes                                                                   75                38
       Other Operating Activities                                                              71               (36)
        Changes in Working Capital:
           Accounts Receivable                                                               (158)              (45)
           Inventories                                                                         --                16
           Accounts Payable, Accrued Expenses and Other Current Liabilities                    51               320
           Changes in Receivables and Payables to Affiliates, net                              63              (278)
           Other Current Assets                                                                (1)                9
---------------------------------------------------------------------------------------------------------------------
Net Cash Flows provided by Operating Activities                                               740               705
---------------------------------------------------------------------------------------------------------------------


CASH FLOWS FROM INVESTING ACTIVITIES
     Capital Expenditures                                                                    (372)             (459)
     Notes Receivable from Affiliate                                                           13               400
     Other Investing Activities                                                                 7                 1
---------------------------------------------------------------------------------------------------------------------
Net Cash Flows used in Investing Activities                                                  (352)              (58)
---------------------------------------------------------------------------------------------------------------------


CASH FLOWS FROM FINANCING ACTIVITIES
     Issuance of Long-Term Debt                                                               701                --
     Retirement of Long-Term Debt                                                            (481)             (174)
     Dividends on Common Stock                                                               (235)             (148)
     Change in Restricted Cash                                                                (32)               --
     Other Financing Activities                                                               (10)               --
---------------------------------------------------------------------------------------------------------------------
Net Cash Flows used in Financing Activities                                                   (57)             (322)
---------------------------------------------------------------------------------------------------------------------


INCREASE IN CASH AND CASH EQUIVALENTS                                                         331               325
---------------------------------------------------------------------------------------------------------------------


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


CASH AND CASH EQUIVALENTS AT END OF PERIOD                                              $     354         $     466
---------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL CASH FLOW INFORMATION Noncash Investing and Financing Activities:
     Net Assets Transferred as a result of Restructuring, net of Note Payable           $      --         $   1,307
     Receivable from Parent                                                             $      --         $   1,062
     Regulatory Asset Fair Value Adjustment                                             $      --         $     347
     Retirement of Treasury Shares                                                      $   1,344         $   2,022





                                    See Notes to Consolidated Financial Statements

</TABLE>


                                                          10
<PAGE>



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



<TABLE>
<CAPTION>
                                                        June 30,      December 31,
(in millions)                                               2002              2001
-------------------------------------------------------------------------------------
ASSETS

CURRENT ASSETS
<S>                                                    <C>               <C>
     Cash and Cash Equivalents                         $     354         $      23
     Restricted Cash                                          73                41
     Accounts Receivable, net
         Customer                                            886               745
         Other                                                93                87
     Receivables from Affiliates                              35                95
     Inventories, at average cost                             56                56
     Deferred Income Taxes                                    16                52
     Other                                                    16                15
-------------------------------------------------------------------------------------
         Total Current Assets                              1,529             1,114
-------------------------------------------------------------------------------------

PROPERTY, PLANT AND EQUIPMENT, NET                         7,522             7,351

DEFERRED DEBITS AND OTHER ASSETS
     Regulatory Assets                                       614               667
     Investments                                              54                64
     Goodwill, net                                         4,895             4,902
     Notes Receivable from Affiliates                      1,301             1,314
     Other                                                   283               304
-------------------------------------------------------------------------------------
         Total Deferred Debits and Other Assets            7,147             7,251
-------------------------------------------------------------------------------------

TOTAL ASSETS                                           $  16,198         $  15,716
-------------------------------------------------------------------------------------

</TABLE>

                    See Notes to Consolidated Financial Statements





                                          11
<PAGE>


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


                                                                                         June 30,      December 31,
(in millions)                                                                                2002              2001
---------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
<S>                                                                                     <C>               <C>
     Long-Term Debt Due within One Year                                                 $     848         $     849
     Accounts Payable                                                                         184               144
     Accrued Expenses                                                                         393               374
     Payables to Affiliates                                                                   272               307
     Other                                                                                    197               212
---------------------------------------------------------------------------------------------------------------------
         Total Current Liabilities                                                          1,894             1,886
---------------------------------------------------------------------------------------------------------------------

LONG-TERM DEBT                                                                              6,095             5,850

DEFERRED CREDITS AND OTHER LIABILITIES
     Deferred Income Taxes                                                                  1,725             1,671
     Unamortized Investment Tax Credits                                                        53                55
     Pension Obligation                                                                       163               151
     Non-Pension Postretirement Benefits Obligation                                           149               146
     Payables to Affiliates                                                                   267               297
     Other                                                                                    263               248
---------------------------------------------------------------------------------------------------------------------
         Total Deferred Credits and Other Liabilities                                       2,620             2,568
---------------------------------------------------------------------------------------------------------------------

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

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
     Common Stock                                                                           1,588             2,048
     Preference Stock                                                                           7                 7
     Other Paid-in Capital                                                                  4,181             5,057
     Receivable from Parent                                                                  (875)             (937)
     Retained Earnings                                                                        382               257
     Treasury Stock, at cost                                                                   --            (1,344)
     Accumulated Other Comprehensive Income (Loss)                                            (23)               (5)
---------------------------------------------------------------------------------------------------------------------
         Total Shareholders' Equity                                                         5,260             5,083
---------------------------------------------------------------------------------------------------------------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                              $  16,198         $  15,716
---------------------------------------------------------------------------------------------------------------------


                                    See Notes to Consolidated Financial Statements
</TABLE>



                                                          12
<PAGE>


PECO ENERGY COMPANY

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

                                                           Three Months Ended June 30,    Six Months Ended June 30,
                                                           ---------------------------    -------------------------
(in millions)                                                          2002       2001           2002          2001
---------------------------------------------------------------------------------------------------------------------
OPERATING REVENUES
<S>                                                                  <C>        <C>              <C>        <C>
     Operating Revenues                                              $  992     $  903           $ 2,008    $ 1,952
     Operating Revenues from Affiliates                                   3          3                 7          5
---------------------------------------------------------------------------------------------------------------------
         Total Operating Revenues                                       995        906             2,015      1,957
---------------------------------------------------------------------------------------------------------------------

OPERATING EXPENSES
     Purchased Power                                                     59         51               107         90
     Purchased Power from Affiliate                                     346        264               649        508
     Fuel                                                                53         79               188        284
     Operating and Maintenance                                          123        122               251        251
     Operating and Maintenance from Affiliates                            8          4                16          7
     Depreciation and Amortization                                      109         99               221        200
     Taxes Other Than Income                                             63         41               122         84
---------------------------------------------------------------------------------------------------------------------
         Total Operating Expense                                        761        660             1,554      1,424
---------------------------------------------------------------------------------------------------------------------

OPERATING INCOME                                                        234        246               461        533
---------------------------------------------------------------------------------------------------------------------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                   (92)      (117)             (187)      (219)
     Interest Expense from Affiliate                                     --         (2)               --         (8)
     Company-Obligated Mandatorily Redeemable Preferred
       Securities of a Partnership, which holds Solely
       Subordinated Debentures of the Company                            (2)        (2)               (5)        (5)
     Interest Income from Affiliates                                     --          1                --          1
     Other, net                                                           2          3                 2         17
---------------------------------------------------------------------------------------------------------------------
         Total Other Income and Deductions                              (92)      (117)             (190)      (214)
---------------------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES                                              142        129               271        319

INCOME TAXES                                                             49         44                90        112
---------------------------------------------------------------------------------------------------------------------

NET INCOME                                                               93         85               181        207
     Preferred Stock Dividends                                           (2)        (3)               (4)        (5)
---------------------------------------------------------------------------------------------------------------------
NET INCOME ON COMMON STOCK                                           $   91     $   82           $   177    $   202
---------------------------------------------------------------------------------------------------------------------


OTHER COMPREHENSIVE INCOME
     Net Income                                                      $   93     $   85           $   181    $   207
     Other Comprehensive Income (Loss) (net of income taxes):
       SFAS 133 Transition Adjustment                                    --         --                --         40
       Cash Flow Hedge Fair Value Adjustment                             (6)         8                (4)       (10)
---------------------------------------------------------------------------------------------------------------------
         Total Other Comprehensive Income                                (6)         8                (4)        30
---------------------------------------------------------------------------------------------------------------------

TOTAL COMPREHENSIVE INCOME                                           $   87     $   93           $   177    $   237
---------------------------------------------------------------------------------------------------------------------


                                    See Notes to Consolidated Financial Statements

</TABLE>



                                                          13
<PAGE>



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

                                                                                          Six Months Ended June 30,
                                                                                         ----------------------------
(in millions)                                                                                2002              2001
---------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                      <C>               <C>
     Net Income                                                                          $    181          $    207
     Adjustments to Reconcile Net Income to Net Cash Flows
      Provided by Operating Activities:
       Depreciation and Amortization                                                          221               200
       Provision for Uncollectible Accounts                                                    32                29
       Deferred Income Taxes                                                                  (19)               13
       Deferred Energy Costs                                                                   49                 7
       Other Operating Activities                                                             (81)              (40)
        Changes in Working Capital:
           Accounts Receivable                                                                 (4)              (19)
           Changes in Receivables and Payables to Affiliates, net                              34                75
           Inventories                                                                         14                 6
           Accounts Payable, Accrued Expenses and Other Current Liabilities                    44                22
           Other Current Assets                                                                (3)              (73)
---------------------------------------------------------------------------------------------------------------------
Net Cash Flows provided by Operating Activities                                               468               427
---------------------------------------------------------------------------------------------------------------------


CASH FLOWS FROM INVESTING ACTIVITIES
     Capital Expenditures                                                                    (123)             (122)
     Other Investing Activities                                                                 1                35
---------------------------------------------------------------------------------------------------------------------
Net Cash Flows used in Investing Activities                                                  (122)              (87)
---------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
     Retirement of Long-Term Debt                                                            (207)             (978)
     Issuance of Long-Term Debt                                                                --               805
     Contribution from Parent                                                                  --                53
     Change in Short-Term Debt                                                                 74              (122)
     Dividends on Preferred and Common Stock                                                 (174)             (105)
     Change in Restricted Cash                                                                  1               (16)
     Settlement of Interest Rate Swap Agreements                                               --                31
---------------------------------------------------------------------------------------------------------------------
Net Cash Flows used in Financing Activities                                                  (306)             (332)
---------------------------------------------------------------------------------------------------------------------

INCREASE IN CASH AND CASH EQUIVALENTS                                                          40                 8

Cash Transferred in Restructuring                                                              --               (31)

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


CASH AND CASH EQUIVALENTS AT END OF PERIOD                                               $     72          $     26
---------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL CASH FLOW INFORMATION Noncash Investing and Financing Activities:
     Net Assets Transferred as a result of Restructuring,
       net of Receivable from Affiliates                                                 $     --          $  1,624
     Contribution of Receivable from Parent                                              $     --          $  1,983




                                    See Notes to Consolidated Financial Statements


</TABLE>



                                                          14
<PAGE>

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

<TABLE>
<CAPTION>
                                                         June 30,      December 31,
(in millions)                                                2002              2001
------------------------------------------------------------------------------------
ASSETS

CURRENT ASSETS
<S>                                                     <C>               <C>
     Cash and Cash Equivalents                          $      72         $     32
     Restricted Cash                                          322              323
     Accounts Receivable, net
         Customer                                             261              286
         Other                                                 30               33
     Receivables from Affiliates                                6                8
     Inventories, at average cost
         Fossil Fuel                                           59               72
         Materials and Supplies                                 6                7
     Prepaid Taxes                                             98                1
     Other                                                     13               58
------------------------------------------------------------------------------------
         Total Current Assets                                 867              820
------------------------------------------------------------------------------------

PROPERTY, PLANT AND EQUIPMENT, NET                          4,098            4,047

DEFERRED DEBITS AND OTHER ASSETS
     Regulatory Assets                                      5,623            5,756
     Investments                                               22               24
     Pension Asset                                             29               13
     Other                                                     78               85
------------------------------------------------------------------------------------
         Total Deferred Debits and Other Assets             5,752            5,878
------------------------------------------------------------------------------------

TOTAL ASSETS                                            $  10,717         $ 10,745
------------------------------------------------------------------------------------
</TABLE>


                    See Notes to Consolidated Financial Statements




                                          15
<PAGE>



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



                                                                                         June 30,      December 31,
(in millions)                                                                                2002              2001
---------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
<S>                                                                                     <C>               <C>
     Notes Payable                                                                      $     175         $     101
     Payables to Affiliates                                                                   190               194
     Long-Term Debt Due within One Year                                                       910               548
     Accounts Payable                                                                          52                54
     Accrued Expenses                                                                         436               397
     Deferred Income Taxes                                                                     27                27
     Other                                                                                     33                21
---------------------------------------------------------------------------------------------------------------------
         Total Current Liabilities                                                          1,823             1,342
---------------------------------------------------------------------------------------------------------------------

LONG-TERM DEBT                                                                              4,869             5,438

DEFERRED CREDITS AND OTHER LIABILITIES
     Deferred Income Taxes                                                                  2,927             2,938
     Unamortized Investment Tax Credits                                                        26                27
     Non-Pension Postretirement Benefits Obligation                                           263               239
     Payables to Affiliates                                                                    20                44
     Other                                                                                    120               110
---------------------------------------------------------------------------------------------------------------------
         Total Deferred Credits and Other Liabilities                                       3,356             3,358
---------------------------------------------------------------------------------------------------------------------

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

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
     Common Stock                                                                           1,911             1,912
     Receivable from Parent                                                                (1,818)           (1,878)
     Preferred Stock                                                                          137               137
     Retained Earnings                                                                        277               270
     Accumulated Other Comprehensive Income                                                    15                19
---------------------------------------------------------------------------------------------------------------------
         Total Shareholders' Equity                                                           522               460
---------------------------------------------------------------------------------------------------------------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                              $  10,717         $  10,745
---------------------------------------------------------------------------------------------------------------------



                                    See Notes to Consolidated Financial Statements
</TABLE>



                                                          16
<PAGE>


EXELON GENERATION COMPANY, LLC

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

                                                           Three Months Ended June 30,    Six Months Ended June 30,
                                                           ---------------------------    -------------------------
(in millions)                                                          2002       2001           2002          2001
---------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>        <C>            <C>          <C>
OPERATING REVENUES
     Operating Revenues                                              $  606     $  677         $1,175       $ 1,392
     Operating Revenues from Affiliates                                 953        906          1,845         1,819
---------------------------------------------------------------------------------------------------------------------
         Total Operating Revenues                                     1,559      1,583          3,020         3,211
---------------------------------------------------------------------------------------------------------------------

OPERATING EXPENSES
     Purchased Power                                                    634        690          1,186         1,272
     Purchased Power from Affiliates                                     71         31            137            48
     Fuel                                                               224        230            433           449
     Operating and Maintenance                                          405        400            833           798
     Operating and Maintenance Expense from Affiliates                    6          5             11            11
     Depreciation and Amortization                                       65         75            128           167
     Taxes Other Than Income                                             41         39             90            85
---------------------------------------------------------------------------------------------------------------------
         Total Operating Expense                                      1,446      1,470          2,818         2,830
---------------------------------------------------------------------------------------------------------------------

OPERATING INCOME                                                        113        113            202           381
---------------------------------------------------------------------------------------------------------------------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                   (10)       (17)           (27)          (35)
     Interest Expense from Affiliates                                    (1)        (9)            (1)          (24)
     Equity in Earnings of Unconsolidated Affiliates                      9         13             32            39
     Other, net                                                          24         14             40            18
---------------------------------------------------------------------------------------------------------------------
         Total Other Income and Deductions                               22          1             44            (2)
---------------------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT
   OF CHANGES IN ACCOUNTING PRINCIPLES                                  135        114            246           379

INCOME TAXES                                                             51         43             96           150
---------------------------------------------------------------------------------------------------------------------

INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN
   ACCOUNTING PRINCIPLES                                                 84         71            150           229

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

NET INCOME                                                               84         71            163           241
---------------------------------------------------------------------------------------------------------------------

OTHER COMPREHENSIVE INCOME (LOSS) (net of income taxes)

       Unrealized Gain (Loss) on Marketable Securities                  (74)        31            (83)          (80)
       SFAS 133 Transition Adjustment                                    --         --             --             4
       Cash Flow Hedge Fair Value Adjustment                              6        (35)           (67)          (36)
---------------------------------------------------------------------------------------------------------------------
         Total Other Comprehensive Income (Loss)                        (68)        (4)          (150)         (112)
---------------------------------------------------------------------------------------------------------------------

TOTAL COMPREHENSIVE INCOME                                           $   16     $   67         $   13       $   129
---------------------------------------------------------------------------------------------------------------------


                                    See Notes to Consolidated Financial Statements
</TABLE>



                                                          17
<PAGE>



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

                                                                                          Six Months Ended June 30,
                                                                                         ----------------------------
(in millions)                                                                                2002              2001
---------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                      <C>               <C>
     Net Income                                                                          $    163          $    241
     Adjustments to Reconcile Net Income to Net Cash Flows
      Provided by Operating Activities:
       Depreciation and Amortization, including nuclear fuel                                  312               366
       Cumulative Effect of a Change in Accounting Principle (net of income taxes)            (13)              (12)
       Provision for Uncollectible Accounts                                                    17                 3
       Deferred Income Taxes                                                                   (4)               (6)
       Equity in (Earnings) Losses of Unconsolidated Affiliates                               (32)              (39)
       Net Realized Losses on Nuclear Decommissioning Trust Funds                              21                24
       Other Operating Activities                                                              70              (116)
        Changes in Working Capital:
           Accounts Receivable                                                               (136)              115
           Changes in Receivables and Payables to Affiliates, net                             (93)             (161)
           Inventories                                                                        (54)             (110)
           Accounts Payable, Accrued Expenses and Other Current Liabilities                   316               156
           Other Current Assets                                                               (48)               24
---------------------------------------------------------------------------------------------------------------------
Net Cash Flows provided by Operating Activities                                               519               485
---------------------------------------------------------------------------------------------------------------------


CASH FLOWS FROM INVESTING ACTIVITIES
     Capital Expenditures                                                                    (475)             (301)
     Acquisition of Generating Plants                                                        (443)               --
     Proceeds from Nuclear Decommissioning Trust Funds                                        889               621
     Investment in Nuclear Decommissioning Trust Funds                                       (943)             (655)
     Note Receivable from Affiliate                                                           (75)              236
     Other Investing Activities                                                                (1)               --
---------------------------------------------------------------------------------------------------------------------
Net Cash Flows used in Investing Activities                                                (1,048)              (99)
---------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
     Change in Intercompany Payable, Affiliate                                                331              (696)
     Issuance of Long-Term Debt                                                                --               752
     Retirement of Long-Term Debt                                                              (2)               (2)
     Distribution to Member                                                                    --              (121)
---------------------------------------------------------------------------------------------------------------------
Net Cash Flows provided by (used in) Financing Activities                                     329               (67)
---------------------------------------------------------------------------------------------------------------------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                             (200)              319
---------------------------------------------------------------------------------------------------------------------


CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                              224                 4
---------------------------------------------------------------------------------------------------------------------


CASH AND CASH EQUIVALENTS AT END OF PERIOD                                               $     24          $    323
---------------------------------------------------------------------------------------------------------------------


                                    See Notes to Consolidated Financial Statements
</TABLE>



                                                          18
<PAGE>


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

<TABLE>
<CAPTION>
                                                            June 30,      December 31,
(in millions)                                                   2002              2001
----------------------------------------------------------------------------------------
ASSETS

CURRENT ASSETS
<S>                                                        <C>               <C>
     Cash and Cash Equivalents                             $      24         $     224
     Accounts Receivable, net
         Customer                                                503               316
         Other                                                    38               150
     Receivable from Affiliate                                   523               444
     Inventories, at average cost
         Fossil Fuel                                             135               105
         Materials and Supplies                                  227               202
     Accumulated Deferred Income Taxes                             7                --
     Other                                                       103                65
----------------------------------------------------------------------------------------
         Total Current Assets                                  1,560             1,506
----------------------------------------------------------------------------------------

PROPERTY, PLANT AND EQUIPMENT, NET                             2,650             2,003

DEFERRED DEBITS AND OTHER ASSETS
     Nuclear Decommissioning Trust Funds                       3,060             3,165
     Investments                                                 913               859
     Notes Receivable from Affiliates                            261               291
     Deferred Income Taxes                                       437               297
     Other                                                       223               223
----------------------------------------------------------------------------------------
         Total Deferred Debits and Other Assets                4,894             4,835
----------------------------------------------------------------------------------------

TOTAL ASSETS                                               $   9,104         $   8,344
----------------------------------------------------------------------------------------

</TABLE>

                    See Notes to Consolidated Financial Statements



                                          19
<PAGE>



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



                                                                                         June 30,      December 31,
(in millions)                                                                                2002              2001
---------------------------------------------------------------------------------------------------------------------
LIABILITIES AND MEMBER'S EQUITY

CURRENT LIABILITIES
<S>                                                                                     <C>               <C>
     Long-Term Debt Due within One Year                                                 $       6         $       4
     Accounts Payable                                                                         788               585
     Accounts Payable to Affiliate                                                             16               105
     Notes Payable to Affiliate                                                               331                --
     Accrued Expenses                                                                         416               303
     Deferred Income Taxes                                                                     --                 7
     Other                                                                                    215               171
---------------------------------------------------------------------------------------------------------------------
         Total Current Liabilities                                                          1,772             1,175
---------------------------------------------------------------------------------------------------------------------

LONG-TERM DEBT                                                                              1,065             1,021

DEFERRED CREDITS AND OTHER LIABILITIES
     Unamortized Investment Tax Credits                                                       230               234
     Nuclear Decommissioning Liability for Retired Plants                                   1,379             1,353
     Pension Obligation                                                                       102               118
     Non-Pension Postretirement Benefits Obligation                                           396               384
     Spent Nuclear Fuel Obligation                                                            851               843
     Other                                                                                    361               280
---------------------------------------------------------------------------------------------------------------------
         Total Deferred Credits and Other Liabilities                                       3,319             3,212
---------------------------------------------------------------------------------------------------------------------

COMMITMENTS AND CONTINGENCIES

MEMBER'S EQUITY
     Membership Interest                                                                    2,316             2,316
     Undistributed Earnings                                                                   686               523
     Accumulated Other Comprehensive Income (Loss)                                            (54)               97
---------------------------------------------------------------------------------------------------------------------
         Total Member's Equity                                                              2,948             2,936
---------------------------------------------------------------------------------------------------------------------

TOTAL LIABILITIES AND MEMBER'S EQUITY                                                   $   9,104         $   8,344
---------------------------------------------------------------------------------------------------------------------


                                    See Notes to Consolidated Financial Statements

</TABLE>


                                                          20
<PAGE>

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

1.   BASIS OF PRESENTATION (Exelon, ComEd, PECO and Generation)
         The accompanying  consolidated financial statements as of June 30, 2002
and for the three and six  months  then ended are  unaudited,  but  include  all
adjustments  that  Exelon  Corporation  (Exelon),  Commonwealth  Edison  Company
(ComEd),   PECO  Energy  Company  (PECO)  and  Exelon  Generation  Company,  LLC
(Generation)  consider  necessary for a fair  presentation  of their  respective
financial statements.  All adjustments are of a normal, recurring nature, except
as otherwise  disclosed.  The December 31, 2001 consolidated  balance sheet data
were  derived  from  audited  financial   statements  but  do  not  include  all
disclosures  required  by  generally  accepted  accounting  principles.  Certain
prior-year  amounts  have been  reclassified  for  comparative  purposes.  These
reclassifications  had no effect  on net  income or  shareholders'  or  member's
equity. These notes should be read in conjunction with the Notes to Consolidated
Financial  Statements of Exelon,  ComEd and PECO included in or  incorporated by
reference  in Item 8 of their  Annual  Report  on Form  10-K for the year  ended
December  31,  2001  and the  Notes  to  Consolidated  Financial  Statements  in
Generation's  Form S-4 registration  statement  declared  effective on April 24,
2002 by the Securities and Exchange  Commission (SEC),  (Generation's Form S-4).
See ITEM 6. Exhibits and Reports on Form 8-K.


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

         Exelon,  ComEd, PECO and Generation  adopted SFAS No. 142 as of January
1, 2002.  SFAS No. 142  establishes  new accounting and reporting  standards for
goodwill  and  intangible  assets.  Other than  goodwill,  Exelon  does not have
significant other intangible assets recorded on its consolidated balance sheets.
Under SFAS No. 142, goodwill is no longer subject to amortization, however,


                                       21
<PAGE>

goodwill is subject to an assessment for impairment  using a two-step fair value
based test, the first step of which must be performed at least annually, or more
frequently if events or circumstances  indicate that goodwill might be impaired.
The first step  compares  the fair  value of a  reporting  unit to its  carrying
amount, including goodwill. If the carrying amount of the reporting unit exceeds
its fair value,  the second step is  performed.  The second  step  compares  the
carrying  amount of the goodwill to the fair value of the goodwill.  If the fair
value of  goodwill  is less than the  carrying  amount,  an  impairment  loss is
reported as a reduction to goodwill and a charge to operating expense, except at
the  transition  date,  when the loss is reflected  as a cumulative  effect of a
change in accounting principle.

         As of December 31, 2001, Exelon's Consolidated Balance Sheets reflected
approximately  $5.3  billion  in  goodwill  net  of  accumulated   amortization,
including $4.9 billion of net goodwill related to the October 20, 2000 merger of
Unicom  Corporation  (Unicom),  the former  parent  company  of ComEd,  and PECO
(Merger)  recorded on ComEd's  Consolidated  Balance Sheets,  with the remainder
related to acquisitions by Exelon Enterprises  Company,  LLC (Enterprises).  The
first  step of the  transitional  impairment  analysis  indicated  that  ComEd's
goodwill  was not  impaired  but that an  impairment  did exist with  respect to
goodwill  recorded in  Enterprises'  reporting  units.  Exelon's  infrastructure
services business (InfraSource),  the energy services business (Exelon Services)
and the competitive retail energy sales business (Exelon Energy) were determined
to be those reporting units of Enterprises that had goodwill  allocated to them.
The  second  step of the  analysis,  which  compared  the fair  value of each of
Enterprises'  reporting  units'  goodwill to the carrying  value at December 31,
2001,  indicated a total goodwill impairment of $357 million ($243 million,  net
of income  taxes and  minority  interest).  The fair  value of the  Enterprises'
reporting units was determined using discounted cash flow models  reflecting the
expected range of future cash flow outcomes  related to each of the  Enterprises
reporting units over the life of the model.  These cash flows were discounted to
2002 using a  risk-adjusted  discount  rate.  The  impairment  was recorded as a
cumulative  effect of a change in  accounting  principle in the first quarter of
2002.

         The changes in the carrying  amount of goodwill by  reportable  segment
(see Note 6 for further  discussion of  reportable  segments) for the six months
ended June 30, 2002 are as follows:

<TABLE>
<CAPTION>
                                                                          Energy
                                                                        Delivery      Enterprises             Total
---------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>              <C>               <C>
Balance as of January 1, 2002                                          $   4,902        $     433         $   5,335
Impairment losses                                                             --             (357)             (357)
Settlement of pre-merger income tax contingency                               (7)              --                (7)
---------------------------------------------------------------------------------------------------------------------
Balance as of June 30, 2002                                            $   4,895        $      76         $   4,971
---------------------------------------------------------------------------------------------------------------------
</TABLE>

         The June 30, 2002,  Energy Delivery  goodwill  relates to ComEd and the
remaining  Enterprises  goodwill  relates to the InfraSource and Exelon Services
reporting  units.  Consistent with SFAS No. 142, the remaining  goodwill will be
reviewed for  impairment on an annual basis or more  frequently  if  significant
events occur that could indicate an impairment exists.



                                       22
<PAGE>

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

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

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












                                       23
<PAGE>

         The  following  tables set forth  Exelon's  net income and earnings per
common  share and ComEd's net income for the three and six months ended June 30,
2002 and 2001,  respectively,  adjusted  to exclude  2001  amortization  expense
related to goodwill that is no longer being amortized.

<TABLE>
<CAPTION>
Exelon
                                                     Three Months Ended June 30,         Six Months Ended June 30,
                                                     ---------------------------         -------------------------
                                                          2002              2001             2002              2001
---------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>              <C>               <C>               <C>
Reported income before cumulative effect
     of changes in accounting principles              $    485         $     315         $    722          $    702
Cumulative effect of changes in
     accounting principles                                  --                --             (230)               12
---------------------------------------------------------------------------------------------------------------------
Reported net income                                        485               315              492               714
Goodwill amortization                                       --                38               --                77
---------------------------------------------------------------------------------------------------------------------
Adjusted net income                                  $     485         $     353         $   492           $    791
---------------------------------------------------------------------------------------------------------------------

Basic earnings per common share:
    Reported income before cumulative effect
       of changes in accounting principles            $   1.50          $   0.98         $   2.24          $   2.19
    Cumulative effect of changes in
       accounting principles                                --                --            (0.71)             0.04
---------------------------------------------------------------------------------------------------------------------
    Reported net income                                   1.50              0.98             1.53              2.23
    Goodwill amortization                                   --              0.12               --              0.24
---------------------------------------------------------------------------------------------------------------------
    Adjusted net income                               $   1.50          $   1.10         $   1.53          $   2.47
---------------------------------------------------------------------------------------------------------------------

Diluted earnings per common share:
    Reported income before cumulative effect
       of changes in accounting principles            $   1.50          $   0.97         $   2.23          $   2.17
    Cumulative effect of changes in
       accounting principles                                --                --            (0.71)             0.04
---------------------------------------------------------------------------------------------------------------------
    Reported net income                                   1.50              0.97             1.52              2.21
    Goodwill amortization                                   --              0.12               --              0.24
---------------------------------------------------------------------------------------------------------------------
    Adjusted net income                               $   1.50          $   1.09         $   1.52          $   2.45
---------------------------------------------------------------------------------------------------------------------

ComEd
                                                     Three Months Ended June 30,          Six Months Ended June 30,
                                                     ---------------------------         --------------------------
                                                          2002              2001             2002              2001
---------------------------------------------------------------------------------------------------------------------
Reported net income                                   $    231          $    182         $    360          $    329
Goodwill amortization                                       --                32               --                64
---------------------------------------------------------------------------------------------------------------------
Adjusted net income                                   $    231          $    214         $    360          $    393
---------------------------------------------------------------------------------------------------------------------
</TABLE>

Generation
         The cessation of the  amortization  of negative  goodwill of AmerGen on
January  1, 2002 did not have a material  impact on  Generation's  reported  net
income for the three or six months ended June 30, 2002.


                                       24
<PAGE>

EITF Issue 02-3
         Exelon and  Generation  early adopted the provision of Emerging  Issues
Task Force  (EITF)  Issue 02-3  "Accounting  for  Contracts  Involved  in Energy
Trading and Risk Management  Activities"  (EITF 02-3) issued by the FASB EITF in
June 2002 that  requires  revenues  and energy costs  related to energy  trading
contracts to be presented on a net basis in the income  statement.  Prior to the
second quarter of 2002, revenues from trading activity were presented in Revenue
and the  energy  costs  related  to  energy  trading  were  presented  as either
Purchased  Power  or  Fuel  expense  on  Exelon  and  Generation's  Consolidated
Statements of Income. For comparative  purposes,  energy costs related to energy
trading have been  reclassified  in prior periods to revenue to conform with the
net basis of  presentation  required by EITF 02-3.  For the three and six months
ended June 30, 2001,  $30 million of purchased  power  expense and $5 million of
fuel expense was reclassified and reflected as a reduction to revenue. The three
months ended March 31, 2002 included $504 million of purchased power expense and
$9  million  of fuel  expense  that has been  reclassified  and  reflected  as a
reduction to revenue in the six months ended June 30, 2002.

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

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


3. ACQUISITIONS AND DISPOSITIONS (Exelon and Generation)
Acquisition of Generating Plants from TXU
On April 25, 2002, Generation acquired two natural-gas and oil-fired plants from
TXU Corp.  (TXU) for an aggregate  purchase price of $443 million.  The purchase
included the  893-megawatt  Mountain Creek Steam Electric  Station in Dallas and
the 1,441-megawatt Handley Steam Electric Station in Fort Worth. The transaction
included a power purchase  agreement for TXU to purchase power during the months
of May through  September from 2002 through 2006.  During the periods covered by
the power purchase  agreement,  TXU will make fixed  capacity  payments and will
provide fuel to Exelon in return for exclusive rights to the energy and capacity
of the  generation  plants.  Substantially  all of the  purchase  price has been
allocated to property,  plant,  and equipment  pending final  valuation of plant
assets.



                                       25
<PAGE>


Sale of AT&T Wireless
         On April 1, 2002,  Enterprises  sold its 49% interest in AT&T  Wireless
PCS of  Philadelphia,  LLC to a subsidiary  of AT&T  Wireless  Services for $285
million in cash.  Enterprises  recorded  an  after-tax  gain of $116  million in
other, net on the $84 million investment, which was reflected in Deferred Debits
and Other Assets on Exelon's Consolidated Balance Sheets.

Sithe New England Holdings, LLC Acquisition
         On June 26,  2002,  Generation  agreed to  purchase  Sithe New  England
Holdings,  LLC, (Sithe New England) a subsidiary of Sithe Energies Inc. (Sithe),
and related power marketing  operations in exchange for a $543 million note plus
the assumption of non-recourse debt,  estimated to be approximately $1.2 billion
at the  transaction  closing  date.  The  parties  are  seeking  Federal  Energy
Regulatory  Commission  (FERC) and other  required  approvals of the purchase by
October 31, 2002. Exelon has negotiated  closing conditions that allow Exelon to
terminate the purchase if the conditions are not satisfied.  If approved, and if
the closing  conditions are  satisfied,  the  transaction  could be completed in
November 2002.

         The purchase involves  approximately 4,471 MWs of generation  capacity,
consisting  of 2,050 MWs in operation  and 2,421 MWs under  construction,  which
will increase  Generation's  net assets by  approximately  $1.7 billion when the
transaction  closes.  Sithe New  England's  generation  facilities  are  located
primarily in Massachusetts, but are also located in Maine.

         Generation is a 49.9% owner of Sithe and accounts for the investment as
an  unconsolidated  equity  investment.  The Sithe New England purchase will not
affect  the  accounting  for  Sithe  as  an  equity  investment.   Additionally,
Generation is subject to a Put and Call  Agreement  (PCA) that gives  Generation
the right to purchase (Call) the remaining  50.1% of Sithe,  and gives the other
Sithe shareholders the right to sell (Put) their interest to Generation.  If the
Put option is exercised, Generation has the obligation to complete the purchase.
The PCA provides that the Put and Call options become exercisable as of December
18, 2002. The Sithe New England purchase is a separate  transaction from the PCA
that is intended to enable  Generation to acquire only the Sithe assets that fit
Generation's strategy,  accelerate the realization of synergies,  and reduce the
amount of debt needed to finance the transaction.

         See ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations - Exelon  Corporation - for further  discussion of the
PCA.


4.  REGULATORY ISSUES (Exelon, ComEd and PECO)
         On April 1, 2002,  the  Illinois  Commerce  Commission  (ICC) issued an
interim  order in ComEd's  Delivery  Services  Rate Case.  The interim  order is
subject  to an  audit  of  test  year  expenditures  that is  anticipated  to be
completed by the end of 2002 with a final order to be issued in 2003.  The order
sets new delivery rates for residential customers choosing a new retail electric
supplier.  The new rates became effective May 1, 2002 when residential customers
were eligible to choose their supplier of electricity. Traditional bundled rates
paid by  customers  that  retain  ComEd as their  electricity  supplier  are not
affected by this order.  Bundled  rates will remain  frozen  through  2006, as a
result of the June 6, 2002  amendments  to the Illinois


                                       26
<PAGE>

Restructuring  Act that  extended the freeze on bundled  rates for an additional
two years. Delivery service rates for non-residential customers are not affected
by the order. The potential  revenue impact of the interim order is not expected
to be material in 2002.

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


5.  EARNINGS PER SHARE (Exelon)
         Diluted earnings per share are calculated by dividing net income by the
weighted average number of 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 June 30,     Six Months Ended June 30,
                                                            ---------------------------     -------------------------
                                                                    2002           2001          2002            2001
----------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>            <C>           <C>             <C>
Average common shares outstanding                                    322            321           322             320
Assumed exercise of stock options                                      2              3             2               3
----------------------------------------------------------------------------------------------------------------------
Average diluted common shares outstanding                            324            324           324             323
----------------------------------------------------------------------------------------------------------------------
</TABLE>

         Stock options not included in average common shares used in calculating
diluted earnings per share due to their  antidilutive  effect were three million
for the three and six months  ended June 30,  2002 and one million for the three
and six months ended June 30, 2001.




                                       27
<PAGE>

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.
Beginning in 2002,  Exelon evaluates the performance of its business segments on
the basis of net income.  Exelon's segment  information for the three months and
six months  ended June 30, 2002 as  compared to the same  periods in 2001 and at
June 30, 2002 and December 31, 2001 are as follows:

Three Months Ended June 30, 2002 as compared to Three Months Ended June 30, 2001

<TABLE>
<CAPTION>
                                                                                    Corporate and
                                        Energy                                       Intersegment
                                      Delivery      Generation     Enterprises       Eliminations      Consolidated
 -------------------------------------------------------------------------------------------------------------------
<S>                                   <C>             <C>              <C>               <C>               <C>
 Revenues:
     2002                              $ 2,476         $ 1,559          $  476            $ (992)           $ 3,519
     2001                                2,436           1,583             546              (949)             3,616
 Intersegment Revenues:
     2002                              $    15         $   953          $   24            $ (992)           $    --
     2001                                   16             906              27              (949)                --
 Net Income:
     2002                              $   322         $    84          $   83            $   (4)           $   485
     2001                                  264              71             (5)               (15)               315
 -------------------------------------------------------------------------------------------------------------------

Six Months Ended June 30, 2002 as compared to Six Months Ended June 30, 2001

                                                                                    Corporate and
                                        Energy                                       Intersegment
                                      Delivery      Generation      Enterprises      Eliminations      Consolidated
 -------------------------------------------------------------------------------------------------------------------
 Revenues:
     2002                              $ 4,811         $ 3,020          $   966          $(1,921)          $  6,876
     2001                                4,933           3,211            1,213           (1,918)             7,439
 Intersegment Revenues:
     2002                              $    29         $ 1,845          $    47          $(1,921)          $     --
     2001                                   59           1,819               40           (1,918)                --
 Net Income:
     2002                              $   538         $   163          $ (188)          $   (21)          $    492
     2001                                  530             241             (30)              (27)               714
 -------------------------------------------------------------------------------------------------------------------

 Total Assets:
     June 30, 2002                     $26,915         $ 9,104          $ 1,290          $(1,688)          $ 35,621
     December 31, 2001                  26,461           8,344            1,790           (1,735)            34,860
 -------------------------------------------------------------------------------------------------------------------
</TABLE>




                                       28


<PAGE>

7. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (Exelon, ComEd, PECO and
Generation)
         During the three and six months  ended June 30,  2002 and 2001,  Exelon
recorded  net   gains/(losses)  in  other   comprehensive   income  relating  to
mark-to-market  (MTM) adjustments of contracts designated as cash flow hedges as
follows:

<TABLE>
<CAPTION>
                                             ComEd            PECO        Generation      Enterprises       Exelon
---------------------------------------------------------------------------------------------------------------------
<S>                                        <C>            <C>             <C>             <C>             <C>
Three months ended June 30, 2002              $(13)          $  (7)          $    15         $     (3)       $   (8)
Three months ended June 30, 2001                --              15               (61)              (2)          (48)
Six months ended June 30, 2002                  (6)             (1)             (107)              14          (100)
Six months ended June 30, 2001                  --               8               (62)               2           (52)
---------------------------------------------------------------------------------------------------------------------
</TABLE>

         During  the three  months  ended  June 30,  2002 and 2001,  and the six
months  ended June 30,  2002 and 2001,  Generation  recognized  net MTM gains on
non-trading  energy derivative  contracts not designated as cash flow hedges, in
operating revenues as follows:

<TABLE>
<CAPTION>
                                                                                                 2002          2001
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                            <C>        <C>
Three months ended June 30,                                                                    $    4     $       5
Six months ended June 30,                                                                          10            22
---------------------------------------------------------------------------------------------------------------------
</TABLE>

         During the three months ended June 30, 2002 and 2001 and the six months
ended June 30, 2002 and 2001,  no amounts  were  reclassified  from  accumulated
other  comprehensive  income  into  earnings  as a result of  forecasted  energy
commodity transactions no longer being probable.

         During  the three  months  ended  June 30,  2002 and 2001,  and the six
months  ended June 30, 2002 and 2001,  Generation  recognized  net MTM losses on
energy trading contracts, in operating revenues as follows:

<TABLE>
<CAPTION>
                                                                                                 2002          2001
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                            <C>        <C>
Three months ended June 30,                                                                    $   (9)    $      (6)
Six months ended June 30,                                                                         (13)           (6)
---------------------------------------------------------------------------------------------------------------------
</TABLE>

         During the three months ended June 30, 2002 and 2001 and the six months
ended June 30, 2002 and 2001, PECO reclassified other income in the Consolidated
Statements of Income and Comprehensive Income, as a result of the discontinuance
of cash flow hedges related to certain  forecasted  financing  transactions that
were no longer probable of occurring as follows:

<TABLE>
<CAPTION>
                                                                                                 2002          2001
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                            <C>        <C>
Three months ended June 30,                                                                    $   --     $      --
Six months ended June 30,                                                                          --             6
---------------------------------------------------------------------------------------------------------------------
</TABLE>








                                       29
<PAGE>

         As of June 30,  2002,  deferred  net  gains on  derivative  instruments
accumulated in other  comprehensive  income are expected to be  reclassified  to
earnings during the next twelve months are as follows:

<TABLE>
<CAPTION>
                                                         ComEd         PECO   Generation  Enterprises       Exelon
---------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>           <C>          <C>          <C>          <C>
Gains Expected to be Reclassified                      $     1       $   15       $   --       $    2       $    18
---------------------------------------------------------------------------------------------------------------------
</TABLE>

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

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

<TABLE>
<CAPTION>
                                                                                                      June 30, 2002
                                                    ---------------------------------------------------------------
                                                                           Gross            Gross
                                                     Amortized        Unrealized       Unrealized         Estimated
                                                          Cost             Gains           Losses        Fair Value
---------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>               <C>              <C>               <C>
Equity securities                                    $   1,677         $     115        $    (406)        $   1,386
Debt securities
    Government obligations                                 994                39               (1)            1,032
    Other debt securities                                  641                18              (17)              642
---------------------------------------------------------------------------------------------------------------------
Total debt securities                                    1,635                57              (18)            1,674
---------------------------------------------------------------------------------------------------------------------
Total available-for-sale securities                  $   3,312         $     172        $    (424)        $   3,060
---------------------------------------------------------------------------------------------------------------------
</TABLE>

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

         For the three  months ended June 30,  2002,  proceeds  from the sale of
decommissioning  trust  investments and gross realized gains and losses on those
sales were $309 million, $13 million and $24 million,  respectively. For the six
months  ended June 30, 2002,  proceeds  from the sale of  decommissioning  trust
investments  and gross  realized  gains  and  losses  on those  sales  were $889
million, $31 million and $56 million, respectively.

         Net  realized  losses of $4  million  were  recognized  in  Accumulated
Depreciation  in Generation's  Consolidated  Balance Sheets at June 30, 2002 and
$21  million  of net  realized  losses  were  recognized  in  Other  Income  and
Deductions in Generation's  Consolidated  Statements of Income and Comprehensive
Income for the six months ended June 30, 2002. The available-for-sale securities
held at June 30, 2002 have an average  maturity of eight to ten years.  The cost
of these securities was determined on the basis of specific identification.





                                       30
<PAGE>

8.  COMMITMENTS AND CONTINGENCIES (Exelon, ComEd, PECO and Generation)
         For information regarding capital commitments,  nuclear decommissioning
and spent  fuel  storage,  see the  Commitments  and  Contingencies  Note in the
Consolidated  Financial  Statements of Exelon, ComEd and PECO for the year ended
December 31, 2001 and Generation's S-4 dated April 24, 2002.

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
June 30, 2002, Exelon had accrued $139 million for  environmental  investigation
and remediation costs that currently can be reasonably estimated, including $115
million for MGP investigation and remediation.

         ComEd had accrued $96 million  (discounted)  as of June 30,  2002,  for
environmental   investigation  and  remediation  costs  that  currently  can  be
reasonably  estimated.  This reserve included $90 million for MGP  investigation
and  remediation.   ComEd  is  currently  experiencing  delays  in  the  ongoing
remediation of an MGP site in Oak Park,  Illinois,  and is evaluating the impact
of those delays on the cost to complete the project. The impact of the delays is
currently uncertain, but could increase the environmental reserve in the future.

         PECO had accrued $34 million  (undiscounted)  as of June 30, 2002,  for
environmental   investigation  and  remediation  costs  that  currently  can  be
reasonably   estimated,   including  $25  million  for  MGP   investigation  and
remediation.

         Generation had accrued $9 million  (undiscounted)  as of June 30, 2002,
for  environmental  investigation and remediation cost, none of which relates to
MGP investigation and remediation.

         Exelon,  ComEd,  PECO and Generation cannot predict the extent to which
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.





                                       31
<PAGE>

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

<TABLE>
<CAPTION>
                                                                        Power Only Purchases from
                                Net Capacity        Power Only          -------------------------      Transmission
                               Purchases (1)             Sales           AmerGen   Non-Affiliates  Rights Purchases
---------------------------------------------------------------------------------------------------------------------
<S>                              <C>               <C>               <C>              <C>               <C>
2002                             $       634       $     2,111       $       127      $     1,659       $        72
2003                                     692             1,491               247              588               108
2004                                     859               822               301              200                89
2005                                     389               244               227               78                83
2006                                     352               120               227               66                 2
Thereafter                             4,120                23             2,045              272                --
---------------------------------------------------------------------------------------------------------------------
Total                            $     7,046       $     4,811       $     3,174      $     2,863       $       354
---------------------------------------------------------------------------------------------------------------------
<FN>
(1)  Net Capacity Purchases  includes Midwest Generation  commitments as of July
     1, 2002. On July 1, 2002,  Generation  notified  Midwest  Generation of the
     exercise of its call options  under the existing Coal  Generation  Purchase
     Power Agreement.  Generation exercised options on 1,265 MWs of capacity and
     did not exercise options on 2,684 MWs of capacity. In 2003, Generation will
     take  1,696 MWs of  non-option  capacity  and 1,265 MWs of option  capacity
     under the existing contract.  Net Capacity Purchases also includes capacity
     sales to TXU under the purchase power agreement  entered into in connection
     with the purchase of two generating plants in April 2002, which states that
     TXU will  purchase  the plant output from May through  September  from 2002
     through 2006. The combined capacity of the two plants is 2,334 MWs.
</FN>
</TABLE>

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

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


                                       32
<PAGE>

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

Litigation
Exelon
         Securities Litigation.  Between May 8 and June 14, 2002, a total of six
nearly  identical class action lawsuits were filed in the Federal District Court
in Chicago  asserting  securities  claims on behalf of Exelon  investors  during
April to September  2001. The  complaints  allege that Exelon  violated  Federal
securities  laws  by  issuing  a  series  of  materially  false  and  misleading
statements  relating to its 2001 earnings  expectations during the Class Period.
On May 30 and July 2, 2002, the Court granted  Exelon's  agreed-upon  motions to
consolidate   the  pending  cases  into  one  lawsuit,   and  stayed   discovery
indefinitely.  A lead  plaintiff  has not been  selected.  Exelon  believes  the
lawsuit is without merit and is vigorously contesting this matter.

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

         FERC Municipal Request for Refund. Three of ComEd's wholesale municipal
customers  filed a complaint  and request for refund with the FERC alleging that
ComEd  failed to properly  adjust its rates,  as provided for under the terms of
the electric service contracts with the municipal customers and to track certain
refunds made to ComEd's retail  customers in the years 1992 through 1994. In the
third  quarter of 1998,  FERC granted the complaint and directed that refunds be
made,  with interest.  ComEd filed a request for  rehearing.  On April 30, 2001,
FERC issued an order  granting  rehearing in which it  determined  that its 1998
order  had been  erroneous  and  that no  refunds  were  due  from  ComEd to the
municipal  customers.  On June 29, 2001, FERC denied the customers' requests for
rehearing of the order  granting  rehearing.  In August 2001,  each of the three
wholesale  municipal  customers  appealed  the April 30,  2001 FERC order to the
Federal  circuit  court,  which  consolidated  the appeals  for the  purposes of
briefing and decision.  In November 2001, the court suspended  briefing  pending
court-initiated settlement discussions.

         Retail Rate Law. In 1996, several developers of non-utility  generating
facilities filed litigation against various Illinois officials claiming that the
enforcement  against  those  facilities of an amendment to Illinois law removing
the entitlement of those facilities to state-subsidized


                                       33
<PAGE>

payments  for  electricity  sold to ComEd after March 15,  1996  violated  their
rights under the Federal and state constitutions. The developers also filed suit
against ComEd for a declaratory judgment that their rights under their contracts
with ComEd were not affected by the  amendment.  On August 4, 1999, the Illinois
Appellate  Court  held  that the  developers'  claims  against  the  state  were
premature,  and the Illinois  Supreme  Court denied leave to appeal that ruling.
Developers  of both  facilities  have since filed amended  complaints  repeating
their  allegations  that ComEd breached the contracts in question and requesting
damages  for such  breach  reflecting  the  state-subsidized  rate to which  the
developers claim they were entitled under their contracts.  These matters are in
the discovery  phase.  Certain of the plaintiffs  have produced an expert report
claiming   approximately  $175  million  in  damages,  a  quantification   ComEd
vigorously  disputes.  Virtually  all  parties  have filed  motions  for summary
judgment.  ComEd is  contesting  each case and has filed its motion for  summary
judgment  arguing  that,  as a  matter  of  law,  it did not  breach  any of the
contracts.

         Service Interruptions. In August 1999, three class action lawsuits were
filed against ComEd, and subsequently consolidated, in the Circuit Court of Cook
County,  Illinois  seeking  damages for personal  injuries,  property damage and
economic  losses related to a series of service  interruptions  that occurred in
the summer of 1999. The combined effect of these interruptions  resulted in over
168,000  customers  losing service for more than four hours.  Conditional  class
certification  was  approved  by the court  for the sole  purpose  of  exploring
settlement talks.  ComEd filed a motion to dismiss the complaints.  On April 24,
2001, the court dismissed four of the five counts of the consolidated  complaint
without prejudice and the sole remaining count was dismissed in part. On June 1,
2001, the plaintiffs filed a second amended consolidated complaint and ComEd has
filed an  answer.  A portion  of any  settlement  or  verdict  may be covered by
insurance; discussions with the carrier are ongoing.

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

ComEd and Generation
         Godley Park  District  Litigation.  On April 18, 2001,  the Godley Park
District  filed suit in Will County  Circuit Court against ComEd and  Generation
alleging  that oil  spills  at  Braidwood  Station  have  contaminated  the Park
District's water supply.  The complaint sought actual damages,  punitive damages
of $100 million and statutory penalties.  The court dismissed all counts seeking
punitive damages and statutory penalties, and the plaintiff has filed an amended
complaint  before  the court.  The  amended  complaint  added  counts  under the
Illinois  Public Utility Act (PUA),  which provides for statutory  penalties and
allows recovery of attorneys fees. On


                                       34
<PAGE>

April 20, 2002,  the Court denied ComEd and  Generation's  motion to dismiss the
additional  counts  under  the PUA.  ComEd and  Generation  are  contesting  the
liability and damages sought by the plaintiff.

Generation
         Cotter  Corporation  Litigation.  During  1989 and 1991,  actions  were
brought  in  Federal  and  state  courts  in  Colorado  against  ComEd  and  its
subsidiary,   Cotter  Corporation  (Cotter),  seeking  unspecified  damages  and
injunctive  relief based on allegations  that Cotter  permitted  radioactive and
other  hazardous  material  to be  released  from its mill into  areas  owned or
occupied by the plaintiffs,  resulting in property damage and potential  adverse
health effects. In 1994, a Federal jury returned nominal dollar verdicts against
Cotter on eight plaintiffs' claims in the 1989 cases, which verdicts were upheld
on appeal.  The remaining  claims in the 1989 actions were settled or dismissed.
In 1998,  a jury  verdict  was  rendered  against  Cotter  in favor of 14 of the
plaintiffs in the 1991 cases, totaling  approximately $6 million in compensatory
and punitive  damages,  interest and medical  monitoring.  On appeal,  the Tenth
Circuit Court of Appeals  reversed the jury  verdict,  and remanded the case for
new trial.  These  plaintiffs'  cases were  consolidated  with the  remaining 26
plaintiffs'  cases,  which  had not  been  tried.  The  consolidated  trial  was
completed  on June 28,  2001.  The jury  returned a verdict  against  Cotter and
awarded $16.3  million in various  damages.  On November 20, 2001,  the District
Court  entered  an  amended  final  judgment  that  included  an  award  of both
pre-judgment and post-judgment interests, costs, and medical monitoring expenses
that total $43.3  million.  This matter is being appealed by Cotter in the Tenth
Circuit Court of Appeals. Cotter will vigorously contest the award.

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

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

         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


                                       35
<PAGE>

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.

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

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


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

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

         The  purchase  price  allocation  as of December  31,  2000  included a
liability  of  $307  million  for  Unicom  employee  costs  and  liabilities  of
approximately  $39  million  for  estimated  costs of exiting  various  business
activities  of  former  Unicom  activities  that  were not  compatible  with the
strategic business direction of Exelon.


                                       36
<PAGE>

         During 2001, Exelon finalized its plans for consolidation of functions,
including  negotiation  of an agreement  with the  International  Brotherhood of
Electrical Workers Local 15 regarding  severance benefits to union employees and
recorded adjustments to the purchase price allocation as follows:

<TABLE>
<CAPTION>
                                                                        Original             2001          Adjusted
                                                                        Estimate      Adjustments       Liabilities
------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>              <C>               <C>
Employee severance payments                                            $     128        $      33         $     161 (a)
Relocation and other benefits                                                 21                9                30 (a)
------------------------------------------------------------------------------------------------------------------------
Employee severance payments and relocation and other benefits                149               42               191
Actuarially determined pension and postretirement costs                      158              (11)              147 (b)
------------------------------------------------------------------------------------------------------------------------
Total Unicom - Employee Cost                                           $     307        $      31         $     338
------------------------------------------------------------------------------------------------------------------------
<FN>
(a)  The  increase  is a  result  of the  identification  in 2001 of  additional
     positions to be eliminated.
(b)  The  reduction  results from lower  estimated  pension and post  retirement
     welfare benefits reflecting revised actuarial estimates.
</FN>
</TABLE>


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

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                     <C>
Employee severance and relocation reserve as of October 20, 2000                                          $     149
Additional reserve                                                                                               42
------------------------------------------------------------------------------------------------------------------------
Adjusted employee severance and relocation reserve                                                              191
Payments to employees (October 2000-March 2002)                                                                 (92)
Payments to employees (April 2002-June 2002)                                                                    (33)
------------------------------------------------------------------------------------------------------------------------
Employee severance and relocation reserve as of June 30, 2002                                             $      66
------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

         As part of the January 2001  corporate  restructuring,  portions of the
employee  severance and  restructuring  reserve were  transferred  from ComEd to
Generation,   Enterprises   and  Exelon   Business   Services   Company   (BSC).
Approximately  $37  million  and  $15  million  of the  employee  severance  and
relocation  reserve  as of June  30,  2002  relates  to  ComEd  and  Generation,
respectively,  and is  reflected  on the  Consolidated  Balance  Sheets of those
entities.

         Approximately  3,300 Unicom and PECO positions have been  identified to
be eliminated as a result of the merger.  Exelon has terminated  2,255 employees
as of June 30, 2002 of which 510 were  terminated in the second quarter of 2002.
The remaining positions are expected to be eliminated by the end of 2002.


10.  LONG-TERM DEBT (Exelon and ComEd)
         On June 13, 2002,  ComEd  issued $200  million of 6.15% First  Mortgage
Bonds,  due March 15, 2012.  The $200 million bond issuance was a refinancing of
the $200  million of 8.5% First  Mortgage  Bonds  redeemed on July 15, 2002 at a
redemption price of 103.915% of the principal amount.


                                       37
<PAGE>

         In connection  with the issuance of the $200 million of First  Mortgage
Bonds,  ComEd  settled a forward  starting  interest  rate swap in the  notional
amount  of  $75  million  resulting  in a $1  million  loss  recorded  in  other
comprehensive  income, which is being amortized over the expected remaining life
of the related debt.

         On April 15, 2002,  ComEd  issued $100 million of Illinois  Development
Finance  Authority  floating-rate  Pollution  Control Revenue  Refunding  Bonds,
Series 2002.  The $100 million bond  issuance was used to redeem $100 million of
7.25% Illinois Development Finance Authority Pollution Control Revenue Refunding
Bonds, Series 1991.

         On March 13, 2002,  ComEd  issued $400 million of 6.15% First  Mortgage
Bonds,  due March 15, 2012.  This $400 million bond  issuance  refinanced  other
First Mortgage  Bonds.  In connection with the issuance of $400 million of First
Mortgage  Bonds,  ComEd  settled  forward  starting  interest  rate swaps in the
aggregate  notional  amount  of $375  million  resulting  in a $9  million  loss
recorded  in other  comprehensive  income,  which is  being  amortized  over the
expected remaining life of the related debt.

         On March 21, 2002, ComEd redeemed $200 million of 8.625% First Mortgage
Bonds at the redemption  price of 103.84% of the principal  amount.  These bonds
had a maturity date of February 1, 2022.

         During the six months ended June 30, 2002,  ComEd  recorded  prepayment
premiums of $9 million, partially offset by net unamortized premiums,  discounts
and debt issuance  expenses of $2 million,  associated with the early retirement
of debt in 2002 that have been deferred by ComEd in  regulatory  assets and will
be amortized to interest  expense over the life of the related new debt issuance
consistent with regulatory recovery.


11.  SALE OF ACCOUNTS RECEIVABLE  (Exelon and PECO)
         PECO is party to an agreement,  which expires in November 2005,  with a
financial  institution  under which it can sell or finance with limited recourse
an undivided  interest,  adjusted  daily,  in up to $225  million of  designated
accounts receivable.  As of June 30, 2002, PECO had sold a $225 million interest
in  accounts  receivable,  consisting  of a $170  million  interest  in accounts
receivable that PECO accounted for as a sale under SFAS No. 140, "Accounting for
Transfers and Servicing of Financial Assets and  Extinguishments of Liabilities,
a  Replacement  of  FASB  Statement  No.  125"  and a $55  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  cash,  which  would  otherwise  be  received  by PECO under this
program,  to be held in escrow until the  requirement  is met. At June 30, 2002,
PECO met this requirement.


12.  RELATED-PARTY TRANSACTIONS (Exelon, ComEd, PECO and Generation)
     Exelon and Generation
         In February 2002,  Generation entered into an agreement to loan AmerGen
up to $75 million at an  interest  rate equal to the  1-month  London  Interbank
Offering  Rate plus 2.25%.  As


                                       38
<PAGE>

of June 30, 2002, $75 million had been loaned to AmerGen. In July 2002, the loan
agreement and the loan were  increased to $100 million and the maturity date was
extended to July 1, 2003.

         Generation  has entered into PPAs dated  December 18, 2001 and November
22, 1999 with  AmerGen.  Under the 2001 PPA,  Generation  has agreed to purchase
from AmerGen all the energy from Unit No. 1 at Three Mile Island Nuclear Station
from January 1, 2002 through December 31, 2014.  Under the 1999 PPA,  Generation
has agreed to purchase  from  AmerGen all of the  residual  energy from  Clinton
Nuclear Power  Station  (Clinton),  through  December 31, 2002.  Currently,  the
residual output  approximates 25% of the total output of Clinton.  For the three
months ended June 30, 2002 and 2001,  and for the six months ended June 30, 2002
and 2001, the amount of purchased  power recorded in Purchased Power in Exelon's
and Generation's  Consolidated  Statements of Income and Comprehensive Income is
$60 million and $12 million and $116 million and $22 million,  respectively.  As
of June 30, 2002 and December 31, 2001,  Generation had a payable of $27 million
and $3 million, respectively, resulting from these PPAs.

         Under a service  agreement  dated  March 1, 1999,  Generation  provides
AmerGen with certain  operation and support  services to the nuclear  facilities
owned by AmerGen.  This  service  agreement  has an  indefinite  term and may be
terminated by Generation or AmerGen on 90 days notice. Generation is compensated
for these  services in an amount agreed to in the work order,  but not less than
the higher of fully  allocated  costs for  performing the services or the market
price.  For the three months ended June 30, 2002 and 2001, the amount charged to
AmerGen for these  services was $16  million.  For the six months ended June 30,
2002 and 2001,  the amount charged to AmerGen for these services was $30 million
and $32  million,  respectively.  As of June 30,  2002 and  December  31,  2001,
Generation  had a  receivable  of $61  million  and $47  million,  respectively,
resulting from these services.

ComEd
         ComEd  had a note  receivable  from  Unicom  Investments  Inc.  of $1.3
billion at June 30, 2002 and December 31,  2001,  relating to the December  1999
fossil  plant sale,  which is included  in Deferred  Debits and Other  Assets in
ComEd's  Consolidated  Balance  Sheets.  Interest  income  earned  on this  note
receivable  was $7 million and $14 million,  respectively,  for the three months
ended June 30, 2002 and 2001 and was $15 million and $37 million,  respectively,
for the six months ended June 30, 2002 and 2001. Interest receivable due on this
note was $15 million and $24 million at June 30,  2002 and  December  31,  2001,
respectively,  and is included in Current Assets on ComEd's Consolidated Balance
Sheets.

         At December 31, 2000,  ComEd had a $400 million  receivable  from PECO,
which was repaid in the second  quarter of 2001.  Interest  income earned on the
receivable from PECO for the three months and six months ended June 30, 2001 was
$2 million and $8 million, respectively.

         At June 30, 2002 and December  31, 2001,  ComEd had an $875 million and
$937 million non-interest bearing receivable, respectively, from Exelon relating
to the 2001 corporate restructuring. This receivable is reflected as a reduction
of Shareholders'  Equity in ComEd's  Consolidated Balance Sheets and is expected
to be settled over the years 2002 through 2008.


                                       39
<PAGE>

         ComEd had a  short-term  payable of $59  million  at June 30,  2002 and
December 31, 2001,  and a long-term  payable of $260 million and $291 million at
June 30, 2002 and December  31,  2001,  respectively,  to  Generation  primarily
representing   ComEd's  legal  requirements  to  remit  collections  of  nuclear
decommissioning  costs  from  customers  to  Generation.  These  liabilities  to
Generation were included in Current  Liabilities and Deferred  Credits and Other
Liabilities, respectively, on ComEd's Consolidated Balance Sheets.

         ComEd paid common  stock  dividends  to Exelon of $117  million and $85
million for the three months ended June 30, 2002 and 2001, respectively,  and of
$235  million and $148  million for the six months ended June 30, 2002 and 2001,
respectively.

         Effective  January 1, 2001,  ComEd entered into a PPA with  Generation.
Intercompany power purchases pursuant to the PPA for the three months ended June
30, 2002 and June 30, 2001 were $547 million and $585 million, respectively, and
for the six months  ended June 30, 2002 and 2001 were $1,079  million and $1,193
million,  respectively. At June 30, 2002 and December 31, 2001, there was a $212
million and $183 million  payable,  respectively,  to Generation  for the PPA as
well as other  services  provided  which is included in Current  Liabilities  on
ComEd's Consolidated Balance Sheets.

         ComEd provides electric,  transmission, and other ancillary services to
Generation  and  Enterprises.  These services were recorded in revenues and were
$12 million and $13 million for the three  months  ended June 30, 2002 and 2001,
respectively,  and $23 million and $55 million for the six months ended June 30,
2002 and 2001, respectively. At June 30, 2002 and December 31, 2001, there was a
$3 million and $26 million  receivable,  respectively,  for  services  provided,
which  is  included  in  Current  Liabilities  and  Current  Assets  on  ComEd's
Consolidated Balance Sheets, respectively.

         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 $28 million
and $33 million for the three months ended June 30, 2002 and 2001, respectively,
of which $26 million and $30  million,  respectively,  was included in Operating
and Maintenance from Affiliates on ComEd's Consolidated Statements of Income and
Comprehensive  Income  and  $2  million  and  $3  million,   respectively,   was
capitalized.  For the six months ended June 30, 2002 and 2001,  charges for such
services were $68 million and $63 million, of which $65 million and $58 million,
respectively,  was included in Operating  and  Maintenance  from  Affiliates  on
ComEd's  Consolidated  Statements  of Income  and  Comprehensive  Income  and $3
million  and $5 million,  respectively,  was  capitalized.  At June 30, 2002 and
December 31, 2001, there was a $6 million and $14 million payable, respectively,
to BSC for services provided which is included in Current Liabilities on ComEd's
Consolidated Balance Sheets.

         ComEd receives substation and transmission engineering and construction
services under contracts with InfraSource. Such services totaling $6 million and
$13 million for the three months ended June 30, 2002 and 2001, respectively, and
totaling  $13 million and $22 million for the six months ended June 30, 2002 and
2001, respectively, were capitalized.



                                       40
<PAGE>

         ComEd  has   contracted   with  Exelon   Services  to  provide   energy
conservation  services  to ComEd  customers.  The costs were $3  million  and $8
million for the three  months  ended June 30, 2002 and 2001,  respectively,  and
were $6 million and $12 million for the six months ended June 30, 2002 and 2001,
respectively,  and were included in Operating and Maintenance expense on ComEd's
Consolidated Statements of Income and Comprehensive Income.

         In order to benefit from economies of scale,  ComEd  processes  certain
invoice  payments on behalf of Generation and BSC.  Receivables at June 30, 2002
and December 31, 2001 from  Generation  for such service  totaled $8 million and
$21 million,  respectively, and were included in Current Liabilities and Current
Assets  on  ComEd's  Consolidated  Balance  Sheets,  respectively,  and from BSC
totaled $8 million and $19 million,  respectively,  and were included in Current
Assets on ComEd's Consolidated Balance Sheets.

PECO
         Effective  January 1, 2001,  Exelon  contributed to PECO a $2.0 billion
non-interest  bearing  receivable  from  Exelon  related  to the 2001  corporate
restructuring.  This  receivable  is reflected  as a reduction of  Shareholders'
Equity in PECO's Consolidated  Balance Sheets and is expected to be settled over
the years 2002 through  2010.  As of June 30, 2002 and  December  31, 2001,  the
balance of this  receivable  from  Exelon  was $1.8  billion  and $1.9  billion,
respectively.

         PECO paid  common  stock  dividends  to Exelon of $85  million  and $56
million for the three  months  ended June 30, 2002 and 2001,  respectively,  and
$170  million and $101  million for the six months ended June 30, 2002 and 2001,
respectively.

         Effective  January 1, 2001,  PECO entered  into a PPA with  Generation.
Intercompany  power  purchases  pursuant  to the PPA were $346  million and $264
million for the three  months  ended June 30, 2002 and 2001,  respectively,  and
$649  million and $508  million for the six months ended June 30, 2002 and 2001.
As of June 30, 2002 and December 31, 2001, PECO's payable related to the PPA was
$137 million and $90 million, respectively.

         PECO  receives  a  variety  of  corporate  support  services  from BSC,
including legal, human resources, financial and information technology services.
Such services,  provided at cost including applicable overhead,  were $7 million
and $15 million for the three months ended June 30, 2002 and 2001, respectively,
and $13 million and $17 million for the six months ended June 30, 2002 and 2001,
respectively. At June 30, 2002 and December 31, 2001, PECO had a $33 million and
$41 million payable, respectively, to BSC.

         PECO  receives  services  from  Enterprises  for  construction  and the
deployment of automated meter reading technology. Construction services totaling
$10 million and $14 million  were  capitalized  in the six months ended June 30,
2002  and  2001,  respectively.  Automated  meter  reading  technology  services
totaling $8 million and $4 million for the three  months ended June 30, 2002 and
2001,  respectively,  and totaling $16 million and $7 million for the six months
ended June 30,  2002 and 2001,  respectively,  were  included in  Operating  and
Maintenance  from  Affiliates  in the  Consolidated  Statements  of  Income  and
Comprehensive  Income.  At June 30,  2002 and  December  31,  2001,  PECO had $6
million and $8 million payable, respectively, to Enterprises.


                                       41
<PAGE>

         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 three and six months ended June 30, 2001 was $2 million and
$8 million, respectively.

         PECO  provides   energy  to  Generation  for   Generation's   own  use.
Intercompany  sales for the three and six months  ended  June 30,  2002 and 2001
were $2 million and $3 million, respectively, in each period.

Generation
         Generation had a short-term  receivable of $59 million at June 30, 2002
and  December  31,  2001,  and a long-term  receivable  of $260 million and $291
million  at June 30,  2002 and  December  31,  2001,  respectively,  from  ComEd
primarily  representing  ComEd's  legal  requirements  to remit  collections  of
nuclear  decommissioning  costs from customers to Generation  resulting from the
restructuring.  These receivables from ComEd were included in Current Assets and
Deferred Debits and Other Assets,  respectively,  on  Generation's  Consolidated
Balance Sheets.

         Effective January 1, 2001,  Generation entered into PPAs with ComEd and
PECO.  Intercompany  power sales pursuant to the PPAs for the three months ended
June 30, 2002 and 2001 were $893 million,  including  decommissioning revenue of
$3 million, and $849 million,  including  decommissioning revenue of $3 million,
respectively.  For the six months  ended June 30,  2002 and June 30,  2001 these
intercompany power sales were $1,728 million,  including decommissioning revenue
of $6  million,  and $1,701  million,  including  decommissioning  revenue of $6
million,  respectively. At June 30, 2002 and December 31, 2001, there was a $351
million and $273 million receivable, respectively, for the PPAs as well as other
services   provided  which  is  included  in  Current  Assets  on   Generation's
Consolidated Balance Sheets.

         Generation  sells  power to Exelon  Energy.  Power  sales for the three
months  ended  June  30,  2002  and  2001  were  $60  million  and $57  million,
respectively,  and for the six  months  ended  June 30,  2002 and 2001 were $117
million and $118 million,  respectively. At June 30, 2002 and December 31, 2001,
there was a $21 million and $15 million receivable, respectively.

         Generation  purchases power from AmerGen under PPAs as discussed in the
Exelon and Generation section of this note.  Additionally,  Generation purchases
power from PECO for  Generation's  own use,  buys back excess  power from Exelon
Energy and  purchases  transmission  and ancillary  services  from ComEd.  These
purchases,  including AmerGen, for the three months ended June 30, 2002 and 2001
were $75 million and $42  million,  respectively,  and for the six months  ended
June 30, 2002 and 2001 were $147 million and $60 million,  respectively. At June
30, 2002 and December 31, 2001, there was a payable for these power purchases of
$35 million and $26 million, respectively.

         Generation  receives a variety of corporate  support services from BSC,
including legal, human resources, financial and information technology services.
Such services,  provided at cost including  applicable  overhead,  for the three
months  ended June 30, 2002 and June 30, 2001 were $16 million and $22  million,
respectively,  and $30 million and $35 million for the six months


                                       42
<PAGE>

ended  June 30,  2002 and June 30,  2001,  respectively,  and were  included  in
Operating and Maintenance (O&M) expense on Generation's  Consolidated Statements
of Income and  Comprehensive  Income.  At June 30, 2002 and  December  31, 2001,
there was an $8 million and an $18  million  payable,  respectively,  to BSC for
services  provided  which is included  in Current  Liabilities  on  Generation's
Consolidated Balance Sheets.

         In order to facilitate  payment  processing,  ComEd  processes  certain
invoice payments on behalf of Generation and BSC.  Payables at June 30, 2002 and
December 31, 2001 to ComEd for such services totaled $8 million and $21 million,
respectively,   and  were  included  in  Current   Liabilities  on  Generation's
Consolidated Balance Sheets.

         In relation to the  acquisition  of two  generating  plants from TXU in
April of 2002, Generation had a $331 million payable to Exelon at June 30, 2002.
Interest expense related to this payable was $1 million for the three months and
six months ended June 30, 2002.

         In relation to the  December  18,  2001  acquisition  of 49.9% of Sithe
common stock,  Generation had a $700 million payable to Exelon, which was repaid
in the second quarter of 2001.  Interest expense related to this payable for the
three  and six  months  ended  June 30,  2001 was $8  million  and $23  million,
respectively.


13.  NEW ACCOUNTING PRONOUNCEMENTS (Exelon, ComEd, PECO and Generation)
         In  June  2001,  the  FASB  issued  SFAS  No.  143,  "Asset  Retirement
Obligations"  (SFAS No.  143).  In April  2002,  the FASB issued SFAS No. 145, "
Rescission of FASB Statements No. 4, 44 and 64,  Amendment of FASB Statement No.
13, and Technical  Corrections"  (SFAS No. 145).  In July 2002,  the FASB issued
SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities"
(SFAS No. 146).

         SFAS  No.  143  provides   accounting   requirements   for   retirement
obligations  associated with tangible long-lived assets. Exelon expects to adopt
SFAS  No.  143 on  January  1,  2003.  Retirement  obligations  associated  with
long-lived  assets included within the scope of SFAS No. 143 are those for which
there is a legal  obligation to settle under  existing or enacted law,  statute,
written  or oral  contract  or by  legal  construction  under  the  doctrine  of
promissory estoppel. Adoption of SFAS No. 143 will change the accounting for the
decommissioning  of Exelon's nuclear  generating plants as well as certain other
long-lived   assets.

         Currently,   Generation  records  the  obligation  for  decommissioning
ratably over the lives of the plants.  The January 1, 2003  adoption of SFAS No.
143 will require a cumulative effect  adjustment  effective the date of adoption
to adjust plant assets and decommissioning  liabilities to the values they would
have been had this  standard  been  employed  from the  in-service  dates of the
plants.

         As it relates to nuclear decommissioning, the effect of this cumulative
adjustment will be to change the  decommissioning  liability to reflect the fair
value of the decommissioning obligation at the balance sheet date. Additionally,
the standard will require the accrual of an asset related to the decommissioning
obligation,  which will be amortized over the remaining lives of the plants. The
net difference between the asset recognized and the


                                       43
<PAGE>

liability recorded upon adoption of SFAS No. 143 will be charged to earnings and
recognized as a cumulative  effect,  net of expected  regulatory  recovery.  The
decommissioning liability to be recorded represents an obligation for the future
decommissioning of the plants, and as a result accretion expense will be accrued
on this liability until such time as the obligation is satisfied.

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

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

         SFAS No. 146 requires that the liability for costs associated with exit
or disposal activities be recognized when incurred, rather than at the date of a
commitment  to an  exit  or  disposal  plan.  SFAS  No.  146  is  to be  applied
prospectively to exit or disposal activities  initiated after December 31, 2002.


14.  CHANGE IN ACCOUNTING ESTIMATE (Exelon, ComEd and Generation)
         Effective April 1, 2001,  Generation  changed its accounting  estimates
related to the depreciation and decommissioning of certain generating  stations.
The  estimated  service  lives  were  extended  by 20 years  for  three  nuclear
stations,  by periods of up to 20 years for certain  fossil  stations  and by 50
years for a pumped  storage  station.  Effective  July 1,  2001,  the  estimated
service lives were extended by 20 years for the remainder of Exelon's  operating
nuclear  stations.   These  changes  were  based  on  engineering  and  economic
feasibility  studies  performed by Generation  considering,  among other things,
future capital and maintenance  expenditures at these plants. As a result of the
change,  net income for the three  months  and six  months  ended June 30,  2002
increased  $25 million ($16  million,  net of income taxes) and $60 million ($36
million, net of income taxes), respectively.



                                       44
<PAGE>

         Effective April 1, 2002, ComEd changed its accounting  estimate related
to the  allowance  for  uncollectible  accounts.  This  change  was  based on an
independently  prepared  evaluation  of the risk  profile  of  ComEd's  customer
accounts  receivable.  As a result  of the new  evaluation,  the  allowance  for
uncollectible  accounts reserve was reduced by $11 million in the second quarter
of 2002.


15.  SUBSEQUENT EVENTS
         On July 1, 2002, Exelon Generation  notified Midwest  Generation of the
exercise of its call options under the existing Coal  Generation  Purchase Power
Agreement.  Exelon Generation exercised options on 1,265 MWs of capacity and did
not exercise options on 2,684 MWs of capacity.  In 2003,  Exelon Generation will
take 1,696 MWs of non-option capacity and 1,265 MWs of option capacity under the
existing contract.
























                                       45
<PAGE>


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

(Dollars in millions, unless otherwise noted)

EXELON CORPORATION

GENERAL

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

o        Energy Delivery,  consisting of the retail electricity distribution and
         transmission  businesses  of  Commonwealth  Edison  Company  (ComEd) in
         northern  Illinois  and PECO  Energy  Company  (PECO)  in  southeastern
         Pennsylvania and the natural gas  distribution  business of PECO in the
         Pennsylvania counties surrounding the City of Philadelphia.
o        Generation, consisting of Exelon Generation Company, LLC's (Generation)
         electric generating facilities,  energy marketing operations and equity
         interests in Sithe Energies,  Inc.  (Sithe) and AmerGen Energy Company,
         LLC (AmerGen).
o        Enterprises,   consisting   of  Exelon   Enterprises   Company,   LLC's
         (Enterprises)    competitive   retail   energy   sales,    energy   and
         infrastructure services,  communications and other investments weighted
         towards  the  communications,   energy  services  and  retail  services
         industries.

         See Note 6 of the Combined Notes to Consolidated  Financial  Statements
for further segment information.

         Generation  early adopted the  provision of Emerging  Issues Task Force
(EITF) Issue 02-3 "Accounting for Contracts  Involved in Energy Trading and Risk
Management  Activities" (EITF 02-3) issued by the Financial Accounting Standards
Board (FASB) EITF in June 2002 that  requires  revenues and energy costs related
to  energy  trading  contracts  to be  presented  on a net  basis in the  income
statement. For comparative purposes, energy costs related to energy trading have
been  reclassified  in prior periods to revenue to conform with the net basis of
presentation required by EITF 02-3.

RESULTS OF OPERATIONS

Three Months Ended June 30, 2002 Compared To Three Months Ended June 30, 2001

Net Income and Earnings Per Share

         Net income  increased $170 million,  or 54%, for the three months ended
June 30, 2002.  Diluted  earnings per common share increased $0.53 per share, or
55%. The increase in net income  reflects the gain on  Enterprises'  sale of its
49% interest in AT&T Wireless PCS of Philadelphia,  LLC (AT&T Wireless),  higher
earnings in Energy  Delivery,  primarily  related to an increase in retail sales
due to warmer summer weather,  the  discontinuation of goodwill  amortization at
Energy  Delivery and  Enterprises  required by the adoption of FASB Statement of
Financial  Accounting  Standards (SFAS) No. 142,  "Goodwill and Other Intangible
Assets" (SFAS No. 142) and certain other factors affecting net income, which are
discussed in the remainder of the results of operations section.


                                       46
<PAGE>

         Exelon  evaluates its  performance on a business  segments  basis.  The
analysis below presents the operating  results for each of its business segments
for the three months ended June 30, 2002 compared to the three months ended June
30, 2001.

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

Net Income by Business Segment

<TABLE>
<CAPTION>
                                                     Three Months Ended June 30,
                                                     ---------------------------
                                                          2002              2001         Variance          % Change
---------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>               <C>              <C>                <C>
Energy Delivery                                       $    322          $    264         $     58           21.9%
Generation                                                  84                71               13           18.3%
Enterprises                                                 83                (5)              88            n.m.
Corporate                                                   (4)              (15)              11          (73.3%)
-----------------------------------------------------------------------------------------------------
Total                                                 $    485          $    315         $    170           53.9%
-----------------------------------------------------------------------------------------------------
n.m. - not meaningful
</TABLE>

Results of Operations - Energy Delivery Business Segment

<TABLE>
<CAPTION>
                                                              Three Months Ended June 30,
                                                              ---------------------------
                                                                       2002         2001     Variance      % Change
---------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>            <C>           <C>           <C>
OPERATING REVENUES                                                $   2,476      $ 2,436       $   40        1.6%

OPERATING EXPENSES
     Purchased Power                                                    958          901           57        6.3%
     Fuel                                                                53           79          (26)     (32.9%)
     Operating and Maintenance                                          351          374          (23)      (6.1%)
     Depreciation and Amortization                                      242          267          (25)      (9.4%)
     Taxes Other Than Income                                            136          110           26       23.6%
------------------------------------------------------------------------------------------------------
         Total Operating Expense                                      1,740        1,731            9        0.1%
------------------------------------------------------------------------------------------------------

OPERATING INCOME                                                        736          705           31        4.4%
------------------------------------------------------------------------------------------------------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                  (218)        (260)          42      (16.1%)
     Distributions on Preferred Securities of Subsidiaries              (11)         (12)           1       (8.3%)
     Other, net                                                          15           24           (9)     (37.5%)
------------------------------------------------------------------------------------------------------
         Total Other Income and Deductions                             (214)        (248)          34      (13.7%)
------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES                                              522          457           65       14.2%

INCOME TAXES                                                            200          193            7        3.6%
------------------------------------------------------------------------------------------------------
NET INCOME                                                        $     322      $   264       $   58       22.0%
------------------------------------------------------------------------------------------------------
</TABLE>

         Energy  Delivery's  gross margin  (revenue  net of purchased  power and
fuel)  increased  $9 million,  $25 million of which was  attributable  to warmer
summer  weather in the second  quarter



                                       47
<PAGE>

of 2002  as  compared  to the  second  quarter  of  2001  in the  ComEd  service
territory,  which  increased  retail  electric  volume.  The retail increase was
offset by lower wholesale sales volume.

         Lower  operating and  maintenance  expense  reflects a reduction in bad
debt  expense  due to a change in  estimate  and lower  system  repair and storm
restoration  costs,  partially offset by costs associated with the deployment of
automated meter reading technology and increased corporate allocations.

         Energy  Delivery's  depreciation and amortization  expense decreased by
$25  million  reflecting  $33  million  for  the   discontinuation  of  goodwill
amortization  due to the  adoption  of  SFAS  No.  142 as of  January  1,  2002,
partially offset by $9 million of higher regulatory asset amortization.

         As  required  by  the  Illinois   Restructuring   Act,   ComEd  made  a
notification filing with the Illinois Commerce Commission (ICC) to reflect lower
depreciation  rates  effective July 1, 2002. No ICC approval is required for the
new rates to take effect.  The  anticipated  annual  reduction  in  depreciation
expense is estimated to be approximately $100 million.

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

         Energy  Delivery's  effective  income  tax rate was 38.3% for the three
months  ended June 30,  2002,  compared to 42.2% for the three months ended June
30, 2001. The decrease in the effective tax rate was primarily  attributable  to
the  discontinuation  of goodwill  amortization as of January 1, 2002, which was
not deductible for income tax purposes, and a reduction in state income taxes.
















                                       48
<PAGE>

Energy Delivery Operating Statistics and Revenue Detail

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

<TABLE>
<CAPTION>
                                                              For the three months ended June 30,
                                                              -----------------------------------
Retail Deliveries - (in gigawatthours (GWh))                                2002             2001          % Change
---------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>              <C>             <C>
Bundled Deliveries (1)
Residential                                                                7,977            6,905          15.5%
Small Commercial & Industrial                                              7,481            7,115           5.1%
Large Commercial & Industrial                                              6,049            5,920           2.2%
Public Authorities & Electric Railroads                                    1,885            2,072          (9.0%)
-----------------------------------------------------------------------------------------------------
                                                                          23,392           22,012           6.3%
-----------------------------------------------------------------------------------------------------
Unbundled Deliveries (2)
Alternative Energy Suppliers
---------------------------
Residential                                                                  557              848         (34.3%)
Small Commercial & Industrial                                              1,179            1,169           0.9%
Large Commercial & Industrial                                              1,635            1,983         (17.5%)
Public Authorities & Electric Railroads                                      181               95          90.5%
-----------------------------------------------------------------------------------------------------
                                                                           3,552            4,095         (13.3%)
-----------------------------------------------------------------------------------------------------
PPO (ComEd Only)
---------------------------
Small Commercial & Industrial                                                839              798           5.1%
Large Commercial & Industrial                                              1,392            1,518          (8.3%)
Public Authorities & Electric Railroads                                      274              326         (16.0%)
-----------------------------------------------------------------------------------------------------
                                                                           2,505            2,642          (5.2%)
-----------------------------------------------------------------------------------------------------
Total Unbundled Deliveries                                                 6,057            6,737         (10.1%)
-----------------------------------------------------------------------------------------------------
Total Retail Deliveries                                                   29,449           28,749           2.4%
-----------------------------------------------------------------------------------------------------
<FN>
(1)  Bundled service  reflects  deliveries to customers  taking electric service
     under  tariffed  rates,  which  include the cost of energy and the delivery
     cost  of the  transmission  and  the  distribution  of the  energy.  PECO's
     tariffed rates also include a Competitive Transition Charge (CTC).
(2)  Unbundled   service  reflects   customers   electing  to  receive  electric
     generation  service from an  alternative  energy  supplier or ComEd's Power
     Purchase Option (PPO).
</FN>
</TABLE>










                                       49
<PAGE>

<TABLE>
<CAPTION>
                                                     For the three months ended June 30,
                                                     -----------------------------------
Electric Revenue                                                       2002         2001     Variance      % Change
---------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>           <C>          <C>           <C>
Bundled Revenues (1)
Residential                                                       $     801     $    724     $     77      10.6%
Small Commercial & Industrial                                           669          624           45       7.2%
Large Commercial & Industrial                                           404          367           37      10.1%
Public Authorities & Electric Railroads                                 121          126           (5)     (4.0%)
-------------------------------------------------------------------------------------------------------
                                                                      1,995        1,841          154       8.4%
-------------------------------------------------------------------------------------------------------
Unbundled Revenues (2)
Alternative Energy Suppliers
---------------------------
Residential                                                              42           67          (25)    (37.3%)
Small Commercial & Industrial                                            30           41          (11)    (26.8%)
Large Commercial & Industrial                                            33           40           (7)    (17.5%)
Public Authorities & Electric Railroads                                   5            1            4       n.m.
-------------------------------------------------------------------------------------------------------
                                                                        110          149          (39)    (26.2%)
-------------------------------------------------------------------------------------------------------
PPO (ComEd Only)
---------------------------
Small Commercial & Industrial                                            55           53            2       3.8%
Large Commercial & Industrial                                            76           86          (10)    (11.6%)
Public Authorities & Electric Railroads                                  17           19           (2)    (10.5%)
-------------------------------------------------------------------------------------------------------
                                                                        148          158          (10)     (6.3%)
-------------------------------------------------------------------------------------------------------
    Total Unbundled Revenues                                            258          307          (49)    (16.0%)
-------------------------------------------------------------------------------------------------------
Total Electric Retail Revenues                                        2,253        2,148          105       4.9%
-------------------------------------------------------------------------------------------------------
    Wholesale and Miscellaneous Revenue (3)                             139          176          (37)    (21.0%)
-------------------------------------------------------------------------------------------------------
Total Electric Revenue                                            $   2,392     $  2,324     $     68       2.9%
-------------------------------------------------------------------------------------------------------
<FN>
(1)  Bundled service  reflects  deliveries to customers  taking electric service
     under  tariffed  rates,  which  include the cost of energy and the delivery
     cost  of the  transmission  and  the  distribution  of the  energy.  PECO's
     tariffed rates also include a CTC charge.
(2)  Unbundled   service  reflects   customers   electing  to  receive  electric
     generation  service  from an  alternative  energy  supplier or ComEd's PPO.
     Revenue from customers  choosing an alternative  energy supplier includes a
     distribution charge and a CTC. Revenues from customers choosing ComEd's PPO
     includes an energy charge at market rates,  transmission,  and distribution
     charges and a CTC.  Transmission  charges received from alternative  energy
     suppliers are included in wholesale and miscellaneous revenue.
(3)  Wholesale and  miscellaneous  revenues include sales to alternative  energy
     suppliers,   transmission  revenue,   sales  to  municipalities  and  other
     wholesale energy sales.
</FN>
</TABLE>

         The changes in electric retail revenues for the three months ended June
30,  2002,  as  compared  to the same  period  in 2001 are  attributable  to the
following:

<TABLE>
<CAPTION>
                                                                                                           Variance
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                                       <C>
Rate Changes                                                                                              $     (14)
Customer Choice                                                                                                  46
Weather                                                                                                          41
Other Effects                                                                                                    32
---------------------------------------------------------------------------------------------------------------------
Electric Retail Revenue                                                                                   $     105
---------------------------------------------------------------------------------------------------------------------
</TABLE>

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


                                       50
<PAGE>

     rate  will   increase   PECO's  annual   revenue  and  tax   obligation  by
     approximately $50 million in 2002.
o    Customer  Choice.  All ComEd and PECO customers have the choice to purchase
     energy  from other  suppliers.  This choice  generally  does not impact kWh
     deliveries,  but affects revenue collected from customers related to energy
     supplied  by  Energy  Delivery.  On  May 1,  2002,  all  ComEd  residential
     customers were eligible to choose their supplier of  electricity,  however;
     as of June 30, 2002, no alternative  electric  supplier has sought approval
     from the ICC and no  electric  utilities  have  chosen  to enter  the ComEd
     residential market for the supply of electricity.
              The favorable  customer choice effect is attributable to increased
     revenues  of $85  million  from  customers  in  Pennsylvania  selecting  or
     returning to PECO as their electric generation  supplier,  partially offset
     by a decrease  in  revenues  of $39  million  from  customers  in  Illinois
     electing to purchase energy from an Alternative  Retail  Electric  Supplier
     (ARES) or the PPO, under which customers can purchase power from ComEd at a
     market-based rate. ComEd and PECO continue to collect delivery charges from
     these customers.
o    Weather. The demand for electricity and gas services is impacted by weather
     conditions.  Very warm  weather in summer  months and very cold  weather in
     other  months is referred to as  "favorable  weather  conditions",  because
     these weather  conditions result in increased sales of electricity and gas.
     Conversely, mild weather reduces demand.
              The weather  impact was favorable  compared to the prior year as a
     result of warmer summer weather in the ComEd service  territory  during the
     second quarter of 2002 as compared to the same period in 2001.
o    Other Effects.  Other items increasing revenues were primarily related to a
     $39 million favorable volume variance other than weather, due to the impact
     of a strong housing  construction market in Chicago partially offset by the
     impact of a slower economy on large commercial and industrial customers.

         The reduction in wholesale  revenue for the three months ended June 30,
2002 as compared to the three months ended June 30, 2001  reflects a $10 million
decrease due to the expiration of wholesale contracts that were offered by ComEd
from June 2000 to May 2001 to support the open access  program in Illinois and a
2001 $15 million  reversal of reserve for revenue  refunds related to certain of
ComEd's municipal customers as a result of a favorable FERC ruling.

         On July 19,  2002, ComEd  filed a request  with the ICC to  revise  the
Provider  of Last  Resort  (POLR)  obligation  in  Illinois.  ComEd  is  seeking
permission  from the ICC to limit the  availability  by June 2006 of Rate 6L for
370 of ComEd's  largest  energy  customers  with  demands of at least three MWs,
totaling  approximately  2,500 MWs.  Rate 6L is a bundled  fixed rate offered to
large  customers  including heavy  industrial  plants,  large office  buildings,
government facilities and a variety of other businesses. The ICC has 120 days to
act on the filing or it will be deemed approved.






                                       51
<PAGE>

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

<TABLE>
<CAPTION>
                                                               For the three months ended June 30,
                                                               -------------------------------------
                                                                                   2002         2001       Variance
--------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>          <C>               <C>
Deliveries in million cubic feet (mmcf)                                          14,286       13,781            505
Revenue                                                                             $84        $ 112         $ (28)
--------------------------------------------------------------------------------------------------------------------
</TABLE>


         The  changes in gas revenue for the  quarter  ended June 30,  2002,  as
compared to the same 2001 period, are as follows:

<TABLE>
<CAPTION>
(in millions)                                                                                              Variance
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                                       <C>
Rate Changes                                                                                              $     (28)
Weather                                                                                                          --
Volume                                                                                                           (1)
Other                                                                                                             1
---------------------------------------------------------------------------------------------------------------------
Gas Revenue                                                                                               $     (28)
---------------------------------------------------------------------------------------------------------------------
</TABLE>

o    Rate  Changes.  The  unfavorable  variance in rates is  attributable  to an
     adjustment of the purchased  gas cost recovery by the  Pennsylvania  Public
     Utilities Commission (PUC) effective in December 2001. The average rate per
     million  cubic feet for all  customers  for the quarter ended June 30, 2002
     was 28% lower than the same 2001  period.  PECO's gas rates are  subject to
     periodic  adjustments  by  the  PUC  designed  to  recover  or  refund  the
     difference  between actual cost of purchased gas and the amount included in
     base rates and to recover or refund increases or decreases in certain state
     taxes not recovered in base rates.
o    Weather.  The weather  impact was neutral during the quarter ended June 30,
     2002  as  compared  to the  same  2001  period.  Heating  degree-days  were
     consistent  in the quarter  ended June 30,  2002  compared to the same 2001
     period.
o    Volume.  Exclusive of weather  impacts,  delivery volume was consistent for
     the quarter ended June 30, 2002 compared to the same 2001 period.













                                       52
<PAGE>

Results of Operations - Generation Business Segment

<TABLE>
<CAPTION>
                                                              Three Months Ended June 30,
                                                              ---------------------------
                                                                       2002         2001     Variance      % Change
---------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>             <C>          <C>          <C>
OPERATING REVENUES                                                $   1,559       $1,583       $  (24)      (1.5%)

OPERATING EXPENSES
     Purchased Power                                                    705          721          (16)      (2.2%)
     Fuel                                                               224          230           (6)      (2.6%)
     Operating and Maintenance                                          411          405            6        1.5%
     Depreciation and Amortization                                       65           75          (10)     (13.3%)
     Taxes Other Than Income                                             41           39            2        5.1%
-------------------------------------------------------------------------------------------------------
         Total Operating Expense                                      1,446        1,470          (24)      (1.6%)
-------------------------------------------------------------------------------------------------------

OPERATING INCOME                                                        113          113           --         --
-------------------------------------------------------------------------------------------------------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                   (11)         (26)          15      (57.6%)
     Equity in Earnings (Losses) of Unconsolidated Affiliates, net        9           13           (4)     (30.8%)
     Other, net                                                          24           14           10       71.4%
-------------------------------------------------------------------------------------------------------
         Total Other Income and Deductions                               22            1           21        n.m.
-------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES                                              135          114           21       18.4%

INCOME TAXES                                                             51           43            8       18.6%
-------------------------------------------------------------------------------------------------------
NET INCOME                                                        $      84       $   71           13       18.3%
-------------------------------------------------------------------------------------------------------
</TABLE>

         Net income for the three  months  ended  June 30,  2002 was  positively
impacted by increased revenue from retail affiliates, increased revenue from the
acquisition of two generating plants in April 2002 and reduced  depreciation and
interest  expense,  partially  offset by depressed  wholesale  market prices for
energy.  Operating  revenues,  net of fuel and purchased power,  decreased by $2
million.  Lower  wholesale  market  prices  for  energy  reduced  margins by $46
million, which were partially offset by increased revenue from affiliates of $43
million,  revenue from the two  generating  plants  acquired in April 2002,  and
lower fuel costs.  Operating and maintenance expense increased by $6 million due
to additional  employee  benefit costs of $9 million and operating costs for two
generating  plants  acquired  in  April  2002 of $3  million.  These  additional
expenses were  partially  offset by $7 million less in nuclear  outage costs and
other operating cost reductions  including savings from Exelon's Cost Management
Initiative.  The  decline in  depreciation  expense  reflects  extension  of the
estimated service lives of certain  generating  stations in the third quarter of
2001,  partially  offset by additional  depreciation  expense on plant placed in
service after June 30, 2001,  including the acquisition of two generating plants
in April 2002. Lower interest expense is due to capitalized interest and a lower
interest rate on the spent nuclear fuel  obligation.  Additionally,  revenue for
the three months ended June 30, 2002  includes a net trading  portfolio  loss of
$16 million  compared to a net $6 million  loss for the three  months ended June
30, 2001.

Generation Operating Statistics:






                                       53
<PAGE>

         For the three months ended June 30, 2002 and 2001,  Generation's  sales
and the  supply  of these  sales  exclusive  of the  trading  portfolio  were as
follows:

<TABLE>
<CAPTION>
                                                                                        Three Months Ended June 30,
                                                                                        ----------------------------
Sales (in GWhs)                                                                              2002              2001
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                        <C>               <C>
Energy Delivery                                                                            28,294            28,105
Exelon Energy                                                                               1,355             1,415
Market Sales                                                                               20,589            18,548
---------------------------------------------------------------------------------------------------------------------
Total Sales                                                                                50,238            48,068
---------------------------------------------------------------------------------------------------------------------

                                                                                        Three Months Ended June 30,
                                                                                        ----------------------------
Supply of Sales (in GWhs)                                                                    2002              2001
---------------------------------------------------------------------------------------------------------------------
Nuclear Generation                                                                         28,353            28,443
Purchases - non-trading portfolio                                                          18,220            16,392
Fossil and Hydro Generation                                                                 3,665             3,233
---------------------------------------------------------------------------------------------------------------------
Total Supply                                                                               50,238            48,068
---------------------------------------------------------------------------------------------------------------------
</TABLE>

         Trading  volume was 8,566 GWhs and 454 GWhs for the three  months ended
June 30, 2002 and 2001, respectively.

         Generation's  average  margin data for the three  months ended June 30,
2002 and 2001 were as follows:
<TABLE>
<CAPTION>
                                                                                        Three Months Ended June 30,
                                                                                        ----------------------------
($/MWh)                                                                                      2002              2001
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>             <C>
Average Realized Revenue
     Energy Delivery                                                                 $     31.45     $       30.09
     Exelon Energy                                                                         44.73             40.11
     Market Sales                                                                          30.69             37.69
     Total Sales - excluding the trading portfolio                                         31.50             33.32

Average Supply Cost - excluding the trading portfolio                                $     18.79     $       20.05

Average Margin - excluding the trading portfolio                                     $     12.71     $       13.27
---------------------------------------------------------------------------------------------------------------------
</TABLE>

         Generation's nuclear fleet, including AmerGen,  performed at a capacity
factor of 92.1% for the three months  ended June 30, 2002  compared to 93.6% the
same period in 2001.  The lower  capacity  factor is primarily due to 72 planned
outage days in the three  months  ended June 30, 2002 versus 31 days in the same
period in 2001, including AmerGen.  Generation's nuclear units' production costs
including  AmerGen for the three  months ended June 30, 2002 were $12.54 per MWh
compared  to  $13.02  per MWh for the same  period  in 2001.  The  reduced  unit
production costs reflect additional generation due to power uprates,  which more
than  offset  the  lower  capacity  factor,  and lower  production  costs due to
headcount reductions and Exelon's Cost Management Initiative in the three months
ended June 30, 2002 as compared to the same period in 2001. Generation's average
purchased power costs for wholesale operations were $39.96 per MWh for the three
months  ended June 30,  2002,  compared to $45.27 per MWh for the same



                                       54
<PAGE>

period in 2001.  The  decrease in  purchased  power costs was  primarily  due to
depressed wholesale power market prices.

Results of Operations - Enterprises Business Segment

<TABLE>
<CAPTION>
                                                              Three Months Ended June 30,
                                                              ----------------------------
                                                                       2002         2001     Variance      % Change
---------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>          <C>          <C>         <C>
OPERATING REVENUES                                                   $  476       $  546       $  (70)     (12.8%)

OPERATING EXPENSES
     Purchased Power                                                     56           61           (5)      (8.2%)
     Fuel                                                                82          100          (18)     (18.0%)
     Operating and Maintenance                                          334          382          (48)     (12.5%)
     Depreciation and Amortization                                       17           16            1        6.2%
     Taxes Other Than Income                                              2            3           (1)     (33.3%)
-------------------------------------------------------------------------------------------------------
         Total Operating Expense                                        491          562          (71)     (12.6%)
-------------------------------------------------------------------------------------------------------

OPERATING INCOME                                                        (15)         (16)           1       (6.2%)
-------------------------------------------------------------------------------------------------------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                    (3)          (9)           6      (66.6%)
     Equity in Earnings (Losses) of Unconsolidated Affiliates, net        2           (6)           8     (133.3%)
     Other, net                                                         158           21          137        n.m.
-------------------------------------------------------------------------------------------------------
         Total Other Income and Deductions                              157            6          151        n.m.
-------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES                                              142          (10)         152        n.m.

INCOME TAXES                                                             59           (5)          64        n.m.
-------------------------------------------------------------------------------------------------------

NET INCOME                                                           $   83       $   (5)      $   88        n.m.
-------------------------------------------------------------------------------------------------------
</TABLE>

         Enterprises'  net income  increased  $88 million  for the three  months
ended June 30, 2002  compared to the same  period in 2001.  The  increase in net
income is primarily  attributable  to the sale of  Enterprises'  49% interest in
AT&T Wireless PCS of  Philadelphia,  LLC (AT&T Wireless) to a subsidiary of AT&T
Wireless Services for $285 million in cash that resulted in an after-tax gain of
$116 million and higher  equity in earnings of  unconsolidated  affiliates of $8
million primarily as a result of the  discontinuance of losses on AT&T Wireless.
These increases were partially  offset by $36 million of investment  write-downs
and $4 million of net asset write-downs.

         Operating revenues decreased $70 million,  or 13%, for the three months
ended June 30,  2002,  compared  to the same  period in 2001.  The  decrease  in
operating  revenues was attributable to lower gas sales of $12 million primarily
resulting from lower gas prices, reduced retail energy sales of $20 million from
Exelon Energy, Inc. (Exelon Energy) due to exiting the retail energy business in
the Pennsylvania,  New Jersey and Maryland area (PJM market),  lower revenues of
$43 million from Exelon Services,  Inc. (Exelon Services) from reduced volume of
construction   project   revenues  and  lower   revenues  of  $19  million  from
InfraSource,   Inc.   (InfraSource)   from   the   continued   decline   in  the
telecommunications  industry and reduced volume of construction services in that
industry.  These decreases were partially offset by higher electric  revenues of
$22 million  primarily  resulting  from higher  electric  prices in Illinois for
Exelon Energy.


                                       55
<PAGE>

         Enterprises'  operating and other expenses,  net decreased $222 million
for the three  months  ended June 30, 2002  compared to the same period in 2001.
The  decrease  is  primarily  attributable  to a  pre-tax  gain of $198  million
recorded on the AT&T  Wireless  sale,  lower gas costs of $18 million  primarily
resulting from lower gas prices, lower power costs of $20 million resulting from
reduced  operations of retail  energy sales from Exelon  Energy  exiting the PJM
market,  reduced costs relating to lower  construction  project volume at Exelon
Services of $33 million,  reduced costs relating to lower volume of construction
services in the  telecommunications  industry  at  InfraSource  of $18  million,
higher equity in earnings of  unconsolidated  affiliates of $8 million primarily
as a result of the  discontinuance of losses on AT&T Wireless as a result of the
AT&T Wireless sale and lower  interest  expense of $6 million.  These  decreases
were partially  offset by higher  electric  purchased power costs in Illinois of
$21 million for Exelon Energy,  write-downs of communications investments of $27
million,  write-downs  of  energy  related  investments  of  $9  million,  a net
write-down of other assets of $4 million in 2002 and an $18 million gain in 2001
from the sale of a communications investment.

         The effective income tax rate was 41.5% for the three months ended June
30,  2002,  compared  to 50.0% for the three  months  ended June 30,  2001.  The
decrease  in  the  effective  tax  rate  was  primarily   attributable   to  the
discontinuation  of goodwill  amortization  as of January 1, 2002,  that was not
deductible  for income tax purposes and a true-up of income taxes  relating to a
merger between two Enterprises businesses in April 2001, partially offset by the
effect of the AT&T Wireless sale.


Six Months Ended June 30, 2002 Compared To Six Months Ended June 30, 2001

Net Income and Earnings Per Share
         Exelon's  income before the cumulative  effect of changes in accounting
principles increased $20 million, or 3%, for the six months ended June 30, 2002.
Diluted  earnings per common share on the same basis  increased $0.06 per share,
or 3%.  The  increase  in income  before  the  cumulative  effect of  changes in
accounting principles reflects higher earnings due to the sale of AT&T Wireless,
warmer summer weather, and the discontinuation of goodwill amortization required
by the adoption of SFAS No. 142,  partially offset by a decrease in retail sales
due to mild winter weather,  lower wholesale  energy prices,  increased  nuclear
refueling  outage  costs,  employee  severance  costs and certain  other factors
affecting  net income,  which are  discussed in the  remainder of the results of
operations  section.  Net income  included net pretax charges of $10 million for
severance costs, primarily related to executive severance.

         Net income  decreased  $222  million,  or 31%, for the six months ended
June 30, 2002.  Diluted  earnings per common share decreased $0.69 per share, or
31%. Net income for the six months  ended June 30, 2002  includes a $230 million
charge for the cumulative effect of changes in accounting principles, reflecting
goodwill  impairment  upon the  adoption of SFAS No. 142. Net income for the six
months  ended June 30, 2001  includes  $12 million of income for the  cumulative
effect of adopting SFAS No. 133,  "Accounting  for  Derivative  Instruments  and
Hedging  Activities"  (SFAS  No.  133).  See  Note 2 of the  Combined  Notes  to
Consolidated Financial Statements for further information regarding the adoption
of SFAS No. 133.


                                       56
<PAGE>

         The analysis below presents the operating  results for each of Exelon's
business  segments  for the six months  ended June 30, 2002  compared to the six
months ended June 30, 2001.

Income Before Cumulative Effect of Changes in Accounting Principles by Business
Segment

<TABLE>
<CAPTION>
                                                       Six Months Ended June 30,
                                                     ----------------------------
                                                          2002              2001         Variance          % Change
---------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>               <C>              <C>                <C>
Energy Delivery                                       $    538          $    530         $      8           1.5%
Generation                                                 150               229              (79)        (34.4%)
Enterprises                                                 55               (30)              85           n.m.
Corporate                                                  (21)              (27)               6         (22.2%)
---------------------------------------------------------------------------------------------------
Total                                                 $    722          $    702         $     20           2.8%
---------------------------------------------------------------------------------------------------
</TABLE>


Results of Operations - Energy Delivery Business Segment
<TABLE>
<CAPTION>

                                                                Six Months Ended June 30,
                                                               ----------------------------
                                                                       2002         2001     Variance      % Change
---------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>             <C>          <C>          <C>
OPERATING REVENUES                                                $   4,811       $4,933       $ (122)      (2.4%)

OPERATING EXPENSES
     Purchased Power                                                  1,846        1,793           53        2.9%
     Fuel                                                               188          284          (96)     (33.8%)
     Operating and Maintenance                                          724          724           --         --
     Depreciation and Amortization                                      489          535          (46)      (8.5%)
     Taxes Other Than Income                                            268          225           43       19.1%
--------------------------------------------------------------------------------------------------------
         Total Operating Expense                                      3,515        3,561          (46)      (1.2%)
--------------------------------------------------------------------------------------------------------

OPERATING INCOME                                                      1,296        1,372          (76)      (5.5%)
--------------------------------------------------------------------------------------------------------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                  (439)        (506)          67      (13.2%)
     Distributions on Preferred Securities of Subsidiaries              (23)         (23)          --         --
     Other, net                                                          30           71          (41)     (57.7%)
--------------------------------------------------------------------------------------------------------
         Total Other Income and Deductions                             (432)        (458)          26       (5.6%)
--------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES                                              864          914          (50)      (5.5%)

INCOME TAXES                                                            326          384          (58)     (15.1%)
--------------------------------------------------------------------------------------------------------

NET INCOME                                                        $     538       $  530       $    8        1.5%
--------------------------------------------------------------------------------------------------------
</TABLE>

         Energy  Delivery's  gross margin  (revenue  net of purchased  power and
fuel) declined $79 million,  $26 million of which was attributable  primarily to
warmer winter  weather,  partially  offset by warmer summer weather in the ComEd
service  territory  during the  second  quarter of 2002,  which  reduced  retail
electric and gas volumes, and a reduction in wholesale sales volumes.

         Flat operating and maintenance  expense reflects  increased pension and
postretirement  benefit costs and increased corporate  allocations,  including a
portion of executive  severance  charges,  and an increase in the  provision for
injuries and damages offset by decreased system



                                       57

<PAGE>

repair and storm damage costs, a decrease in the provision for bad debt expense,
and a decrease in the provision for obsolete inventory.

         Energy  Delivery's  depreciation and amortization  expense decreased by
$46  million  reflecting  $64  million  for  the   discontinuation  of  goodwill
amortization  due to the  adoption  of  SFAS  No.  142 as of  January  1,  2002,
partially offset by $17 million of higher regulatory asset amortization.

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

         Energy  Delivery's  effective  income  tax rate was  37.7%  for the six
months ended June 30, 2002,  compared to 42.0% for the six months ended June 30,
2001. The decrease in the effective tax rate was primarily  attributable  to the
discontinuation  of goodwill  amortization as of January 1, 2002,  which was not
deductible for income tax purposes, and a reduction in state income taxes.
























                                       58
<PAGE>

Energy Delivery Operating Statistics and Revenue Detail

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

<TABLE>
<CAPTION>
                                                                For the six months ended June 30,
                                                                ---------------------------------
Retail Deliveries - (in GWhs)                                               2002             2001        % Change
-------------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>              <C>             <C>
Bundled Deliveries (1)
Residential                                                               16,441           15,670          4.9%
Small Commercial & Industrial                                             14,687           13,991          5.0%
Large Commercial & Industrial                                             11,357           11,341          0.1%
Public Authorities & Electric Railroads                                    3,879            4,275         (9.3%)
----------------------------------------------------------------------------------------------------
                                                                          46,364           45,277          2.4%
----------------------------------------------------------------------------------------------------
Unbundled Deliveries (2)
Alternative Energy Suppliers
----------------------------
Residential                                                                1,348            1,375         (2.0%)
Small Commercial & Industrial                                              2,280            2,523         (9.6%)
Large Commercial & Industrial                                              3,124            4,335        (27.9%)
Public Authorities & Electric Railroads                                      320              143        123.8%
----------------------------------------------------------------------------------------------------
                                                                           7,072            8,376        (15.6%)
----------------------------------------------------------------------------------------------------
PPO (ComEd Only)
----------------
Small Commercial & Industrial                                              1,602            1,622         (1.2%)
Large Commercial & Industrial                                              2,703            2,876         (6.0%)
Public Authorities & Electric Railroads                                      516              584        (11.6%)
----------------------------------------------------------------------------------------------------
                                                                           4,821            5,082         (5.1%)
----------------------------------------------------------------------------------------------------
Total Unbundled Deliveries                                                11,893           13,458        (11.6%)
----------------------------------------------------------------------------------------------------
Total Retail Deliveries                                                   58,257           58,735         (0.8%)
----------------------------------------------------------------------------------------------------
<FN>
(1)  Bundled service  reflects  deliveries to customers  taking electric service
     under  tariffed  rates,  which  include the cost of energy and the delivery
     cost  of the  transmission  and  the  distribution  of the  energy.  PECO's
     tariffed rates also include a CTC charge.
(2)  Unbundled   service  reflects   customers   electing  to  receive  electric
     generation service from an alternative energy supplier or ComEd's PPO.
</FN>
</TABLE>















                                       59
<PAGE>

<TABLE>
<CAPTION>
                                                       For the six months ended June 30,
                                                       ---------------------------------
Electric Revenue                                                       2002         2001     Variance      % Change
---------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>           <C>          <C>            <C>
Bundled Revenues (1)
Residential                                                       $   1,563     $  1,538     $     25       1.6%
Small Commercial & Industrial                                         1,249        1,144          105       9.2%
Large Commercial & Industrial                                           750          687           63       9.2%
Public Authorities & Electric Railroads                                 230          250          (20)     (8.0%)
-------------------------------------------------------------------------------------------------------
                                                                      3,792        3,619          173       4.8%
-------------------------------------------------------------------------------------------------------
Unbundled Revenues (2)
Alternative Energy Suppliers
----------------------------
Residential                                                              96          103           (7)     (6.8%)
Small Commercial & Industrial                                            48           94          (46)    (48.9%)
Large Commercial & Industrial                                            45          102          (57)    (55.9%)
Public Authorities & Electric Railroads                                   7            3            4     133.3%
-------------------------------------------------------------------------------------------------------
                                                                        196          302         (106)    (35.1%)
-------------------------------------------------------------------------------------------------------
PPO (ComEd Only)
----------------
Small Commercial & Industrial                                            98           90            8       8.9%
Large Commercial & Industrial                                           140          146           (6)     (4.1%)
Public Authorities & Electric Railroads                                  29           31           (2)     (6.5%)
-------------------------------------------------------------------------------------------------------
                                                                        267          267           --        --
-------------------------------------------------------------------------------------------------------
    Total Unbundled Revenues                                            463          569         (106)    (18.6%)
-------------------------------------------------------------------------------------------------------
Total Electric Retail Revenues                                        4,255        4,188           67       1.6%
-------------------------------------------------------------------------------------------------------
    Wholesale and Miscellaneous Revenue (3)                             263          338          (75)    (22.2%)
-------------------------------------------------------------------------------------------------------
Total Electric Revenue                                            $   4,518     $  4,526     $     (8)     (0.2%)
-------------------------------------------------------------------------------------------------------
<FN>
(1)  Bundled service  reflects  deliveries to customers  taking electric service
     under  tariffed  rates,  which  include the cost of energy and the delivery
     cost  of the  transmission  and  the  distribution  of the  energy.  PECO's
     tariffed rates also include a CTC charge.
(2)  Unbundled   service  reflects   customers   electing  to  receive  electric
     generation  service  from an  alternative  energy  supplier or ComEd's PPO.
     Revenue from customers  choosing an alternative  energy supplier includes a
     distribution charge and a CTC. Revenues from customers choosing ComEd's PPO
     includes an energy charge at market rates,  transmission,  and distribution
     charges and a CTC.  Transmission  charges received from alternative  energy
     suppliers are included in wholesale and miscellaneous revenue.
(3)  Wholesale and  miscellaneous  revenues include sales to alternative  energy
     suppliers,   transmission  revenue,   sales  to  municipalities  and  other
     wholesale energy sales.
</FN>
</TABLE>

         The changes in electric  retail  revenues for the six months ended June
30,  2002,  as  compared  to the same  period  in 2001 are  attributable  to the
following:

<TABLE>
<CAPTION>
                                                                                                           Variance
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                                       <C>
Rate Changes                                                                                              $     (15)
Customer Choice                                                                                                  87
Weather                                                                                                         (31)
Other Effects                                                                                                    26
---------------------------------------------------------------------------------------------------------------------
Electric Retail Revenue                                                                                   $      67
---------------------------------------------------------------------------------------------------------------------
</TABLE>
o    Rate  Changes.  The  decrease  in  revenues  attributable  to rate  changes
     reflects the 5% ComEd  residential  rate  reduction,  effective  October 1,
     2001, required by the Illinois restructuring  legislation and the timing of
     a $60 million PECO rate reduction  effective  January 1, 2001


                                       60
<PAGE>

     offset by $26 million due to an increase in PECO's gross  receipts tax rate
     and the  expiration  of a 6%  reduction  in PECO's  rates  during the first
     quarter of 2001.
o    Customer  Choice.  The favorable  customer choice effect is attributable to
     increased revenues of $165 million from customers in Pennsylvania selecting
     or  returning  to PECO as their  electric  generation  supplier,  partially
     offset by a decrease in revenues of $78 million from  customers in Illinois
     electing to purchase  energy from an ARES or the PPO, under which customers
     can  purchase  power  from  ComEd at a  market-based  rate.  ComEd and PECO
     continue to collect delivery charges from these customers.
o    Weather. The weather impact was unfavorable compared to the prior year as a
     result of warmer  winter  weather  in ComEd  and PECO  service  territories
     partially  offset by warmer summer  weather in the ComEd service  territory
     during the second quarter of 2002 as compared to the same period in 2001.
o    Other Effects.  Other items decreasing revenues were primarily related to a
     net $58 million favorable volume variance other than weather, primarily due
     to the impact of a strong housing construction market in Chicago, partially
     offset by the  payment  of $14  million  to  Generation  related to nuclear
     decommissioning  cost recovery under an agreement  effective September 2001
     which  reduced  PECO's  revenue  compared to the prior year, an $11 million
     settlement  of CTCs by a large  PECO  customer  in 2001 and the impact of a
     slower economy on large commercial and industrial customers.

         The  reduction in  wholesale  revenue for the six months ended June 30,
2002 as compared to the six months  ended June 30, 2001 was due  primarily  to a
decrease in off-system  sales due to the expiration of wholesale  contracts that
were  offered  by ComEd from June 2000 to May 2001 to  support  the open  access
program in Illinois,  and a 2001 reversal of reserve for revenue refunds related
to  certain of  ComEd's  municipal  customers  as a result of a  favorable  FERC
ruling.

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

<TABLE>
<CAPTION>
                                                                   For the six months ended June 30,
                                                                   ---------------------------------
                                                                                   2002         2001       Variance
--------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>          <C>           <C>
Deliveries in mmcf                                                               45,643       48,011        (2,368)
Revenue                                                                           $ 293        $ 407         $(114)
--------------------------------------------------------------------------------------------------------------------
</TABLE>

         The changes in gas revenue for the six months ended June 30,  2002,  as
compared to the same 2001 period, are as follows:

<TABLE>
<CAPTION>
                                                                                                           Variance
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                                       <C>
Rate Changes                                                                                              $     (63)
Weather                                                                                                         (30)
Volume                                                                                                          (22)
Other                                                                                                             1
---------------------------------------------------------------------------------------------------------------------
Gas Revenue                                                                                               $    (114)
---------------------------------------------------------------------------------------------------------------------
</TABLE>







                                       61
<PAGE>


o    Rate  Changes.  The  unfavorable  variance in rates is  attributable  to an
     adjustment  of the  purchased  gas cost  recovery by the PUC  effective  in
     December  2001.  The average rate per million  cubic feet for all customers
     for the  quarter  ended  June 30,  2002 was 24%  lower  than the same  2001
     period.
o    Weather.  The  unfavorable  weather impact is attributable to warmer winter
     weather  during the six months  ended June 30, 2002 as compared to the same
     2001 period. Heating degree-days decreased 15% in the six months ended June
     30, 2002 compared to the same 2001 period.
o    Volume.  Exclusive  of weather  impacts,  lower  delivery  volume  affected
     revenue by $22 million in the six months  ended June 30,  2002  compared to
     the same 2001 period.  Total deliveries to retail customers decreased 5% in
     the six  months  ended  June 30,  2002  compared  to the same 2001  period,
     primarily  as a result  of slower  economic  conditions  in 2002  offset by
     increased customer growth.

Results of Operations - Generation Business Segment

<TABLE>
<CAPTION>
                                                                Six Months Ended June 30,
                                                                -------------------------
                                                                       2002         2001     Variance      % Change
---------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>             <C>          <C>          <C>
OPERATING REVENUES                                                $   3,020       $3,211       $ (191)      (5.9%)

OPERATING EXPENSES
     Purchased Power                                                  1,323        1,320            3        --
     Fuel                                                               433          449          (16)      (3.5%)
     Operating and Maintenance                                          844          809           35        4.3%
     Depreciation and Amortization                                      128          167          (39)     (23.3%)
     Taxes Other Than Income                                             90           85            5        5.8%
--------------------------------------------------------------------------------------------------------
         Total Operating Expense                                      2,818        2,830          (12)       --
--------------------------------------------------------------------------------------------------------

OPERATING INCOME                                                        202          381         (179)     (46.9%)
--------------------------------------------------------------------------------------------------------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                   (28)         (59)          31      (52.5%)
     Equity in Earnings of Unconsolidated Affiliates, net                32           39           (7)     (17.9%)
     Other, net                                                          40           18           22      122.2%
--------------------------------------------------------------------------------------------------------
         Total Other Income and Deductions                               44           (2)          46        n.m.
--------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES AND CUMULATIVE
   EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES                           246          379         (133)     (35.0%)

INCOME TAXES                                                             96          150          (54)     (36.0%)
--------------------------------------------------------------------------------------------------------

INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN
   ACCOUNTING PRINCIPLES                                                150          229          (79)     (34.4%)

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

NET INCOME                                                        $     163       $  241          (78)     (32.3%)
--------------------------------------------------------------------------------------------------------
</TABLE>

         Net  income  for the six  months  ended  June 30,  2002  was  adversely
impacted by a lower  margin on wholesale  energy  sales due to depressed  market
prices  for  energy,  a  reduced  supply of  low-cost  nuclear  generation,  and
increased  operating and maintenance  expense partially offset by an increase in
revenue from affiliates and lower  depreciation and interest expense.  Operating



                                       62
<PAGE>

revenues,  net of fuel and purchased  power,  decreased by $178  million.  Lower
wholesale  market prices for energy reduced  margins by $184 million,  which was
partially offset by increased  revenues from affiliates of $26 million and lower
fuel costs.  The amount of low-cost  nuclear  generation  available for sale was
reduced  due to an  increased  number of nuclear  generating  station  refueling
outages in the six months ended June 30, 2002, as compared to the same period in
2001. Operating and maintenance expense increased by $35 million,  primarily due
to $55 million of costs  incurred for the additional  refueling  outages and the
acquisition of two generating  plants in April 2002. These  additional  expenses
were partially offset by other operating cost reductions,  including $10 million
related  to  headcount  reductions,  a $10  million  reduction  in  Generation's
severance  accrual and $4 million in savings related to Exelon's Cost Management
Initiative.  The  decline in  depreciation  expense  reflects  extension  of the
estimated  service  lives of  generating  stations in the third quarter of 2001,
partially offset by additional  depreciation  expense on plant placed in service
after June 30, 2001, including the acquisition of two generating plants in April
2002. Lower interest expense is due to capitalized interest and a lower interest
rate on the spent nuclear fuel obligation. Additionally, trading activities were
initiated in April 2001. Revenue for the six months ended June 30, 2002 includes
a net trading portfolio loss of $16 million compared to a net $6 million loss in
the six months ended June 30, 2001.

Generation Operating Statistics:

         For the six months ended June 30, 2002 and 2001, Generation's sales and
the supply of these sales, excluding the trading portfolio, were as follows:

<TABLE>
<CAPTION>
                                                                                          Six Months Ended June 30,
                                                                                          -------------------------
Sales (in GWhs)                                                                              2002              2001
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                        <C>               <C>
Energy Delivery                                                                            56,044            57,309
Exelon Energy                                                                               2,605             3,006
Market Sales (1)                                                                           39,913            36,007
---------------------------------------------------------------------------------------------------------------------
Total Sales                                                                                98,562            96,322
---------------------------------------------------------------------------------------------------------------------
</TABLE>











                                       63
<PAGE>

<TABLE>
<CAPTION>
                                                                                          Six Months Ended June 30,
                                                                                          -------------------------
Supply of Sales (in GWhs)                                                                    2002              2001
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                        <C>               <C>
Nuclear Generation                                                                         55,886            58,410
Purchases - non-trading portfolio                                                          36,314            31,954
Fossil and Hydro Generation                                                                 6,362             5,958
---------------------------------------------------------------------------------------------------------------------
Total Supply                                                                               98,562            96,322
---------------------------------------------------------------------------------------------------------------------
</TABLE>

         Trading  volume was 22,805  GWhs and 454 GWhs for the six months  ended
June 30, 2002 and 2001, respectively.
         Generation's average margin data for the six months ended June 30, 2002
and 2001 were as follows:

<TABLE>
<CAPTION>
                                                                                          Six Months Ended June 30,
                                                                                          -------------------------
($/MWh)                                                                                      2002              2001
---------------------------------------------------------------------------------------------------------------------
Average Realized Revenue
<S>                                                                                  <C>             <C>
     Energy Delivery                                                                 $     30.73     $       29.58
     Exelon Energy                                                                         45.08             39.30
     Market Sales                                                                          29.44             38.66
     Total Sales - excluding the trading portfolio                                         30.58             33.27

Average Supply Cost - excluding the trading portfolio                                $     17.78     $       18.75

Average Margin - excluding the trading portfolio                                     $     12.80     $       14.52
---------------------------------------------------------------------------------------------------------------------
</TABLE>

         Generation's nuclear fleet, including AmerGen,  performed at a capacity
factor of 91.2% for the six months  ended June 30,  2002  compared  to 96.2% the
same period in 2001.  Generation's  nuclear units' production  costs,  including
AmerGen,  for the six months ended June 30, 2002 were $13.38 per MWh compared to
$12.34  per MWh for the same  period in 2001.  The  lower  capacity  factor  and
increased unit production  costs are primarily due to 153 days of planned outage
time in the six months  ended June 30, 2002 versus 31 days in the same period in
2001.  Generation's  average purchased power costs for wholesale operations were
$36.76 per MWh for the six months  ended June 30,  2002,  compared to $41.81 per
MWh for the same  period in 2001.  The  decrease  in  purchased  power costs was
primarily due to depressed wholesale power market prices.






                                       64
<PAGE>


Results of Operations - Enterprises Business Segment

<TABLE>
<CAPTION>
                                                                Six Months Ended June 30,
                                                                -------------------------
                                                                       2002         2001     Variance      % Change
---------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>          <C>          <C>         <C>
OPERATING REVENUES                                                   $  966       $1,213       $ (247)     (20.4%)

OPERATING EXPENSES
     Purchased Power                                                    108          157          (49)     (31.2%)
     Fuel                                                               234          365         (131)     (35.9%)
     Operating and Maintenance                                          634          705          (71)     (10.1%)
     Depreciation and Amortization                                       35           31            4       12.9%
     Taxes Other Than Income                                              5            7           (2)     (28.6%)
-------------------------------------------------------------------------------------------------------
         Total Operating Expense                                      1,016        1,265         (249)     (19.7%)
-------------------------------------------------------------------------------------------------------

OPERATING INCOME                                                        (50)         (52)           2       (3.9%)
-------------------------------------------------------------------------------------------------------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                    (8)         (22)          14      (63.6%)
     Equity in Earnings (Losses) of Unconsolidated Affiliates, net       (5)         (14)           9      (64.3%)
     Other, net                                                         158           38          120        n.m.
-------------------------------------------------------------------------------------------------------
         Total Other Income and Deductions                              145            2          143        n.m.
-------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES AND CUMULATIVE
   EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE                              95          (50)         145        n.m

INCOME TAXES                                                             40          (20)          60        n.m
-------------------------------------------------------------------------------------------------------

INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
   ACCOUNTING PRINCIPLE                                                  55          (30)          85        n.m

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

NET INCOME                                                           $ (188)      $  (30)      $ (158)       n.m.
-------------------------------------------------------------------------------------------------------
</TABLE>

         Enterprises'  net income increased $85 million for the six months ended
June 30,  2002  compared to the same period in 2001,  excluding  the  cumulative
effect  of a change in  accounting  principle.  The  increase  in net  income is
primarily  attributable  to the AT&T Wireless sale that resulted in an after-tax
gain of $116 million and higher equity in earnings of unconsolidated  affiliates
of $9 million  primarily  as a result of the  discontinuation  of losses on AT&T
Wireless as a result of the AT&T Wireless sale.  These  increases were partially
offset by $40  million  of  investment  write-downs  and $4 million of net asset
write-downs.  Enterprises'  net loss increased $158 million after reflecting the
cumulative  effect  of a  change  in  accounting  principle  resulting  from the
adoption of SFAS No. 142,  which no longer allows  amortization  of goodwill but
requires  testing  goodwill for  impairment on an annual basis.  The  impairment
booked during the first quarter, as a result of transitional impairment testing,
was $243 million net of income taxes and minority interest.

         Operating revenues decreased $247 million for the six months ended June
30,  2002,  compared  to the same  period in 2001.  The  decrease  in  operating
revenues is attributable to lower gas sales of $116 million primarily  resulting
from lower gas prices,  reduced  retail  energy sales of


                                       65
<PAGE>

$91 million from Exelon  Energy  exiting the PJM market,  lower  revenues of $56
million from Exelon  Services from reduced volume of  construction  projects and
lower revenues of $29 million from InfraSource from the continued decline in the
telecommunications  industry and reduced volume of construction services in that
industry.  These decreases were partially offset by higher electric  revenues of
$45 million  primarily  resulting  from higher  electric  prices in Illinois for
Exelon Energy.

         Enterprises'  operating and other expenses,  net decreased $392 million
for the six months ended June 30, 2002 compared to the same period in 2001.  The
decrease is primarily attributable to a pre-tax gain of $198 million recorded on
the AT&T Wireless sale, lower gas costs of $107 million primarily resulting from
lower gas prices,  lower  purchased  power costs of $114 million  resulting from
reduced  operations of retail  energy sales from Exelon  Energy  exiting the PJM
market,  reduced costs relating to lower  construction  project volume at Exelon
Services of $45 million,  reduced costs relating to lower volume of construction
services in the telecommunications industry at InfraSource of $23 million, lower
interest expense of $14 million, and higher equity in earnings of unconsolidated
affiliates of $9 million  primarily as a result of the  discontinuance of losses
on AT&T Wireless as a result of the AT&T Wireless  sale.  These  decreases  were
partially  offset by higher  electric  purchased  power costs in Illinois of $42
million for Exelon  Energy,  write-downs  of  communications  investments of $29
million,  write-downs  of  energy  related  investments  of $11  million,  a net
write-down  of other assets of $4 million in 2002 and a $28 million gain in 2001
from the sales of communications investments.

         The  effective  income tax rate was 42.1% for the six months ended June
30, 2002, compared to 40.0% for the six months ended June 30, 2001. The increase
in the effective tax rate was primarily  attributable  to the AT&T Wireless sale
offset by the  discontinuation  of goodwill  amortization as of January 1, 2002,
that was not deductible for income tax purposes.


LIQUIDITY AND CAPITAL RESOURCES

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

Cash Flows from Operating Activities
         Cash flows  provided by  operations  for the six months  ended June 30,
2002 were $1.6 billion compared to $2.0 billion in the six months ended June 30,
2001.  Approximately  70% of 2002 cash flows  provided by operations for the six
months ended June 30, 2002 were  provided by Energy  Delivery and  approximately
30% was provided by Generation.  Enterprises'  cash


                                       66
<PAGE>

flows from  operations  were  immaterial to Exelon for the six months ended June
30, 2002.  Energy  Delivery's  cash flows from  operating  activities  primarily
result from sales of electricity  and gas to a stable and diverse base of retail
customers  at fixed  prices and are weighted  toward the third  quarter.  Energy
Delivery's  future  cash  flows will  depend  upon the  ability to achieve  cost
savings in  operations,  and the impact of the  economy,  weather  and  customer
choice on its  revenues.  Generation's  cash  flows  from  operating  activities
primarily  result  from the sale of  electric  energy  to  wholesale  customers,
including  Energy Delivery and Enterprises.  Generation's  future cash flow from
operating activities will depend upon future demand and market prices for energy
and the ability to continue to produce and supply  power at  competitive  costs.
Although  the  amounts  may vary  from  period  to  period  as a  result  of the
uncertainties  inherent in business,  Exelon  expects  that Energy  Delivery and
Generation  will  continue to provide a reliable  and steady  source of internal
cash flow from operations for the foreseeable future.

Cash Flows from Investing Activities
         Cash flows used in investing  activities  for the six months ended June
30, 2002 were $1.3  billion,  compared to $998  million for the six months ended
June 30,  2001.  The  increase was  primarily  attributable  to the $443 million
acquisition of two generating  plants from TXU Corp. (TXU) and increased capital
expenditures partially offset by $285 million of proceeds from the AT&T Wireless
sale. Capital  expenditures other than the TXU acquisition,  by business segment
for the six months ended June 30, 2002 and 2001 are as follows:

<TABLE>
<CAPTION>
                                                                                         Six Months Ended June 30,
                                                                                         --------------------------
                                                                                             2002              2001
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>               <C>
Energy Delivery                                                                         $     495         $     581
Generation                                                                                    475               301
Enterprises                                                                                    28                37
Corporate and Other                                                                            30                18
---------------------------------------------------------------------------------------------------------------------
Total Capital Expenditures                                                              $   1,028         $     937
---------------------------------------------------------------------------------------------------------------------
</TABLE>

         Energy   Delivery's   capital   expenditures   for  2002   reflect  the
continuation of efforts to further  improve the reliability of its  distribution
system in the Chicago region. Energy Delivery's investing activities were funded
primarily through operating activities.

         Generation's  capital  expenditures  for 2002 are for  additions to and
upgrades of existing facilities  (including nuclear refueling outages),  nuclear
fuel,  and  increases  in capacity at existing  plants.  Generation's  investing
activities were funded from operating activities, borrowings from Exelon and the
use of available cash.

         Generation  closed the purchase of the two  natural-gas  and  oil-fired
generating  plants from TXU on April 25,  2002.  The $443  million  purchase was
funded with available cash and Exelon commercial paper.  Exelon expects to repay
the commercial paper utilizing Generation's internal cash flows.

         Capital  expenditures  have increased for the six months ended June 30,
2002 as compared to 2001 due to higher nuclear fuel expenditures,  growth and an
increase in the number of planned


                                       67
<PAGE>

refueling  outages,  during which significant work is performed for additions to
or upgrades of existing facilities.

         In February 2002,  Generation entered into an agreement to loan AmerGen
up to $75 million at an interest rate of one-month  LIBOR plus 2.25%. As of June
30, 2002,  AmerGen had borrowed $75 million under this agreement.  In July 2002,
the loan  agreement and the loan were increased to $100 million and the maturity
date was extended to July 1, 2003.

         Enterprises'  capital expenditures for 2002 are primarily for additions
to or upgrades  of existing  facilities.  On April 1, 2002,  Exelon  Enterprises
closed on the sale of its 49%  interest  in AT&T  Wireless  for $285  million in
cash.  Proceeds from the transaction will be used for Exelon's general corporate
purposes.

Cash Flows from Financing Activities
         Cash flows used in financing activities were $142 million in the second
quarter 2002,  primarily  attributable to debt service and payments of dividends
on common stock of $280 million. Debt financing activities during the six months
ended June 30, 2002 were as follows:

o    ComEd issued $600 million in First Mortgage  Bonds,  issued $100 million of
     Illinois  Development  Finance  Authority  floating-rate  Pollution Control
     Revenue   Refunding   Bonds,   redeemed  $100  million  of  7.25%  Illinois
     Development  Finance  Authority  Pollution Control Revenue Refunding Bonds,
     redeemed  $200  million in First  Mortgage  Bonds with  available  cash and
     retired $170 million of transitional trust notes,
o    PECO  borrowed  an  additional  $74  million of  commercial  paper and made
     principal payments of $207 million on long-term debt with available cash.

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

         At June  30,  2002,  Exelon's  capital  structure  consisted  of 60% of
long-term debt, 35% common stock,  2% notes payable and 3% preferred  securities
of  subsidiaries.  Total  debt  included  $6.6  billion of  securitization  debt
constituting  obligations  of certain  consolidated  special  purpose  entities,
representing 28% of capitalization.

         At June 30, 2002,  Exelon had outstanding $470 million of notes payable
consisting  principally of commercial  paper.  For the six months ended June 30,
2002,  the  average  interest  rate on notes  payable was  approximately  1.96%.
Certain of the credit agreements to which Exelon, ComEd, PECO and Generation are
a party require each of them to maintain a debt to total capitalization ratio of
65%  or  less  (excluding  securitization  debt  and  for  PECO,  excluding  the
receivable from parent  recorded in PECO's  shareholders'  equity).  At June 30,
2002, the debt to total capitalization  ratios on that basis for Exelon,  ComEd,
PECO and Generation were 48%, 46%, 38% and 32%, respectively.


                                       68
<PAGE>

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

         Under the Public  Utility  Holding  Company Act of 1935 (PUHCA) and the
Federal Power Act,  Exelon,  ComEd,  PECO and  Generation can pay dividends only
from retained,  undistributed or current earnings. However, an SEC order granted
permission  to Exelon and ComEd to pay up to $500  million in  dividends  out of
additional paid-in capital, provided that Exelon agreed not to pay dividends out
of paid-in capital after December 31, 2002 if its common equity is less than 30%
of its total  capitalization.  At June 30, 2002, Exelon had retained earnings of
$1.4 billion,  which  includes  ComEd  retained  earnings of $382 million,  PECO
retained  earnings of $277  million  and  Generation  retained  earnings of $686
million.

Contractual Obligations and Commercial Commitments
         Contractual  obligations represent cash obligations that are considered
to  be  firm  commitments  and  commercial   commitments  represent  commitments
triggered by future  events.  Exelon's  contractual  obligations  and commercial
commitments  as of June 30, 2002 were  materially  unchanged,  other than in the
normal  course of business,  from the amounts set forth in the December 31, 2001
Form 10-K except for the following:
o    ComEd  issued  $600  million of First  Mortgage  Bonds due March 15,  2012,
     issued $100 million of Illinois Development Finance Authority floating-rate
     Pollution  Control  Revenue  Refunding  Bonds,  series 2002,  redeemed $100
     million of 7.25% Illinois  Development  Finance Authority Pollution Control
     Revenue  Refunding  Bonds,  series  1991,  redeemed  $200  million of First
     Mortgage   Bonds  due  February  1,  2022,  and  retired  $170  million  of
     transitional trust notes.
o    Guarantees  increased $300 million  primarily related to an increase in the
     amount of surety bonds required by Enterprises' insurance policies.
o    Insured  long-term debt increased $100 million related to ComEd's  issuance
     of $100 million in variable rate debt that has been credit enhanced through
     the purchase of insurance coverage.
o    On April 25, 2002 Generation  closed the purchase of two generating  plants
     from TXU. The $443 million  purchase was funded  primarily with  commercial
     paper issued by Exelon.
o    On June 26, 2002 Generation  agreed to purchase Sithe New England Holdings,
     LLC  (Sithe  New  England)  for  $543  million,   plus  the  assumption  of
     non-recourse debt estimated to be approximately $1.2 billion at the date of
     purchase.  The purchase is estimated to close in November 2002,  subject to
     regulatory  approval.  See Note 3 of the Combined Notes to the Consolidated
     Financial Statements for additional information about the Sithe New England
     acquisition.
o    Purchase  obligations  increased  by  $1.2  billion,  primarily  due  to an
     increase of $2.0 billion in power only purchases partially offset by a $0.8
     billion  decrease in net  capacity  purchase  commitments.  The increase in
     power only purchases is primarily due to Generation's


                                       69
<PAGE>

     agreement  to purchase  all the energy from Unit No. 1 at Three Mile Island
     after  December 31, 2001 through  December 31, 2014.  This  decrease in net
     capacity  purchase  commitments  is due  primarily  to the  decision not to
     exercise  the  option  to  purchase  2,684  MWs of  capacity  from  Midwest
     Generation in 2002 and 2003 as well as the increase in capacity sales under
     the TXU tolling agreement.

Off Balance Sheet Obligations
         Generation owns 49.9% of the outstanding  common stock of Sithe and has
an option,  beginning  on December 18, 2002,  to purchase the  remaining  common
stock outstanding  (Remaining Interest) in Sithe. The purchase option expires on
December 18, 2005. In addition,  the Sithe stockholders who own in the aggregate
the  Remaining  Interest  have the right to require  Generation  to purchase the
Remaining  Interest (Put Rights) during the same period in which  Generation can
exercise its purchase option.  At the end of this exercise period, if Generation
has not exercised its purchase option and the other Sithe  stockholders have not
exercised their Put Rights,  Generation will have an additional  one-time option
to purchase shares from the other  stockholders  in Sithe to bring  Generation's
ownership in Sithe from the current 49.9% to 50.1% of Sithe's total  outstanding
common stock.

         If Generation  exercises its option to acquire the Remaining  Interest,
or if all the other Sithe  stockholders  exercise their Put Rights, the purchase
price for 70% of the Remaining Interest will be set at fair market value subject
to a floor of $430  million  and a ceiling of $650  million.  The balance of the
Remaining  Interest  will be valued at fair market  value  subject to a floor of
$141 million and a ceiling of $330 million.  In either  instance,  the floor and
ceiling will accrue interest from the beginning of the exercise period.

         If Generation  increases its ownership in Sithe to 50.1% or more, Sithe
will become a  consolidated  subsidiary  and  Exelon's  financial  results  will
include Sithe's financial  results from the date of purchase.  At June 30, 2002,
Sithe had total assets of $4.1 billion and total debt of $2.1 billion, including
$1.6 billion of  non-recourse  project debt of which $1.0 billion is  associated
with Sithe New  England,  $0.4  billion of  subordinated  debt,  $49  million of
short-term  debt, $33 million of capital  leases,  and excluding $411 million of
non-recourse  project debt associated with Sithe's equity  investments.  For the
six months ended June 30, 2002,  Sithe had revenues of $0.6 billion.  As of June
30, 2002,  Generation had a $725 million equity investment in Sithe. On June 26,
2002,  Generation agreed to purchase Sithe New England for $543 million plus the
assumption of approximately $1.2 billion of non-recourse  project debt, which is
expected  to be  outstanding  at the  time  of  the  closing  of  the  purchase.
Generation  expects to close the purchase of Sithe New England in November 2002,
subject to regulatory approval.

         Additionally,  the debt on the books of Exelon's  unconsolidated equity
investments and joint ventures is not reflected on Exelon's Consolidated Balance
Sheets.  Total  investee  debt,  at June 30, 2002,  including  the debt of Sithe
described in the preceding paragraph,  is currently estimated to be $2.3 billion
($1.2 billion based on Exelon's ownership interest of the investments).


                                       70
<PAGE>

         Generation and British Energy plc (British Energy),  Generation's joint
venture  partner in AmerGen,  have each agreed to provide up to $100  million to
AmerGen at any time for operating expenses.

Other Factors
         Exelon's costs of providing  pension and  postretirement  benefit plans
are  dependent  upon a number  of  factors,  such as the rates of return on plan
assets, discount rate, and the rate of increase in health care costs. The market
value of plan assets has been  affected by sharp  declines in the equity  market
since the third quarter of 2000. As a result, at December 31, 2002, Exelon could
be required to recognize an additional  minimum  liability as prescribed by FASB
SFAS  No.  87  "Employers'  Accounting  for  Pensions"  and FASB  SFAS  No.  132
"Employers'  Disclosures  about  Pensions  and  Postretirement   Benefits."  The
liability  would be  recorded as a reduction  to common  equity,  and the equity
would be restored to the balance sheet in future  periods when the fair value of
plan assets exceeds the accumulated benefit obligations. The amount of reduction
to  common  equity  recorded,  if  any,  will  depend  upon  the  asset  returns
experienced  in 2002,  but could be material.  The  recording of this  reduction
would not affect net income or cash flow in 2002; however, pension cost and cash
funding  requirements  could  increase  in future  years  without a  substantial
recovery in the equity markets.

         Generation is a counterparty to Dynegy Inc.  (Dynegy) in various energy
transactions.  In early July 2002, the credit ratings of Dynegy were  downgraded
by two credit rating  agencies to below  investment  grade. As of July 29, 2002,
Generation  had a net  receivable  from  Dynegy  of less  than $5  million,  and
consistent  with the terms of the existing  credit  arrangement,  has  requested
collateral  in  support of this  receivable.  Generation  also has  credit  risk
associated with Dynegy through Generation's equity investment in Sithe. Sithe is
a 60%  owner  of the  Independence  generating  station,  a 1,040  MW  gas-fired
qualified  facility that has an energy only long-term  tolling  arrangement with
Dynegy,  with a related financial swap  arrangement.  As of June 30, 2002, Sithe
had  recognized  an asset on its balance  sheet related to the fair value of the
financial swap agreement with Dynegy that is marked-to-market under the terms of
SFAS No. 133. If Dynegy is unable to fulfill the terms of this agreement,  Sithe
would be required to write-off the fair value asset, which Generation  estimates
would result in an approximate $15 million reduction in its equity earnings from
Sithe,  based on  Generation's  current  49.9%  investment  ownership  in Sithe.
Additionally,   the  future   economic  value  of  Sithe's   investment  in  the
Independence  Station and AmerGen's  purchased power  arrangement  with Illinois
Power, a subsidiary of Dynegy,  could be impacted by events related to Dynergy's
financial condition.



                                       71
<PAGE>



COMMONWEALTH EDISON COMPANY

GENERAL

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

RESULTS OF OPERATIONS

Three Months Ended June 30, 2002 Compared to Three Months Ended June 30, 2001

Significant Operating Trends - ComEd

<TABLE>
<CAPTION>
                                                              Three Months Ended June 30,
                                                              ---------------------------
                                                                       2002         2001     Variance      % Change
---------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>             <C>          <C>          <C>
OPERATING REVENUES                                                $   1,481       $1,530       $  (49)      (3.2%)

OPERATING EXPENSES
     Purchased Power                                                    553          586          (33)      (5.6%)
     Operating and Maintenance                                          220          248          (28)     (11.3%)
     Depreciation and Amortization                                      133          168          (35)     (20.8%)
     Taxes Other Than Income                                             73           69            4        5.8%
-------------------------------------------------------------------------------------------------------
         Total Operating Expense                                        979        1,071          (92)      (8.6%)
-------------------------------------------------------------------------------------------------------

OPERATING INCOME                                                        502          459           43        9.4%
-------------------------------------------------------------------------------------------------------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                  (127)        (143)          16      (11.2%)
     Distributions on Company-Obligated Mandatorily
       Redeemable Preferred Securities of Subsidiary Trusts
       Holding Solely the Company's Subordinated Debt Securities         (7)          (7)          --         --
     Other, net                                                          14           22           (8)     (36.4%)
-------------------------------------------------------------------------------------------------------
         Total Other Income and Deductions                             (120)        (128)           8       (6.3%)
-------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES                                              382          331           51       15.4%

INCOME TAXES                                                            151          149            2        1.3%
-------------------------------------------------------------------------------------------------------

NET INCOME                                                        $     231       $  182       $   49       26.9%
-------------------------------------------------------------------------------------------------------
</TABLE>

Net Income
         Net income  increased  $49  million,  or 27% for the three months ended
June 30,  2002.  Net income was  impacted by $43 million  increase in  operating
income and by a lower effective income tax rate.




                                       72
<PAGE>

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

<TABLE>
<CAPTION>
                                                              For the three months ended June 30,
                                                              -----------------------------------
Retail Deliveries - (in GWh)                                                2002             2001          % Change
---------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>              <C>            <C>
Bundled Deliveries (1)
Residential                                                                5,862            5,232          12.0%
Small Commercial & Industrial                                              5,600            5,803          (3.5%)
Large Commercial & Industrial                                              2,122            2,748         (22.8%)
Public Authorities & Electric Railroads                                    1,685            1,891         (10.9%)
-------------------------------------------------------------------------------------------------------
                                                                          15,269           15,674          (2.6%)
-------------------------------------------------------------------------------------------------------
Unbundled Deliveries (2)
ARES
----
Small Commercial & Industrial                                              1,177              645          82.5%
Large Commercial & Industrial                                              1,622            1,251          29.7%
Public Authorities & Electric Railroads                                      181               93          94.6%
-------------------------------------------------------------------------------------------------------
                                                                           2,980            1,989          49.8%
-------------------------------------------------------------------------------------------------------
PPO
---
Small Commercial & Industrial                                                839              798           5.1%
Large Commercial & Industrial                                              1,392            1,518          (8.3%)
Public Authorities & Electric Railroads                                      274              326         (16.0%)
-------------------------------------------------------------------------------------------------------
                                                                           2,505            2,642          (5.2%)
-------------------------------------------------------------------------------------------------------
     Total Unbundled Deliveries                                            5,485            4,631          18.4%
-------------------------------------------------------------------------------------------------------
Total Retail Deliveries                                                   20,754           20,305           2.2%
-------------------------------------------------------------------------------------------------------
<FN>
(1)  Bundled service  reflects  deliveries to customers  taking electric service
     under  tariffed  rates,  which  include the cost of energy and the delivery
     cost of the transmission and the distribution of the energy.
(2)  Unbundled   service  reflects   customers   electing  to  receive  electric
     generation service from an ARES or the PPO.
</FN>
</TABLE>















                                       73
<PAGE>


<TABLE>
<CAPTION>
                                                     For the three months ended June 30,
                                                     -----------------------------------
Electric Revenue                                                       2002         2001     Variance      % Change
---------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>           <C>          <C>            <C>
Bundled Revenues (1)
Residential                                                       $     523     $    502     $     21       4.2%
Small Commercial & Industrial                                           445          467          (22)     (4.7%)
Large Commercial & Industrial                                           116          144          (28)    (19.4%)
Public Authorities & Electric Railroads                                 102          109           (7)     (6.4%)
-------------------------------------------------------------------------------------------------------
                                                                      1,186        1,222          (36)     (3.0%)
-------------------------------------------------------------------------------------------------------
Unbundled Revenues (2)
ARES
----
Small Commercial & Industrial                                            30           13           17     130.8%
Large Commercial & Industrial                                            32           21           11      52.4%
Public Authorities & Electric Railroads                                   5            1            4       n.m.
-------------------------------------------------------------------------------------------------------
                                                                         67           35           32      91.4%
-------------------------------------------------------------------------------------------------------
PPO
---
Small Commercial & Industrial                                            55           53            2       3.8%
Large Commercial & Industrial                                            76           86          (10)    (11.6%)
Public Authorities & Electric Railroads                                  17           19           (2)    (10.5%)
-------------------------------------------------------------------------------------------------------
                                                                        148          158          (10)     (6.3%)
-------------------------------------------------------------------------------------------------------
Total Unbundled Revenues                                                215          193           22      11.4%
-------------------------------------------------------------------------------------------------------
Total Electric Retail Revenues                                        1,401        1,415          (14)     (1.0%)
Wholesale and Miscellaneous Revenue (3)                                  80          115          (35)    (30.4%)
-------------------------------------------------------------------------------------------------------
Total Electric Revenue                                            $   1,481     $1,530       $    (49)     (3.2%)
-------------------------------------------------------------------------------------------------------
<FN>
(1)  Bundled service  reflects  deliveries to customers  taking electric service
     under  tariffed  rates,  which  include the cost of energy and the delivery
     cost of the transmission and the distribution of the energy.
(2)  Revenue from customers choosing an ARES includes a distribution  charge and
     a CTC  charge.  Transmission  charges  received  from ARES are  included in
     wholesale and miscellaneous  revenue.  Revenues from customers choosing the
     PPO  includes  an  energy  charge  at  market  rates,   transmission,   and
     distribution charges and a CTC charge.
(3)  Wholesale and  miscellaneous  revenues include sales to ARES,  transmission
     revenue, sales to municipalities and other wholesale energy sales.
n.m. - not meaningful
</FN>
</TABLE>

         The changes in electric retail revenues for the three months ended June
30, 2002, as compared to the three months ended June 30, 2001, are  attributable
to the following:

<TABLE>
<CAPTION>
                                                                                                           Variance
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                                      <C>
Weather                                                                                                  $       40
Rate Changes                                                                                                    (27)
Customer Choice                                                                                                 (39)
Other Effects                                                                                                    12
---------------------------------------------------------------------------------------------------------------------
Electric Retail Revenue                                                                                  $      (14)
---------------------------------------------------------------------------------------------------------------------
</TABLE>

o    Weather. The demand for electricity is impacted by weather conditions. Very
     warm  weather  in summer  months and very cold  weather in other  months is
     referred  to as  "favorable  weather  conditions",  because  these  weather
     conditions  result in  increased  sales of  electricity.  Conversely,  mild
     weather reduces demand.
              The weather  impact for the three  months  ended June 30, 2002 was
     favorable  compared to the three  months ended June 30, 2001 as a result of
     warmer  summer  weather in


                                       74
<PAGE>

     the second  quarter  of 2002 as  compared  to the  second  quarter of 2001.
     Cooling  degree-days  increased 29% in the three months ended June 30, 2002
     compared to the three months ended June 30, 2001.
o    Rate  Changes.  The decrease  attributable  to rate  changes  reflects a 5%
     residential  rate  reduction,  effective  October 1, 2001,  required by the
     Illinois restructuring legislation.
o    Customer  Choice.  All ComEd  customers have the choice to purchase  energy
     from other  suppliers.  This choice generally does not impact the volume of
     deliveries,  but affects revenue collected from customers related to energy
     supplied by ComEd.  On May 1, 2002,  all ComEd  residential  customers were
     eligible to choose their supplier of electricity,  however,  as of June 30,
     2002, no alternative electric supplier has sought approval from the ICC and
     no electric utilities have chosen to enter the ComEd residential market for
     the supply of electricity.
              The decrease in revenues  reflects  customers in Illinois electing
     to  purchase  energy  from  an  ARES  or the  PPO.  As of  June  30,  2002,
     approximately  22,600 retail  customers had elected to purchase energy from
     an ARES or the ComEd PPO, an increase  from  14,000  customers  at June 30,
     2001. The MWhs delivered to such customers increased from approximately 4.6
     million  for the three  months  ended June 30,  2001 to 5.5 million for the
     three months ended June 30, 2002, or  approximately a 20% increase from the
     previous year.
o    Other Effects. A strong housing  construction market in Chicago contributed
     to residential and small commercial and industrial  customer volume growth,
     partially  offset by the  unfavorable  impact of a slower  economy on large
     commercial and industrial customers.

         On July 19,  2002,  ComEd  filed a request  with the ICC to revise  the
Provider  of Last  Resort  (POLR)  obligation  in  Illinois.  ComEd  is  seeking
permission  from the ICC to limit the  availability  by June 2006 of Rate 6L for
370 of ComEd's  largest  energy  customers  with  demands of at least three MWs,
totaling  approximately  2,500 MWs.  Rate 6L is a bundled  fixed rate offered to
large  customers  including heavy  industrial  plants,  large office  buildings,
government facilities and a variety of other businesses. The ICC has 120 days to
act on the filing or it will be deemed approved.

         The reduction in wholesale  revenue for the three months ended June 30,
2002 as compared to the three months ended June 30, 2001 was due  primarily to a
$10 million  decrease in  off-system  sales due to the  expiration  of wholesale
contracts  that were  offered by ComEd from June 2000 to May 2001 to support the
open access  program in Illinois  and a $15 million  reversal of reserve in 2001
for  revenue  refunds  related to certain of ComEd's  municipal  customers  as a
result of a favorable FERC ruling.

Purchased Power Expense
         Purchased  power  expense  decreased  $33 million,  or 6% for the three
months  ended June 30,  2002.  The  decrease  in  purchased  power  expense  was
primarily  attributable  to a $29  million  decrease  as a result  of  customers
choosing to  purchase  energy from an ARES,  an $8 million  decrease  due to the
expiration  of the  wholesale  contracts  offered by ComEd to  support  the open
access program in Illinois,  a $5 million decrease related to a reduction in the
average purchase price of energy and a $5 million decrease due to the effects of
the slower economy on the large  commercial and industrial  customers  partially
offset by a $15 million increase due to favorable weather conditions.





                                       75
<PAGE>

Operating and Maintenance Expense
         Operating and maintenance (O&M) expense decreased $28 million,  or 11%,
for the three  months  ended June 30,  2002.  The  decrease  in O&M  expense was
primarily  attributable to an $11 million  decrease in bad debt expense due to a
revised  estimate  of the  reserve  for  uncollectible  accounts,  a $4  million
decrease  in  corporate  allocations,  and a $9 million  decrease  in repairs of
distribution systems damaged by others and storm restoration.

Depreciation and Amortization Expense
         Depreciation and amortization  expense  decreased $35 million,  or 21%,
for the three months ended June 30, 2002.  This decrease is primarily due to the
discontinuation  of  goodwill  amortization  effective  January 1, 2002 upon the
adoption of SFAS No. 142  partially  offset by increased  depreciation  based on
higher property, plant and equipment balances.

         As required by the Illinois  Restructuring  Act, a notification  filing
was made with the ICC to reflect  lower  depreciation  rates  effective  July 1,
2002.  No ICC  approval  is  required  for the new  rates  to take  effect.  The
anticipated  annual  reduction  in  depreciation  expense  is  estimated  to  be
approximately $100 million.

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

Interest Charges
         Interest  charges  consist of  interest  expense and  distributions  on
Company-Obligated  Mandatorily  Redeemable  Preferred  Securities  of Subsidiary
Trusts.  Interest  charges  decreased $16 million,  or 11%, for the three months
ended June 30, 2002. The decrease in interest charges was primarily attributable
to the impact of lower  interest  rates for the three months ended June 30, 2002
as compared to the three months ended June 30, 2001, the early retirement of the
$196 million of First  Mortgage  Bonds in November of 2001 and the retirement of
$340 million in transitional trust notes since June 2001.

Other Income and Deductions
         Other income and deductions,  excluding interest charges,  decreased $8
million or 36%,  for the three  months  ended June 30,  2002.  The  decrease was
primarily attributable to $2 million in intercompany interest income relating to
the $400 million  receivable  from PECO which was repaid during  second  quarter
2001 and a $7 million  reduction  in  intercompany  interest  income from Unicom
Investment Inc., reflecting lower interest rates.

Income Taxes
The  effective  income  tax rate was 39.5% for the three  months  ended June 30,
2002,  compared to 45.0% for the three months ended June 30, 2001.  The decrease
in the effective tax rate was primarily  attributable to the  discontinuation of
goodwill amortization as of January 1, 2002, which was not deductible for income
tax purposes.




                                       76
<PAGE>


Six Months Ended June 30, 2002 Compared to Six Months Ended June 30, 2001

Significant Operating Trends - ComEd

<TABLE>
<CAPTION>
                                                                Six Months Ended June 30,
                                                                -------------------------
                                                                       2002         2001     Variance      % Change
---------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>             <C>          <C>          <C>
OPERATING REVENUES                                                $   2,796       $2,976       $ (180)      (6.1%)

OPERATING EXPENSES
     Purchased Power                                                  1,091        1,195         (104)      (8.7%)
     Operating and Maintenance                                          457          466           (9)      (1.9%)
     Depreciation and Amortization                                      268          334          (66)     (19.8%)
     Taxes Other Than Income                                            146          141            5        3.6%
--------------------------------------------------------------------------------------------------------
         Total Operating Expense                                      1,962        2,136         (174)      (8.2%)
--------------------------------------------------------------------------------------------------------

OPERATING INCOME                                                        834          840           (6)      (0.7%)
--------------------------------------------------------------------------------------------------------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                  (252)        (284)          32      (11.3%)
     Distributions on Company-Obligated Mandatorily
       Redeemable Preferred Securities of Subsidiary Trusts
       Holding Solely the Company's Subordinated Debt Securities        (15)         (15)          --          --
     Other, net                                                          29           59          (30)     (50.9%)
--------------------------------------------------------------------------------------------------------
         Total Other Income and Deductions                             (238)        (240)           2       (0.8%)
--------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES                                              596          600           (4)      (0.7%)

INCOME TAXES                                                            236          271          (35)     (12.9%)
--------------------------------------------------------------------------------------------------------

NET INCOME                                                        $     360       $  329       $   31        9.4%
--------------------------------------------------------------------------------------------------------
</TABLE>

Net Income
         Net income  increased $31 million,  or 9% for the six months ended June
30, 2002. Net income was impacted by a $35 million  decrease in income taxes due
to a lower  effective  income tax rate offset in part by a decrease in operating
income.















                                       77
<PAGE>

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

<TABLE>
<CAPTION>
                                                                For the six months ended June 30,
                                                                ---------------------------------
Retail Deliveries - (in GWh)                                                2002             2001          % Change
---------------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>              <C>              <C>
Bundled Deliveries (1)
Residential                                                               12,271           11,538           6.4%
Small Commercial & Industrial                                             11,049           11,678          (5.4%)
Large Commercial & Industrial                                              4,078            5,638         (27.7%)
Public Authorities & Electric Railroads                                    3,486            3,901         (10.6%)
-----------------------------------------------------------------------------------------------------
                                                                          30,884           32,755          (5.7%)
-----------------------------------------------------------------------------------------------------
Unbundled Deliveries (2)
ARES
----
Small Commercial & Industrial                                              2,181            1,107          97.0%
Large Commercial & Industrial                                              3,008            2,414          24.6%
Public Authorities & Electric Railroads                                      319              136         134.6%
-----------------------------------------------------------------------------------------------------
                                                                           5,508            3,657          50.6%
-----------------------------------------------------------------------------------------------------
PPO
---
Small Commercial & Industrial                                              1,602            1,622          (1.2%)
Large Commercial & Industrial                                              2,703            2,876          (6.0%)
Public Authorities & Electric Railroads                                      517              584         (11.5%)
-----------------------------------------------------------------------------------------------------
                                                                           4,822            5,082          (5.1%)
-----------------------------------------------------------------------------------------------------
     Total Unbundled Deliveries                                           10,330            8,739          18.2%
-----------------------------------------------------------------------------------------------------
Total Retail Deliveries                                                   41,214           41,494          (0.7%)
-----------------------------------------------------------------------------------------------------
<FN>
(1)  Bundled service  reflects  deliveries to customers  taking electric service
     under  tariffed  rates,  which  include the cost of energy and the delivery
     cost of the transmission and the distribution of the energy.
(2)  Unbundled   service  reflects   customers   electing  to  receive  electric
     generation service from an ARES or the PPO.
</FN>
</TABLE>


















                                       78
<PAGE>

<TABLE>
<CAPTION>
                                                       For the six months ended June 30,
                                                       ---------------------------------
Electric Revenue                                                       2002         2001     Variance      % Change
---------------------------------------------------------------------------------------------------------------------
Bundled Revenues (1)
<S>                                                               <C>           <C>          <C>            <C>
Residential                                                       $   1,041     $  1,035     $      6       0.6%
Small Commercial & Industrial                                           836          880          (44)     (5.0%)
Large Commercial & Industrial                                           218          280          (62)    (22.1%)
Public Authorities & Electric Railroads                                 194          216          (22)    (10.2%)
--------------------------------------------------------------------------------------------------------
                                                                      2,289        2,411         (122)     (5.1%)
--------------------------------------------------------------------------------------------------------
Unbundled Revenues (2)
ARES
----
Small Commercial & Industrial                                            43           26           17      65.4%
Large Commercial & Industrial                                            41           48           (7)    (14.6%)
Public Authorities & Electric Railroads                                   7            2            5       n.m.
--------------------------------------------------------------------------------------------------------
                                                                         91           76           15      19.7%
--------------------------------------------------------------------------------------------------------
PPO
---
Small Commercial & Industrial                                            98           90            8       8.9%
Large Commercial & Industrial                                           140          146           (6)     (4.1%)
Public Authorities & Electric Railroads                                  29           31           (2)     (6.5%)
--------------------------------------------------------------------------------------------------------
                                                                        267          267           --        --
--------------------------------------------------------------------------------------------------------
Total Unbundled Revenues                                                358          343           15       4.4%
--------------------------------------------------------------------------------------------------------
Total Electric Retail Revenues                                        2,647        2,754         (107)     (3.9%)
Wholesale and Miscellaneous Revenue (3)                                 149          222          (73)    (32.9%)
--------------------------------------------------------------------------------------------------------
Total Electric Revenue                                            $   2,796     $  2,976     $   (180)     (6.1%)
--------------------------------------------------------------------------------------------------------
<FN>
(1)  Bundled service  reflects  deliveries to customers  taking electric service
     under  tariffed  rates,  which  include the cost of energy and the delivery
     cost of the transmission and the distribution of the energy.
(2)  Revenue from customers choosing an ARES includes a distribution  charge and
     a CTC  charge.  Transmission  charges  received  from ARES are  included in
     wholesale and miscellaneous  revenue.  Revenues from customers choosing the
     PPO  includes  an  energy  charge  at  market  rates,   transmission,   and
     distribution charges and a CTC charge.
(3)  Wholesale and  miscellaneous  revenues include sales to ARES,  transmission
     revenue, sales to municipalities and other wholesale energy sales.
</FN>
</TABLE>

         The changes in electric  retail  revenues for the six months ended June
30, 2002, as compared to the six months ended June 30, 2001, are attributable to
the following:

<TABLE>
<CAPTION>
                                                                                                           Variance
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                                      <C>
Weather                                                                                                  $      (13)
Rate Changes                                                                                                    (54)
Customer Choice                                                                                                 (78)
Other Effects                                                                                                    38
---------------------------------------------------------------------------------------------------------------------
Retail Revenue                                                                                           $     (107)
---------------------------------------------------------------------------------------------------------------------
</TABLE>

o    Weather.  The  weather  impact for the six months  ended June 30,  2002 was
     unfavorable  compared to the six months  ended June 30, 2001 as a result of
     warmer winter  weather  partially  offset by warmer summer  weather in 2002
     compared  to 2001.  Heating  degree-days  decreased  6% and were  partially
     offset by a 29%  increase in cooling  degree-days  in the six months  ended
     June 30, 2002 compared to the six months ended June 30, 2001
o    Rate  Changes.  The decrease  attributable  to rate  changes  reflects a 5%
     residential  rate  reduction,  effective  October 1, 2001,  required by the
     Illinois restructuring legislation.




                                       79
<PAGE>

o    Customer Choice.  The decrease in revenues  reflects  customers in Illinois
     electing to purchase  energy from an ARES or the PPO. As of June 30,  2002,
     approximately  22,600 retail  customers had elected to purchase energy from
     an ARES or the ComEd PPO, an increase  from  14,000  customers  at June 30,
     2001. The MWhs delivered to such customers increased from approximately 8.7
     million for the six months  ended June 30, 2001 to 10.3 million for the six
     months ended June 30, 2002,  approximately a 20% increase from the previous
     year.
o    Other Effects. A strong housing  construction market in Chicago contributed
     to residential and small commercial and industrial  customer volume growth,
     partially  offset by the  unfavorable  impact of a slower  economy on large
     commercial and industrial customers.

         The  reduction in  wholesale  revenue for the six months ended June 30,
2002 as compared to the six months  ended June 30, 2001 was due  primarily  to a
$38 million  decrease in  off-system  sales due to the  expiration  of wholesale
contracts  that were  offered by ComEd from June 2000 to May 2001 to support the
open access program in Illinois,  a $15 million  reversal of reserve for revenue
refunds in 2001 related to certain of ComEd's municipal customers as a result of
a favorable FERC ruling, and $20 million of other miscellaneous revenue.

Purchased Power Expense
         Purchased  power  expense  decreased  $104  million,  or 9% for the six
months  ended June 30,  2002.  The  decrease  in  purchased  power  expense  was
primarily  attributable  to a $5 million  decrease  due to  unfavorable  weather
conditions, a $62 million decrease as a result of customers choosing to purchase
energy from an ARES,  and a $34 million  decrease due to the  expiration  of the
wholesale  contracts  offered by ComEd to  support  the open  access  program in
Illinois.

Operating and Maintenance Expense
         O&M expense remained relatively consistent from period to period.

Depreciation and Amortization Expense
         Depreciation and amortization  expense  decreased $66 million,  or 20%,
for the six months ended June 30, 2002.  This  decrease is primarily  due to the
discontinuation  of  goodwill  amortization  effective  January 1, 2002 upon the
adoption of SFAS No. 142  partially  offset by increased  depreciation  based on
higher property plant and equipment balances.

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

Interest Charges
         Interest  charges  decreased  $32  million,  or 11%, for the six months
ended June 30, 2002. The decrease in interest charges was primarily attributable
to the impact of lower  interest rates for the six months ended June 30, 2002 as
compared to the six months ended June 30, 2001, the early retirement of the $196
million of First  Mortgage  Bonds in November of 2001 and the retirement of $340
million in transitional trust notes since June 2001.




                                       80
<PAGE>

Other Income and Deductions
         Other income and deductions,  excluding interest charges, decreased $30
million,  or 51%,  for the six months  ended June 30,  2002.  The  decrease  was
primarily attributable to $8 million in intercompany interest income relating to
the $400 million receivable from PECO which was repaid during the second quarter
of 2001, and a $22 million reduction in intercompany interest income from Unicom
Investment Inc., reflecting lower interest rates.

Income Taxes
         The  effective  income tax rate was 39.6% for the six months ended June
30, 2002, compared to 45.2% for the six months ended June 30, 2001. The decrease
in the effective tax rate was primarily  attributable to the  discontinuation of
goodwill amortization as of January 1, 2002, which was not deductible for income
tax purposes.

LIQUIDITY AND CAPITAL RESOURCES

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

Cash Flows from Operating Activities
         Cash flows provided by operations  were $740 million for the six months
ended June 30, 2002  compared to $705  million for the six months ended June 30,
2001.  The increase in cash flows in 2002 was primarily  attributable  to a $107
million increase in other operating activities partially offset by a $67 million
decrease  in working  capital.  ComEd's  future  cash flows will depend upon the
ability  to  achieve  cost  savings in  operations,  the impact of the  economy,
weather, and customer choice on its revenues. Although the amounts may vary from
period to period as a result of  uncertainties  inherent in the business,  ComEd
expects to continue  to provide a reliable  and steady  source of internal  cash
flow from operations for the foreseeable future.

Cash Flows from Investing Activities
         Cash flows used in investing  activities  were $352 million for the six
months ended June 30, 2002 compared to $58 million for the six months ended June
30, 2001.  The increase in cash flows used in investing  activities  in 2002 was
primarily attributable to the paydown of the $400 million outstanding receivable
with PECO in the  second  quarter  of 2001  partially  offset by an $87  million
decrease  in capital  expenditures.  ComEd's  investing  activities  for the six
months ended June 30, 2002 were funded primarily through operating activities.

         ComEd estimated that it will spend  approximately $781 million in total
capital  expenditures  for 2002.  Approximately  two thirds of the budgeted 2002
expenditures  are for continuing  efforts to further  improve the reliability of
its  transmission  and  distribution  systems.  The  remaining  one third is for
capital additions to support new business and customer growth. ComEd anticipates
that it will obtain financing, when necessary,  through borrowings, the



                                       81
<PAGE>

issuance of preferred securities,  or capital contributions from Exelon. ComEd's
proposed  capital  expenditures  and other  investments  are subject to periodic
review and revision to reflect changes in economic conditions and other factors.

Cash Flows from Financing Activities
         Cash flows used in  financing  activities  were $57 million for the six
months  ended June 30, 2002 as compared to $322 million for the six months ended
June  30,  2001.  Cash  flows  used  in  financing   activities  were  primarily
attributable  to debt service and payments of dividends to Exelon.  ComEd's debt
financing  activities  for the six months  ended  June 30,  2002  reflected  the
issuance of $600 million in First Mortgage  Bonds,  the issuance of $100 million
of 7.25% Illinois Development Finance Authority  floating-rate Pollution Control
Revenue  Refunding Bonds,  the retirement of $170 million of transitional  trust
notes,  the early  retirement  of $200  million  in First  Mortgage  Bonds  with
available  cash,  and the  redemption  of $100  million of Illinois  Development
Finance Authority  Pollution Control Revenue Refunding Bonds. For the six months
ended June 30, 2001, ComEd's debt financing  activities reflected the retirement
of $170 million of transitional  trust notes. ComEd paid a $235 million dividend
to Exelon  during the six months ended June 30, 2002  compared to a $148 million
dividend for the six months ended June 30, 2001.

Credit Issues
         ComEd meets its short-term liquidity requirements primarily through the
issuance  of  commercial  paper,  borrowings  under bank credit  facilities  and
borrowings from the Exelon  intercompany  money pool. ComEd,  along with Exelon,
PECO and  Generation  entered into a $1.5 billion  unsecured  364-day  revolving
credit  facility  on December  12, 2001 with a group of banks.  ComEd has a $300
million  sublimit  under the  credit  facility  and  expects  to use the  credit
facility principally to support its $300 million commercial paper program.  This
credit facility requires ComEd to maintain a debt to total  capitalization ratio
of 65% or less (excluding  transitional  trust notes). At June 30, 2002, ComEd's
debt to total  capitalization  ratio on that  basis was 46%.  At June 30,  2002,
ComEd had no short-term borrowings.

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

         At June 30, 2002,  ComEd's capital  structure,  excluding the deduction
from shareholders' equity of the $875 million receivable from Exelon,  consisted
of 52% long-term  debt, 46% of common stock,  and 2% of preferred  securities of
subsidiaries.  Long-term debt included $2.1 billion of transitional  trust notes
constituting  obligations  of  certain  consolidated  special  purpose  entities
representing 16% of capitalization.



                                       82
<PAGE>

         Under PUHCA and the  Federal  Power Act,  ComEd can only pay  dividends
from retained or current earnings.  However, the SEC has authorized ComEd to pay
up to $500 million in dividends  out of  additional  paid-in  capital,  provided
ComEd may not pay  dividends out of paid-in  capital after  December 31, 2002 if
its  common  equity  is less  than 30% of its  total  capitalization  (including
transitional trust notes). At June 30, 2002, ComEd had retained earnings of $382
million.

Contractual Obligations and Commercial Commitments
         Contractual  obligations represent cash obligations that are considered
to  be  firm  commitments  and  commercial   commitments  represent  commitments
triggered by future  events.  ComEd's  contractual  obligations  and  commercial
commitments  as of June 30, 2002 were  materially  unchanged,  other than in the
normal  course of  business,  from the amounts as set forth in the  December 31,
2001 Form 10-K except for the issuance of $600 million of First  Mortgage  Bonds
due March 15, 2012, the issuance of $100 million of Illinois Development Finance
Authority  floating-rate Pollution Control Revenue Refunding Bonds, Series 2002,
the redemption of $100 million of 7.25% Illinois  Development  Finance Authority
Pollution Control Revenue  Refunding Bonds,  Series 1991, the redemption of $200
million of First Mortgage Bonds due February 1, 2022, and the retirement of $170
million in transitional trust notes.



















                                       83
<PAGE>



PECO ENERGY COMPANY

GENERAL

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

RESULTS OF OPERATIONS

Three Months Ended June 30, 2002 Compared to Three Months Ended June 30, 2001

<TABLE>
<CAPTION>
                                                              Three Months Ended June 30,
                                                              ---------------------------
                                                                       2002         2001     Variance      % Change
---------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>             <C>          <C>           <C>
OPERATING REVENUES                                                $     995       $  906       $   89        9.8%

OPERATING EXPENSES
     Purchased Power                                                    405          315           90       28.6%
     Fuel                                                                53           79          (26)     (32.9%)
     Operating and Maintenance                                          131          126            5        4.0%
     Depreciation and Amortization                                      109           99           10       10.1%
     Taxes Other Than Income                                             63           41           22       53.7%
-------------------------------------------------------------------------------------------------------
         Total Operating Expense                                        761          660          101       15.3%
-------------------------------------------------------------------------------------------------------

OPERATING INCOME                                                        234          246          (12)      (4.9%)
-------------------------------------------------------------------------------------------------------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                   (92)        (119)          27      (21.4%)
     Distributions on Company-Obligated Mandatorily
       Redeemable Preferred Securities of a Partnership
       which holds Solely Subordinated Debentures of
       the Company                                                       (2)          (2)          --         --
     Other, net                                                           2            4           (2)     (50.0%)
-------------------------------------------------------------------------------------------------------
         Total Other Income and Deductions                              (92)        (117)          25      (21.4%)
-------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES                                              142          129           13       10.1%

INCOME TAXES                                                             49           44            5       11.4%
-------------------------------------------------------------------------------------------------------

NET INCOME                                                               93           85            8        9.4%
Preferred Stock Dividends                                                (2)          (3)           1      (33.3%)
-------------------------------------------------------------------------------------------------------

NET INCOME ON COMMON STOCK                                        $      91       $   82       $    9       11.0%
-------------------------------------------------------------------------------------------------------
</TABLE>

         Net income on common stock increased $9 million, or 11% for the quarter
ended June 30, 2002 as  compared to the same 2001  period.  The  increase  was a
result  of  higher  additional  volume,  favorable  rate  adjustments  and lower
interest  expense  on  debt  partially  offset  by  increased  depreciation  and
amortization expense.







                                       84
<PAGE>

         PECO's electric sales statistics are as follows:

<TABLE>
<CAPTION>
                                                              For the three months ended June 30,
                                                              -----------------------------------
Deliveries - (in GWh)                                                       2002             2001          % Change
---------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>              <C>            <C>
Bundled Deliveries (1)
Residential                                                                2,115            1,673          26.4%
Small Commercial & Industrial                                              1,881            1,312          43.4%
Large Commercial & Industrial                                              3,927            3,172          23.8%
Public Authorities & Electric Railroads                                      200              181          10.5%
-------------------------------------------------------------------------------------------------------
                                                                           8,123            6,338          28.2%
-------------------------------------------------------------------------------------------------------
Unbundled Deliveries (2)
Residential                                                                  557              848         (34.3%)
Small Commercial & Industrial                                                  2              524         (99.6%)
Large Commercial & Industrial                                                 13              732         (98.2%)
Public Authorities & Electric Railroads                                       --                2        (100.0%)
-------------------------------------------------------------------------------------------------------
                                                                             572            2,106         (72.8%)
-------------------------------------------------------------------------------------------------------
Total Retail Deliveries                                                    8,695            8,444           3.0%
-------------------------------------------------------------------------------------------------------
<FN>
(1)  Bundled service  reflects  deliveries to customers  taking electric service
     under tariffed rates,  which include the cost of energy,  the delivery cost
     of the transmission and distribution of the energy and a CTC charge.
(2)  Unbundled   service  reflects   customers   electing  to  receive  electric
     generation service from an alternative energy supplier.
</FN>
</TABLE>

<TABLE>
<CAPTION>
                                                       For the three months ended June 30,
                                                       -----------------------------------
Electric Revenue                                                       2002         2001     Variance     %Change
-------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>           <C>          <C>           <C>
Bundled Revenue (1)
Residential                                                       $     278     $    222     $     56      25.2%
Small Commercial & Industrial                                           224          157           67      42.7%
Large Commercial & Industrial                                           288          224           64      28.6%
Public Authorities & Electric Railroads                                  19           17            2      11.8%
-------------------------------------------------------------------------------------------------------
                                                                        809          620          189      30.5%
-------------------------------------------------------------------------------------------------------
Unbundled Revenue (2)
Residential                                                              42           67          (25)    (37.3%)
Small Commercial & Industrial                                            --           28          (28)   (100.0%)
Large Commercial & Industrial                                             1           19          (18)    (94.7%)
Public Authorities & Electric Railroads                                  --           --           --        --
-------------------------------------------------------------------------------------------------------
                                                                         43          114          (71)    (62.3%)
-------------------------------------------------------------------------------------------------------
Total Electric Retail Revenues                                          852          734          118      16.1%
Wholesale and Miscellaneous Revenue (3)                                  59           60           (1)     (1.7%)
-------------------------------------------------------------------------------------------------------
Total Electric Revenue                                            $     911     $    794     $    117      14.7%
-------------------------------------------------------------------------------------------------------
<FN>
(1)  Bundled service  reflects  deliveries to customers  taking electric service
     under tariffed rates,  which include the cost of energy,  the delivery cost
     of the transmission and distribution of the energy and a CTC charge.
(2)  Revenue from  customers  receiving  generation  from an alternate  supplier
     includes a distribution charge and a CTC charge.
(3)  Wholesale and miscellaneous  revenues include sales,  transmission revenue,
     sales to municipalities and other wholesale energy sales.
</FN>
</TABLE>




                                       85
<PAGE>

         The changes in electric  retail revenues for the quarter ended June 30,
2002, as compared to the same 2001 period, are as follows:

<TABLE>
<CAPTION>
                                                                                                           Variance
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                                         <C>
Customer Choice                                                                                             $    85
Rate Changes                                                                                                     13
Weather                                                                                                           1
Other Effects                                                                                                    19
---------------------------------------------------------------------------------------------------------------------
Electric Retail Revenue                                                                                     $   118
---------------------------------------------------------------------------------------------------------------------
</TABLE>

o    Customer  Choice.  All PECO customers  have choice to purchase  energy from
     other suppliers. This choice generally does not impact kWh deliveries,  but
     reduces  revenue  collected from  customers  because they are not obtaining
     generation supply from PECO.
              As of June  30,  2002,  the  customer  load  served  by  alternate
     suppliers  was 991 MW or 12.8% as  compared to 1,102 MW or 14.5% as of June
     30, 2001.  For the quarter ended June 30, 2002, the percent of PECO's total
     retail  deliveries  for which PECO was the  electric  supplier was 93.4% in
     2002, an 18.3%  increase as compared to 75.1% in 2001. As of June 30, 2002,
     the number of customers served by alternate  suppliers was 308,866 or 20.2%
     as  compared  to June 30, 2001 of 400,972 or 26.4%.  The  increases  in the
     customer load and the percentage of MWh served by PECO, and the decrease in
     the number of customers served by alternative  suppliers primarily resulted
     from customers  selecting or returning to PECO as their electric generation
     supplier.
              In February 2002,  New Power Company (New Power)  notified PECO of
     its intent to withdraw from providing  Competitive Default Service (CDS) to
     approximately   180,000  residential   customers.   As  a  result  of  that
     withdrawal, those CDS customers were returned to PECO in the second quarter
     of 2002.  Pursuant to a tariff filing approved by the  Pennsylvania  Public
     Utility  Commission (PUC), PECO will serve those returned  customers at the
     discount  energy  rates on  generation  provided for under the original New
     Power CDS Agreement for the remaining term of that contract.  Subsequently,
     in the second  quarter of 2002,  New Power also  advised PECO it planned to
     withdraw  from  serving all of its  customers  in  Pennsylvania,  including
     approximately 15,000 non-CDS PECO customers,  and to return those customers
     to PECO in September.
o    Rate  Changes.  The  increase  in  revenues  attributable  to rate  changes
     primarily  reflects a $13 million  increase due to an increase in the gross
     receipts tax rate effective January 1, 2002.
              As permitted by the  Pennsylvania  Electric  Competition  Act, the
     Pennsylvania  Department of Revenue has  calculated a 2002 Revenue  Neutral
     Reconciliation  (RNR) adjustment to the gross receipts tax rate in order to
     neutralize the impact of electric  restructuring  on its tax revenues.  The
     RNR adjustment  increases the gross receipts tax rate,  which will increase
     PECO's annual revenues and tax obligations by approximately  $50 million in
     2002.  In  January  2002,  the PUC  approved  the  adjustment  to the gross
     receipts tax rate, which was implemented effective January 1, 2002. The RNR
     adjustment is under appeal.
o    Weather. The demand for electricity and gas services is impacted by weather
     conditions.  Very warm  weather in summer  months and very cold  weather in
     other  months is referred to as  "favorable  weather  conditions",  because
     these weather  conditions result in increased sales of electricity and gas.
     Conversely, mild weather reduces demand.



                                       86
<PAGE>

         The weather impact was favorable compared to the prior year as a result
     of warmer summer weather.
o    Other Effects.  Other items affecting revenue during the quarter ended June
     30, 2002 include:
     o    Volume.  Exclusive of weather impacts, higher delivery volume affected
          PECO's revenue by $24 million compared to the same 2001 period.
     o    Other.  The  payment of $7 million  to  Generation  related to nuclear
          decommissioning  cost recovery under an agreement  effective September
          2001, which reduced PECO's revenue compared to the prior year.

         PECO's gas sales  statistics  for the  quarter  ended June 30,  2002 as
compared to the same 2001 period are as follows:

<TABLE>
<CAPTION>
                                                                For the three months ended June 30,
                                                                -----------------------------------
                                                                                   2002         2001       Variance
--------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>          <C>               <C>
Deliveries in mmcf                                                               14,286       13,781            505
Revenue                                                                             $84        $ 112         $ (28)
--------------------------------------------------------------------------------------------------------------------
</TABLE>

         The  changes in gas revenue for the  quarter  ended June 30,  2002,  as
compared to the same 2001 period, are as follows:

<TABLE>
<CAPTION>
(in millions)                                                                                              Variance
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                                       <C>
Rate Changes                                                                                              $     (28)
Weather                                                                                                          --
Volume                                                                                                           (1)
Other                                                                                                             1
---------------------------------------------------------------------------------------------------------------------
Gas Revenue                                                                                               $     (28)
---------------------------------------------------------------------------------------------------------------------
</TABLE>

o    Rate  Changes.  The  unfavorable  variance in rates is  attributable  to an
     adjustment  of the  purchased  gas cost  recovery by the PUC  effective  in
     December  2001.  The average rate per million  cubic feet for all customers
     for the  quarter  ended  June 30,  2002 was 28%  lower  than the same  2001
     period.  PECO's gas rates are  subject to periodic  adjustments  by the PUC
     designed  to  recover  or refund  the  difference  between  actual  cost of
     purchased  gas and the  amount  included  in base  rates and to  recover or
     refund  increases or decreases in certain state taxes not recovered in base
     rates.
o    Weather.  The weather  impact was neutral during the quarter ended June 30,
     2002 compared to the same 2001 period.
o    Volume. Exclusive of weather impact, delivery volume was consistent for the
     quarter ended June 30, 2002 compared to the same 2001 period.





                                       87
<PAGE>

Purchased Power and Fuel Expense
         Purchased  power and fuel  expense for the quarter  ended June 30, 2002
increased $64 million as compared to the same 2001 period.  The increase in fuel
and  purchased  power  expense was  primarily  attributable  to $73 million from
customers in  Pennsylvania  selecting  or  returning  to PECO as their  electric
generation supplier, $9 million primarily attributable to higher delivery volume
and higher PJM ancillary  charges of $8 million.  These increases were partially
offset by $28 million from lower gas prices.

Operating and Maintenance Expense
         O&M expense for the quarter  ended June 30, 2002  increased $5 million,
or 4%, as  compared  to the same 2001  period.  The  increase in O&M expense was
primarily  attributable  to $5 million  related to the  deployment  of automated
meter reading  technology and $3 million  related to an increased  allocation of
corporate expense.

Depreciation and Amortization Expense
         Depreciation  and  amortization  expense for the quarter ended June 30,
2002  increased  $10 million,  or 10%, as compared to the same 2001 period.  The
increase was primarily attributable to $9 million of additional  amortization of
PECO's  CTC and an  increase  of $1  million  related  to  depreciation  expense
associated with additional plant in service. The additional  amortization of the
CTC is in accordance  with PECO's  original  settlement  under the  Pennsylvania
Competition Act.

Taxes Other Than Income
         Taxes other than income for the quarter  ended June 30, 2002  increased
$22  million,  or 54%, as compared to the same 2001  period.  The  increase  was
primarily  attributable  to additional  gross receipts tax related to additional
revenues  and an increase  in the gross  receipts  tax rate on electric  revenue
effective January 1, 2002.

Interest Charges
         Interest  charges  consist of  interest  expense and  distributions  on
Company-Obligated  Mandatorily  Redeemable Preferred Securities of a Partnership
(COMRPS).  Interest charges  decreased $27 million,  or 21% in the quarter ended
June 30, 2002 as compared to the same 2001 period.  The  decrease was  primarily
attributable  to lower  interest  expense on long-term  debt of $22 million as a
result of principal  payments  and lower  interest  rates and  interest  expense
related to a loan from an affiliate in 2001 of $2 million.

Other Income and Deductions
         Other  income  and  deductions   excluding  interest  charges  remained
consistent  in the  quarter  ended June 30,  2002 as  compared  to the same 2001
period.

Income Taxes
         The  effective  tax rate was  substantially  unchanged at 34.5% for the
quarter ended June 30, 2002 as compared to 34.1% for the same 2001 period.



                                       88
<PAGE>

Preferred Stock Dividends
         Preferred  stock  dividends  for the  quarter  ended June 30, 2002 were
consistent as compared to the same 2001 period.

Six Months Ended June 30, 2002 Compared to Six Months Ended June 30, 2001

<TABLE>
<CAPTION>
                                                                Six Months Ended June 30,
                                                                -------------------------
                                                                       2002         2001     Variance      % Change
---------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>             <C>          <C>           <C>
OPERATING REVENUES                                                $   2,015       $1,957       $   58        3.0%

OPERATING EXPENSES
     Purchased Power                                                    756          598          158       26.4%
     Fuel                                                               188          284          (96)     (33.8%)
     Operating and Maintenance                                          267          258            9        3.5%
     Depreciation and Amortization                                      221          200           21       10.5%
     Taxes Other Than Income                                            122           84           38       45.2%
--------------------------------------------------------------------------------------------------------
         Total Operating Expense                                      1,554        1,424          130        9.1%
--------------------------------------------------------------------------------------------------------

OPERATING INCOME                                                        461          533          (72)     (13.5%)
--------------------------------------------------------------------------------------------------------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                  (187)        (227)          40      (17.6%)
     Distributions on Company-Obligated Mandatorily
       Redeemable Preferred Securities of a Partnership
       which holds Solely Subordinated Debentures of
       the Company                                                       (5)          (5)          --         --
     Other, net                                                           2           18          (16)     (88.9%)
--------------------------------------------------------------------------------------------------------
         Total Other Income and Deductions                             (190)        (214)          24      (11.2%)
--------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES                                              271          319          (48)     (15.0%)

INCOME TAXES                                                             90          112          (22)     (19.6%)
--------------------------------------------------------------------------------------------------------

NET INCOME                                                              181          207          (26)     (12.6%)
Preferred Stock Dividends                                                (4)          (5)           1      (20.0%)
--------------------------------------------------------------------------------------------------------

NET INCOME ON COMMON STOCK                                        $     177       $  202       $  (25)     (12.4%)
--------------------------------------------------------------------------------------------------------
</TABLE>

         Net income on common stock  decreased  $25 million,  or 12% for the six
months ended June 30, 2002 as compared to the same 2001 period. The decrease was
a result of lower  margins due to the unplanned  return of certain  residential,
commercial and industrial customers,  milder weather, increased depreciation and
amortization expense, partially offset by favorable rate adjustments.




                                       89
<PAGE>

         PECO's electric sales statistics are as follows:

<TABLE>
<CAPTION>
                                                                For the six months ended June 30,
                                                                ---------------------------------
Deliveries - (in GWh)                                                       2002             2001          % Change
-------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>              <C>             <C>
Bundled Deliveries (1)
Residential                                                                4,171            4,132           0.9%
Small Commercial & Industrial                                              3,638            2,313          57.3%
Large Commercial & Industrial                                              7,278            5,703          27.6%
Public Authorities & Electric Railroads                                      393              374           5.1%
--------------------------------------------------------------------------------------------------------
                                                                          15,480           12,522          23.6%
--------------------------------------------------------------------------------------------------------
Unbundled Deliveries (2)
Residential                                                                1,348            1,375          (2.0%)
Small Commercial & Industrial                                                 99            1,416         (93.0%)
Large Commercial & Industrial                                                116            1,921         (94.0%)
Public Authorities & Electric Railroads                                       --                7        (100.0%)
--------------------------------------------------------------------------------------------------------
                                                                           1,563            4,719         (66.9%)
--------------------------------------------------------------------------------------------------------
Total Retail Deliveries                                                   17,043           17,241          (1.1%)
--------------------------------------------------------------------------------------------------------
<FN>
(1)  Bundled service  reflects  deliveries to customers  taking electric service
     under tariffed rates,  which include the cost of energy,  the delivery cost
     of the transmission and distribution of the energy and a CTC charge.
(2)  Unbundled   service  reflects   customers   electing  to  receive  electric
     generation service from an alternative energy supplier.
</FN>
</TABLE>



<TABLE>
<CAPTION>
                                                           For the six months ended June 30,
                                                           ---------------------------------
Electric Revenue                                                       2002         2001        Variance  % Change
-------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>           <C>          <C>            <C>
Bundled Revenue (1)
Residential                                                       $     522     $    503     $     19       3.8%
Small Commercial & Industrial                                           413          264          149      56.4%
Large Commercial & Industrial                                           532          407          125      30.7%
Public Authorities & Electric Railroads                                  37           34            3       8.8%
--------------------------------------------------------------------------------------------------------
                                                                      1,504        1,208          296      24.5%
--------------------------------------------------------------------------------------------------------
Unbundled Revenue (2)
Residential                                                              96          103           (7)     (6.8%)
Small Commercial & Industrial                                             5           68          (63)    (92.6%)
Large Commercial & Industrial                                             3           54          (51)    (94.4%)
Public Authorities & Electric Railroads                                  --            1           (1)   (100.0%)
--------------------------------------------------------------------------------------------------------
                                                                        104          226         (122)    (54.0%)
--------------------------------------------------------------------------------------------------------
Total Electric Retail Revenues                                        1,608        1,434          174      12.1%
Wholesale and Miscellaneous Revenue (3)                                 114          116           (2)     (1.7%)
--------------------------------------------------------------------------------------------------------
Total Electric Revenue                                            $   1,722     $  1,550     $    172      11.1%
--------------------------------------------------------------------------------------------------------
<FN>
(1)  Bundled service  reflects  deliveries to customers  taking electric service
     under tariffed rates,  which include the cost of energy,  the delivery cost
     of the transmission and distribution of the energy and a CTC charge.
(2)  Revenue from  customers  receiving  generation  from an alternate  supplier
     includes a distribution charge and a CTC charge.
(3)  Wholesale and miscellaneous  revenues include sales,  transmission revenue,
     sales to municipalities and other wholesale energy sales.
</FN>
</TABLE>




                                       90

<PAGE>

         The changes in electric  retail  revenues for the six months ended June
30, 2002, as compared to the same 2001 period, are as follows:

<TABLE>
<CAPTION>
                                                                                                           Variance
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                                        <C>
Customer Choice                                                                                            $    165
Rate Changes                                                                                                     39
Weather                                                                                                         (18)
Other Effects                                                                                                   (12)
---------------------------------------------------------------------------------------------------------------------
Electric Retail Revenue                                                                                    $    174
---------------------------------------------------------------------------------------------------------------------
</TABLE>


o    Customer Choice. As of June 30, 2002, the customer load served by alternate
     suppliers  was 991 MW or 12.8% as  compared to 1,102 MW or 14.5% as of June
     30, 2001.  For the six months  ended June 30,  2002,  the percent of PECO's
     total retail  deliveries for which PECO was the electric supplier was 90.9%
     in 2002,  an 18.2%  increase as  compared to 72.7% in 2001.  As of June 30,
     2002, the number of customers served by alternate  suppliers was 308,866 or
     26.4% as compared to June 30,  2001 of 400,972 or 26.4%.  This  increase in
     the  customer  load and the  percentage  of MWh  served  by  PECO,  and the
     decrease  in the  number  of  customers  served  by  alternative  suppliers
     primarily  resulted from customers  selecting or returning to PECO as their
     electric generation supplier.
o    Rate  Changes.  The  increase  in  revenues  attributable  to rate  changes
     primarily  reflects the  expiration  of a 6%  reduction in PECO's  electric
     rates  during the first  quarter of 2001 and a $26  million  increase  as a
     result of the increase in the gross receipts tax rate effective  January 1,
     2002.  These increases are partially  offset by the timing of a $60 million
     rate reduction in effect for 2001 and 2002.
o    Weather.  The  weather  impact was  unfavorable  compared to the prior year
     primarily  as a  result  of  warmer  winter  weather.  Heating  degree-days
     decreased  15% for the six months ended June 30, 2002  compared to the same
     2001 period.
o    Other Effects.  Other items  affecting  revenue during the six months ended
     June 30, 2002 include:
     o    Volume. Exclusive of weather impacts, higher delivery volume increased
          PECO's revenue by $7 million compared to the same 2001 period.
     o    Other.  The  payment of $14 million to  Generation  related to nuclear
          decommissioning  cost recovery under an agreement  effective September
          2001 which reduced  PECO's  revenue  compared to the prior year and an
          $11  million  settlement  of  CTCs by a large  customer  in the  first
          quarter of 2001.

         PECO's gas sales  statistics  for the six months ended June 30, 2002 as
compared to the same 2001 period are as follows:

<TABLE>
<CAPTION>
                                                                                   2002         2001       Variance
--------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>          <C>           <C>
Deliveries in mmcf                                                               45,643       48,011        (2,368)
Revenue                                                                            $293         $407        $ (114)
--------------------------------------------------------------------------------------------------------------------
</TABLE>





                                       91
<PAGE>

         The changes in gas revenue for the six months ended June 30,  2002,  as
compared to the same 2001 period, are as follows:

<TABLE>
<CAPTION>
                                                                                                           Variance
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                                       <C>
Rate Changes                                                                                              $     (63)
Weather                                                                                                         (30)
Volume                                                                                                          (22)
Other                                                                                                             1
---------------------------------------------------------------------------------------------------------------------
Gas Revenue                                                                                               $    (114)
---------------------------------------------------------------------------------------------------------------------
</TABLE>

o    Rate  Changes.  The  unfavorable  variance in rates is  attributable  to an
     adjustment  of the  purchased  gas cost  recovery by the PUC  effective  in
     December  2001.  The average rate per million  cubic feet for all customers
     for the six  months  ended  June 30,  2002 was 24% lower than the same 2001
     period.
o    Weather.  The  unfavorable  weather impact is attributable to warmer winter
     weather  during the six months  ended June 30, 2002 as compared to the same
     2001 period. Heating degree-days decreased 15% in the six months ended June
     30, 2002 compared to the same 2001 period.
o    Volume.  Exclusive  of weather  impacts,  lower  delivery  volume  affected
     revenue by $22 million in the six months  ended June 30,  2002  compared to
     the same 2001 period.  Total deliveries to retail customers decreased 5% in
     the six  months  ended  June 30,  2002  compared  to the same 2001  period,
     primarily  as a result  of slower  economic  conditions  in 2002  offset by
     increased customer growth.

Purchased Power and Fuel Expense
         Purchased power and fuel expense for the six months ended June 30, 2002
increased $62 million as compared to the same 2001 period.  The increase in fuel
and  purchased  power expense was  primarily  attributable  to $150 million from
customers in  Pennsylvania  selecting  or  returning  to PECO as their  electric
generation  supplier  and higher PJM  ancillary  charges of $17  million.  These
increases  were  partially  offset by $63  million  from lower gas  prices,  $30
million as a result of unfavorable  weather conditions and $22 million primarily
attributable to lower delivery volume primarily related to gas.

Operating and Maintenance Expense
         O&M  expense  for the six  months  ended  June 30,  2002  increased  $9
million, or 4%, as compared to the same 2001 period. The increase in O&M expense
was primarily attributable to $12 million related to the deployment of automated
meter reading  technology and $9 million  related to an increased  allocation of
corporate  expense.  These  increases  were  partially  offset by $6  million of
incremental  storm costs in 2001 and $4 million  associated  with a write-off of
excess and obsolete inventory in 2001.









                                       92
<PAGE>

Depreciation and Amortization Expense
         Depreciation and amortization expense for the six months ended June 30,
2002  increased  $21 million,  or 11%, as compared to the same 2001 period.  The
increase was primarily attributable to $17 million of additional amortization of
PECO's  CTC and an  increase  of $4  million  related  to  depreciation  expense
associated with additional plant in service. The additional  amortization of the
CTC is in accordance  with PECO's  original  settlement  under the  Pennsylvania
Competition Act.

Taxes Other Than Income
         Taxes  other  than  income  for the six  months  ended  June  30,  2002
increased $38 million, or 45%, as compared to the same 2001 period. The increase
was  primarily   attributable  to  additional  gross  receipts  tax  related  to
additional  revenues and an increase in the gross  receipts tax rate on electric
revenue effective January 1, 2002.

Interest Charges
         Interest charges decreased $40 million,  or 18% in the six months ended
June 30, 2002 as compared to the same 2001 period.  The  decrease was  primarily
attributable  to lower  interest  expense on long-term  debt of $32 million as a
result of principal  payments,  lower interest rates and an $8 million reduction
in interest expense due to lower interest rates on a loan from ComEd in 2001.

Other Income and Deductions
         Other income and deductions  excluding  interest charges  decreased $16
million,  or 89% in the six months  ended June 30,  2002 as compared to the same
2001  period.  The  decrease  in  other  income  and  deductions  was  primarily
attributable  to lower  interest  income of $6 million in 2002. The decrease was
also  attributable  to a gain on the  settlement  of an interest rate swap of $6
million and the favorable settlement of a customer contract of $3 million,  both
of which occurred in 2001.

Income Taxes
         The effective tax rate was 33.2% for the six months ended June 30, 2002
as compared to 35.1% for the same 2001 period. The decrease in the effective tax
rate was primarily attributable to a reduction in state income taxes.

Preferred Stock Dividends
         Preferred  stock  dividends  for the  quarter  ended June 30, 2002 were
consistent as compared to the same 2001 period.

LIQUIDITY AND CAPITAL RESOURCES

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


                                       93
<PAGE>

payment of common stock dividends to Exelon.

Cash Flows from Operating Activities
         Cash flows  provided by  operations  for the six months  ended June 30,
2002 were $468  million  compared to $427  million for the six months ended June
30,  2001.  The  increase  in cash  flows was  primarily  attributable  to lower
payments  related to  accounts  payable of $46  million,  higher  collection  of
deferred  energy  costs as a result of a change in gas rates of $42  million and
lower prepaid taxes of $29 million.  These  increases were  partially  offset by
changes in  intercompany  receivables  and  payables of $41 million and deferred
income  taxes  of $32  million.  PECO's  cash  flow  from  operating  activities
primarily results from sales of electricity and gas to a stable and diverse base
of retail  customers at fixed prices.  PECO's future cash flows will depend upon
the  ability  to  achieve  cost  savings  in  operations,  and the impact of the
economy,  weather and customer choice on its revenues.  Although the amounts may
vary from  period to period  as a result of the  uncertainties  inherent  in its
business,  PECO expects  that it will  continue to provide a reliable and steady
source of internal cash flow from operations for the foreseeable future.

Cash Flows from Investing Activities
         Cash flows used in investing  activities  for the six months ended June
30, 2002 were $122 million compared to $87 million for the six months ended June
30, 2001. The increase in cash flows used in investing  activities was primarily
attributable  to an increase in other  investing  activities.  PECO's  investing
activities  during the six months  ended June 30, 2002 were funded  primarily by
operating activities.

         PECO's  projected  capital  expenditures  for 2002  are  $284  million.
Approximately  one  half of the  budgeted  2002  expenditures  are  for  capital
additions to support  customer and load growth and the  remainder  for additions
and  upgrades  to  existing  facilities.  PECO  anticipates  that it will obtain
financing,  when  necessary,  through  borrowings,  the  issuance  of  preferred
securities,  or capital  contributions  from  Exelon.  PECO's  proposed  capital
expenditures  and other  investments are subject to periodic review and revision
to reflect changes in economic conditions and other factors.

Cash Flows from Financing Activities
         Cash flows used in financing  activities  for the six months ended June
30, 2002 were $306  million  compared to $332  million for the six months  ended
June  30,  2001.   Cash  flows  used  in  financing   activities  are  primarily
attributable  to debt service and payment of dividends to Exelon.  The change in
cash flows used in financing activities is primarily attributable to an increase
in commercial  paper  borrowings of $196 million  partially offset by additional
dividends paid to Exelon of $69 million, the contribution from Exelon in 2001 of
$53  million,  additional  debt service of $34  million,  and proceeds  from the
settlement of interest rate swap agreements in 2001 of $31 million.

Credit Issues
         At June 30, 2002,  PECO had  outstanding  $175 million of notes payable
consisting  principally of commercial paper. Certain of the credit agreements to
which PECO is a party  require  PECO to maintain a debt to total  capitalization
ratio of 65% or less, excluding



                                       94
<PAGE>

securitization  debt and excluding the receivable from parent recorded in PECO's
shareholders'  equity. At June 30, 2002, the debt to total capitalization ratios
on that basis for PECO was 38%.

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

         At June 30, 2002,  PECO's  capital  structure,  excluding the deduction
from shareholders' equity of the $1.8 billion receivable from Exelon,  consisted
of 26% common  equity,  2% notes payable,  3% preferred  stock and COMRPS (which
comprised 2% of PECO's total capitalization  structure),  and 69% long-term debt
including  transition  bonds  issued by PECO  Energy  Transition  Trust  (PETT).
Long-term  debt included $4.4 billion of transition  bonds  representing  52% of
capitalization.

         Under PUHCA and the Federal Power Act, PECO can pay dividends only from
retained or current  earnings.  At June 30, 2002, PECO had retained  earnings of
$277 million.

Contractual Obligations and Commercial Commitments
         Contractual  obligations represent cash obligations that are considered
to  be  firm  commitments  and  commercial   commitments  represent  commitments
triggered  by future  events.  PECO's  contractual  obligations  and  commercial
commitments  as of June 30, 2002 were  materially  unchanged,  other than in the
normal  course of  business,  from the amounts as set forth in the  December 31,
2001 Form 10-K except for an $85 million  increase in the amount of surety bonds
required by PECO's insurance  policies.  Approximately  one-fourth of the surety
bonds expire in the remainder of 2002 and the other three-fourths  expire in the
two-year period ending December 2004.

















                                       95
<PAGE>



EXELON GENERATION COMPANY, LLC

GENERAL

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

         Generation  early  adopted  the  provision  of EITF 02-3 that  requires
revenues and energy costs related to energy trading contracts to be presented on
a net basis in the income  statement.  For  comparative  purposes,  energy costs
related to energy trading have been  reclassified in prior periods to revenue to
conform with the net basis of presentation required by EITF 02-3.

RESULTS OF OPERATIONS

Three Months Ended June 30, 2002 Compared to Three Months Ended June 30, 2001

Significant Operating Trends - Generation
<TABLE>
<CAPTION>
                                                             Three Months Ended June 30,
                                                             ---------------------------
                                                                       2002         2001     Variance      % Change
---------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>             <C>          <C>          <C>
OPERATING REVENUES                                                $   1,559       $1,583       $  (24)      (1.5%)

OPERATING EXPENSES
   Purchased Power                                                      705          721          (16)      (2.2%)
   Fuel                                                                 224          230           (6)      (2.6%)
   Operating and Maintenance                                            411          405            6        1.5%
   Depreciation                                                          65           75          (10)     (13.3%)
   Taxes Other Than Income                                               41           39            2        5.1%
--------------------------------------------------------------------------------------------------------
     Total Operating Expense                                          1,446        1,470          (24)      (1.6%)
--------------------------------------------------------------------------------------------------------

OPERATING INCOME                                                        113          113           --
--------------------------------------------------------------------------------------------------------

OTHER INCOME AND DEDUCTIONS
   Interest Expense                                                     (11)         (26)          15      (57.7%)
   Equity in Earnings (Losses) of Unconsolidated Affiliates, net          9           13           (4)     (30.8%)
   Other, net                                                            24           14           10       71.4%
--------------------------------------------------------------------------------------------------------
     Total Other Income and Deductions                                   22            1           21        n.m.
--------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES                                              135          114           21       18.4%

INCOME TAXES                                                             51           43            8       18.6%
--------------------------------------------------------------------------------------------------------

NET INCOME                                                        $      84       $   71           13       18.3%
--------------------------------------------------------------------------------------------------------
n.m. - not meaningful
</TABLE>

Net Income
         Generation's net income increased by $13 million, or 18%, for the three
months  ended June 30, 2002  compared to the same period in the prior year.  Net
income was positively  impacted by increased revenue from affiliates,  increased
revenue from the acquisition of two generating  plants in April 2002 and reduced
depreciation  and interest  expense,  partially  offset by  depressed  wholesale
market prices for energy.

Operating Revenues, Net of Purchased Power and Fuel
         Operating  revenues,  net of purchased power and fuel were $630 million
for the three months  ended June 30, 2002  compared to $632 million for the same
period in 2001. The $2 million, or 0.3%, decrease was due to lower market prices
for energy,  which reduced  margins by $46 million during the three months ended
June 30, 2002  compared to the same period in 2001.


                                       96
<PAGE>

This  decrease was  partially  offset by a $43 million  increase in revenue from
affiliates, revenue from two generating plants acquired in April 2002, and lower
fuel costs. The average  wholesale market prices were $7.00, or 18.6%,  lower in
2002 compared to 2001.  Generation's average purchased power costs for wholesale
operations  were  $39.96  per MWh for the  three  months  ended  June 30,  2002,
compared to $45.27 per MWh for the same period in 2001. The decrease in purchase
power  costs  resulted  from the  decrease in  wholesale  power  market  prices.
Additionally,  revenue for the three months  ended June 30, 2002  includes a net
trading  portfolio loss of $16 million compared to a net $6 million loss for the
three months ended June 30, 2001.

         For the three months ended June 30, 2002 and 2001,  Generation's  sales
and the supply of these sales excluding the trading portfolio, were as follows:

<TABLE>
<CAPTION>
                                                                                        Three Months Ended June 30,
                                                                                        ---------------------------
Sales (in GWhs)                                                                              2002              2001
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                        <C>               <C>
Energy Delivery                                                                            28,294            28,105
Exelon Energy                                                                               1,355             1,415
Market Sales                                                                               20,589            18,548
---------------------------------------------------------------------------------------------------------------------
Total Sales                                                                                50,238            48,068
---------------------------------------------------------------------------------------------------------------------


                                                                                        Three Months Ended June 30,
                                                                                        ---------------------------
Supply of Sales (in GWhs)                                                                    2002              2001
---------------------------------------------------------------------------------------------------------------------
Nuclear Generation                                                                         28,353            28,443
Purchases - non-trading portfolio                                                          18,220            16,392
Fossil and Hydro Generation                                                                 3,665             3,233
---------------------------------------------------------------------------------------------------------------------
Total Supply                                                                               50,238            48,068
---------------------------------------------------------------------------------------------------------------------
</TABLE>

         Trading  volume was 8,566 GWhs and 454 GWhs for the three  months ended
June 30, 2002 and 2001, respectively.


         Generation's average margins on energy sales for the three months ended
June 30, 2002 and 2001 are as follows:
<TABLE>
<CAPTION>
                                                                                        Three Months Ended June 30,
                                                                                        ---------------------------
($/MWh)                                                                                      2002              2001
---------------------------------------------------------------------------------------------------------------------
Average Realized Revenue
<S>                                                                                  <C>             <C>
     Energy Delivery                                                                 $     31.45     $       30.09
     Exelon Energy                                                                         44.73             40.11
     Market Sales                                                                          30.69             37.69
     Total Sales - excluding the trading portfolio                                         31.50             33.32

Average Supply Cost - excluding the trading portfolio                                $     18.79     $       20.05

Average Margin - excluding the trading portfolio                                     $     12.71     $       13.27
---------------------------------------------------------------------------------------------------------------------
</TABLE>

         Generation's nuclear fleet, including AmerGen,  performed at a capacity
factor of 92.1% for the three months  ended June 30, 2002  compared to 93.6% for
the  same  period  in  2001.


                                       97
<PAGE>

Generation's nuclear fleet's production costs,  including AmerGen, for the three
months  ended June 30, 2002 were  $12.54 per MWh  compared to $13.02 per MWh for
the same  period in 2001.  The lower  capacity  factor  is  primarily  due to 72
planned  outage days in the three months ended June 30, 2002,  versus 31 days in
the same  period in 2001,  including  AmerGen.  Reduced  unit  production  costs
reflect  additional  generation due to power uprates and lower  production costs
due to headcount reductions and Exelon's Cost Management Initiative in the three
months ended June 30, 2002 as compared to the same period in 2001.

Operating and Maintenance
         Operating and maintenance expenses increased $6 million, or 2%, for the
three  months  ended June 30,  2002  compared  to the same  period in 2001.  The
increase was primarily due to additional  employee  benefit costs of $9 million,
additional  operating  costs  related to fossil  plant outage work and the costs
related to the two generating plants acquired in April 2002 of $3 million. These
increases were  partially  offset by $7 million less in nuclear outage costs and
other operating cost reductions  including savings from Exelon's Cost Management
Initiative.

Depreciation
         Depreciation  expenses  decreased  $10  million,  or 13%, for the three
months ended June 30, 2002  compared to the same period in the prior year due to
a $16 million  reduction in  depreciation  expense arising from the extension of
the useful lives on certain generation  facilities in the third quarter of 2001,
partially offset by additional  depreciation expense on capital additions placed
in service  after June 30, 2001  including  the  acquisition  of two  generating
plants in April 2002.

Taxes Other Than Income
         Taxes other than  income  increased  $2  million,  or 5%, for the three
months  ended  June 30,  2002  compared  to the same  period in the  prior  year
primarily due to an increase in property taxes.

Interest Expense
         Interest  expense  decreased $15 million,  or 58%, for the three months
ended June 30, 2002, compared to the same period in the prior year. The decrease
is primarily due to capitalized  interest and a lower interest rate on the spent
nuclear fuel obligation.

Equity in Earnings of Unconsolidated Affiliates
         Equity in earnings of unconsolidated  affiliates  decreased $4 million,
or 31%, for the three months ended June 30, 2002  compared to the same period in
the prior year. This decrease was due to a $7 million  reduction in Generation's
equity earnings in AmerGen, primarily due to a planned plant outage, which began
in the first quarter of 2002. This decrease is partially  offset by a $3 million
increase in Generation's equity earnings in Sithe.

Other, net
         Other,  net  increased  $10 million for the three months ended June 30,
2002  compared  to the same  period in the  prior  year  primarily  due to a $10
million  increase in investment  income from the nuclear  decommissioning  trust
funds.





                                       98
<PAGE>

Income Taxes
         The  effective  income  tax rate was  unchanged  at 37.7% for the three
months ended June 30, 2002 and 2001.


Significant Operating Trends - Generation
<TABLE>
<CAPTION>
                                                               Six Months Ended June 30,
                                                               -------------------------
                                                                       2002         2001     Variance      % Change
---------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>             <C>          <C>          <C>
OPERATING REVENUES                                                $   3,020       $3,211       $ (191)      (5.9%)

OPERATING EXPENSES
   Purchased Power                                                    1,323        1,320            3        0.2%
   Fuel                                                                 433          449          (16)      (3.6%)
   Operating and Maintenance                                            844          809           35        4.3%
   Depreciation                                                         128          167          (39)     (23.4%)
   Taxes Other Than Income                                               90           85            5        5.9%
--------------------------------------------------------------------------------------------------------
     Total Operating Expense                                          2,818        2,830          (12)      (0.4%)
--------------------------------------------------------------------------------------------------------

OPERATING INCOME                                                        202          381         (179)     (47.0%)
--------------------------------------------------------------------------------------------------------

OTHER INCOME AND DEDUCTIONS
   Interest Expense                                                     (28)         (59)          31      (52.5%)
   Equity in Earnings (Losses) of Unconsolidated Affiliates, net         32           39           (7)     (17.9%)
   Other, net                                                            40           18           22      122.2%
--------------------------------------------------------------------------------------------------------
     Total Other Income and Deductions                                   44           (2)          46        n.m.
--------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES AND CUMULATIVE
    EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES                          246          379         (133)     (35.1%)

INCOME TAXES                                                             96          150          (54)     (36.0%)
--------------------------------------------------------------------------------------------------------

INCOME BEFORE CUMULATIVE EFFECT OF CHANGES
IN ACCOUNTING PRINCIPLES                                                150          229          (79)     (34.4%)

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

NET INCOME                                                        $     163       $  241          (78)     (32.4%)
--------------------------------------------------------------------------------------------------------
</TABLE>

Net Income
         Generation's net income  decreased by $78 million,  or 32%, for the six
months ended June 30, 2002  compared to the same period in 2001.  Net income was
adversely  impacted by a lower margin on wholesale energy sales due to depressed
market prices for energy, a reduced supply of low-cost nuclear  generation,  and
increased  operating and maintenance  expense partially offset by an increase in
revenue from affiliates and lower depreciation and interest expense.

Operating Revenues, Net of Purchased Power and Fuel
         Operating revenues, net of purchased power and fuel were $1,264 million
for the six months ended June 30, 2002  compared to $1,442  million for the same
period in the prior year.  The $178 million,  or 12%,  decrease was due to lower
wholesale market prices for energy, which reduced margins by $184 million, which
was partially  offset by increased  revenues from  affiliates of $26 million and
lower fuel costs. The amount of low-cost nuclear  generation



                                       99
<PAGE>

available for sale was reduced due to an increased number of nuclear  generating
station refueling outages in the six months ended June 30, 2002, compared to the
same period in 2001.  Additionally,  trading  activities were initiated in April
2001.  Revenue  for the six months  ended June 30,  2002  includes a net trading
portfolio  loss of $16  million  compared  to a net $6  million  loss in the six
months ended June 30, 2001.

         For the six months ended June 30, 2002 and 2001, Generation's sales and
the supply of these sales excluding the trading portfolio were as follows:

<TABLE>
<CAPTION>
                                                                                          Six Months Ended June 30,
                                                                                         ---------------------------
Sales (in GWhs)                                                                              2002              2001
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                        <C>               <C>
Energy Delivery                                                                            56,044            57,309
Exelon Energy                                                                               2,605             3,006
Market Sales                                                                               39,913            36,007
---------------------------------------------------------------------------------------------------------------------
Total Sales                                                                                98,562            96,322
---------------------------------------------------------------------------------------------------------------------


                                                                                          Six Months Ended June 30,
                                                                                        ---------------------------
Supply of Sales (in GWhs)                                                                    2002              2001
---------------------------------------------------------------------------------------------------------------------
Nuclear Generation                                                                         55,886            58,410
Purchases - non-trading portfolio                                                          36,314            31,954
Fossil and Hydro Generation                                                                 6,362             5,958
---------------------------------------------------------------------------------------------------------------------
Total Supply                                                                               98,562            96,322
---------------------------------------------------------------------------------------------------------------------
</TABLE>

         Trading  volume was 22,805  GWhs and 454 GWhs for the six months  ended
June 30, 2002 and 2001, respectively.

         Generation's  average  margins on energy sales for the six months ended
June 30, 2002 and 2001 are as follows:
<TABLE>
<CAPTION>
                                                                                          Six Months Ended June 30,
                                                                                        ---------------------------
($/MWh)                                                                                      2002              2001
---------------------------------------------------------------------------------------------------------------------
Average Realized Revenue
<S>                                                                                  <C>             <C>
     Energy Delivery                                                                 $     30.73     $       29.58
     Exelon Energy                                                                         45.08             39.30
     Market Sales                                                                          29.44             38.66
     Total Sales - excluding the trading portfolio                                         30.58             33.27

Average Supply Cost - excluding the trading portfolio                                      17.78             18.75

Average Margin - excluding the trading portfolio                                           12.80             14.52
---------------------------------------------------------------------------------------------------------------------
</TABLE>

         Generation's nuclear fleet, including AmerGen,  performed at a capacity
factor  91.2% for the six months  ended June 30, 2002  compared to 96.2% for the
same period in 2001.  Generation's  nuclear fleet's production costs,  including
AmerGen,  for the six months ended June 30, 2002 were $13.38 per MWh compared to
$12.34  per MWh for the same  period in 2001.  The  lower  capacity  factor  and
increased unit production  costs are primarily due to 153 planned outage days in
the six months ended June 30,  2002,  versus 31 days in the same period in 2001,



                                      100
<PAGE>

including AmerGen. Increased unit production costs are partially offset by lower
production  costs due to  headcount  reductions  and cost  savings  initiatives.
Generation's  average purchased power costs for wholesale operations were $36.76
per MWh for the six months ended June 30,  2002,  compared to $41.81 per MWh for
the same period in 2001.  The decrease in purchase power costs was primarily due
to depressed wholesale power market prices.

Operating and Maintenance
         Operating and maintenance expense increased $35 million, or 4%, for the
six months ended June 30, 2002 compared to the same period in 2001. This was due
to the additional  operating and maintenance expense of $55 million arising from
an increased  number of nuclear plant  refueling  outages  during the six months
ended June 30, 2002  compared to the same period in 2001,  as well as additional
allocated  corporate  costs  including  executive  severance.  These  additional
expenses were offset by other operating cost  reductions,  including $10 million
related  to  headcount  reductions,  a $10  million  reduction  in  Generation's
severance  accrual  and $4 million  in savings  from  Exelon's  Cost  Management
Initiative.  The severance  reduction  represents a reversal of costs previously
charged to operating expense.

Depreciation
         Depreciation expenses decreased $39 million, or 23%, for the six months
ended June 30,  2002  compared  to the same  period in 2001 due to a $48 million
reduction in depreciation expense arising from the extension of the useful lives
on certain  generation  facilities  commencing  in the  second  quarter of 2001,
partially offset by additional  depreciation expense on capital additions placed
in service after June 30, 2001,  including  the  acquisition  of two  generating
plants in April 2002.

Taxes Other Than Income
         Taxes other than income increased $5 million, or 6%, for the six months
ended June 30, 2002  compared to the same  period in 2001 due  primarily  to the
Texas franchisee taxes related to the acquisition of two generating  plants from
TXU in April 2002 and an increase in property taxes.

Interest Expense
         Interest  expense  decreased  $31  million,  or 53%, for the six months
ended June 30, 2002, compared to the same period in 2001. The decrease is due to
capitalized  interest  and a lower  interest  rate  on the  spent  nuclear  fuel
obligation.

Equity in Earnings of Unconsolidated Affiliates
         Equity in earnings of unconsolidated  affiliates  decreased $7 million,
or 18%,  for the six months  ended June 30, 2002  compared to the same period in
2001. This decrease was due to a $12 million  reduction in  Generation's  equity
earnings in  AmerGen,  primarily  due to a planned  plant  outage in 2002.  This
decrease is partially offset by an increase of $5 million in Generation's equity
earnings of Sithe.




                                      101
<PAGE>

Other, net
         Other,  net  increased $22 million,  or 122%,  for the six months ended
June 30,  2002  compared  to the same  period  in 2001,  primarily  due to a $22
million  increase in investment  income from the nuclear  decommissioning  trust
funds.

Income Taxes
         The effective income tax rate was substantially  unchanged at 39.0% for
the six months  ended June 30,  2002  compared  to 39.6% for the same  period in
2001.

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

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


LIQUIDITY AND CAPITAL RESOURCES

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

Cash Flows from Operating Activities
         Cash flows provided by operations  were $519 million for the six months
ended June 30,  2002,  compared  to $485  million  for the same  period in 2001.
Generation's cash flows from operating activities primarily result from the sale
of electric energy to wholesale  customers,  including  Generation's  affiliated
companies,  as well as settlements arising from Generation's trading activities.
Generation's future cash flow from operating  activities will depend upon future
demand and market  prices for energy and the  ability to continue to produce and
supply power at competitive costs.

Cash Flows from Investing Activities
         Cash flows used in investing activities were $1,048 million for the six
months ended June 30, 2002, compared to $99 million for the same period in 2001.
Capital  expenditures  were $258 million and the  investment in nuclear fuel was
$217  million  in the six  months  ended  June  30,  2002  compared  to  capital
expenditures  of $173 million and  investment in nuclear fuel of $128 million in
the  same  period  in  2001.  In  addition  to the  2002  capital  expenditures,
Generation  closed the purchase of two natural-gas and oil-fired plants from TXU
on April 25, 2002. The $443 million  purchase was funded with available cash and
borrowings  from  Exelon.  An  increased  number of


                                      102
<PAGE>

nuclear  generating  station  refueling  outages  occurred during the six months
ended June 30, 2002 compared to the same period in 2001.  Generation's investing
activities were funded from operating activities, borrowings from Exelon and the
use of available cash.

         In February 2002,  Generation entered into an agreement to loan AmerGen
up to $75 million at an interest rate of one-month  LIBOR plus 2.25%. As of June
30, 2002,  AmerGen had borrowed $75 million under this agreement.  In July 2002,
the loan  agreement and the loan were increased to $100 million and the maturity
date was extended to July 1, 2003.

Cash Flows from Financing Activities
         Cash flows provided by financing  activities  were $329 million for the
six months  ended June 30,  2002,  compared  to cash used of $67 million for the
same period in the prior year. In 2002  Generation  obtained a $331 million loan
from Exelon for the acquisition of two generating  plants. The prior year amount
represented  net  distributions  of $121  million to Exelon and the  issuance of
long-term debt of $752 million.  Also, in 2001 Generation repaid $696 million it
had  borrowed  from Exelon  related to the  acquisition  of a 49.9%  interest in
Sithe.

Credit Issues
         Generation  meets  its  short-term  liquidity   requirements  primarily
through  borrowings under bank credit  facilities and borrowings from the Exelon
intercompany utility money pool.  Generation,  along with Exelon, ComEd and PECO
entered into a $1.5  billion  unsecured  364-day  revolving  credit  facility on
December  12,  2001 with a group of banks.  As of June 30,  2002,  no  borrowing
sublimit had been established for Generation  under this credit  facility.  This
credit facility requires  Generation to maintain a debt to total  capitalization
ratio  of  65%  or  less.  At  June  30,  2002,   Generation's   debt  to  total
capitalization ratio was 32%.

         Generation's  access to the capital  markets and its financing costs in
those  markets are dependent on its  securities  ratings.  None of  Generation's
borrowings  are subject to default or prepayment as a result of a downgrading of
securities  ratings although such a downgrading  could increase interest charges
under certain bank credit facilities.

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

         Under  PUHCA  and the  Federal  Power  Act,  Generation  can  only  pay
dividends from undistributed or current earnings.  At June 30, 2002,  Generation
had undistributed earnings of $686 million.

Contractual Obligations and Commercial Commitments
         Contractual  obligations represent cash obligations that are considered
to  be  firm  commitments  and  commercial   commitments  represent  commitments
triggered by future events.  Generation's contractual obligations and commercial
commitments  as of June 30, 2002 were  materially  unchanged,  other than in the
normal  course of business,  from the amounts set forth in the December 31, 2001
Form10-K except for the following:


                                      103
<PAGE>

o    On April 25, 2002 Generation  closed the purchase of two generating  plants
     from TXU. The $443 million  purchase was funded  primarily with  borrowings
     from Exelon.
o    On June 26, 2002  Generation  agreed to purchase Sithe New England for $543
     million  plus  the  assumption  of   non-recourse   debt  estimated  to  be
     approximately  $1.2  billion  at the  date of  purchase.  The  purchase  is
     estimated to close in November 2002,  subject to regulatory  approval.  See
     Note 3 of the Combined Notes to the Consolidated  Financial  Statements for
     additional information about the Sithe New England acquisition.
o    Purchase  obligations  increased  by  $1.2  billion,  primarily  due  to an
     increase of $2.0 billion in power only purchases partially offset by a $0.8
     billion  decrease in net  capacity  purchase  commitments.  The increase in
     power only purchases is primarily due to Generation's agreement to purchase
     all the energy from Unit No. 1 at Three Mile Island after December 31, 2001
     through  December  31,  2014.  This  decrease  in  net  capacity   purchase
     commitments  is due primarily to the decision not to exercise the option to
     purchase 2,684 MWs of capacity from Midwest  Generation in 2002 and 2003 as
     well as the increase in capacity sales under the TXU tolling agreement.

Off Balance Sheet Obligations
         Generation owns 49.9% of the outstanding  common stock of Sithe and has
an option,  beginning  on December 18, 2002,  to purchase the  remaining  common
stock outstanding  (Remaining Interest) in Sithe. The purchase option expires on
December 18, 2005. In addition,  the Sithe stockholders who own in the aggregate
the  Remaining  Interest  have the right to require  Generation  to purchase the
Remaining  Interest (Put Rights) during the same period in which  Generation can
exercise its purchase option.  At the end of this exercise period, if Generation
has not exercised its purchase option and the other Sithe  stockholders have not
exercised their Put Rights,  Generation will have an additional  one-time option
to purchase shares from the other  stockholders  in Sithe to bring  Generation's
ownership in Sithe from the current 49.9% to 50.1% of Sithe's total  outstanding
common stock.

         If Generation  exercises its option to acquire the Remaining  Interest,
or if all the other Sithe  stockholders  exercise their Put Rights, the purchase
price for 70% of the Remaining Interest will be set at fair market value subject
to a floor of $430  million  and a ceiling of $650  million.  The balance of the
Remaining  Interest  will be valued at fair market  value  subject to a floor of
$141 million and a ceiling of $330 million.  In either  instance,  the floor and
ceiling will accrue interest from the beginning of the exercise period.

         If Generation  increases its ownership in Sithe to 50.1% or more, Sithe
will become a  consolidated  subsidiary  and  Exelon's  financial  results  will
include Sithe's financial  results from the date of purchase.  At June 30, 2002,
Sithe had total assets of $4.1 billion and total debt of $2.1 billion, including
$1.6 billion of  non-recourse  project debt of which $1.0 billion is  associated
with Sithe New  England,  $0.4  billion of  subordinated  debt,  $49  million of
short-term  debt, $33 million of capital  leases,  and excluding $411 million of
non-recourse  project debt associated with Sithe's equity  investments.  For the
six months ended June 30, 2002,  Sithe had revenues of $0.6 billion.  As of June
30, 2002,  Generation had a $725 million equity investment in Sithe. On June 26,
2002,  Generation agreed to purchase Sithe New England for $543 million plus the
assumption of approximately $1.2 billion of non-recourse  project debt, which is



                                      104
<PAGE>

expected  to be  outstanding  at the  time  of  the  closing  of  the  purchase.
Generation  expects to close the purchase of Sithe New England in November 2002,
subject to regulatory approval.

         Additionally,  the debt on the books of Exelon's  unconsolidated equity
investments and joint ventures is not reflected on Exelon's Consolidated Balance
Sheets.  Total  investee  debt,  at June 30,  2002  including  the debt of Sithe
described in the preceding paragraph,  is currently estimated to be $2.3 billion
($1.2 billion based on Exelon's ownership interest of the investments).

         Generation and British  Energy,  Generation's  joint venture partner in
AmerGen,  have each agreed to provide up to $100  million to AmerGen at any time
for operating expenses.

Other Factors
         Generation is a counterparty to Dynegy in various energy  transactions.
In early July 2002, the credit  ratings of Dynegy were  downgraded by two credit
rating agencies to below investment grade. As of July 29, 2002, Generation had a
net  receivable  from Dynegy of less than $5 million,  and  consistent  with the
terms of the existing credit arrangement, has requested collateral in support of
this receivable.  Generation also has credit risk associated with Dynegy through
Generation's   equity  investment  in  Sithe.  Sithe  is  a  60%  owner  of  the
Independence  generating  station, a 1,040 MW gas-fired  qualified facility that
has an energy only long-term  tolling  arrangement  with Dynegy,  with a related
financial swap  arrangement.  As of June 30, 2002, Sithe had recognized an asset
on its balance sheet related to the fair value of the financial  swap  agreement
with Dynegy that is marked-to-market  under the terms of SFAS No. 133. If Dynegy
is unable to fulfill  the terms of this  agreement,  Sithe  would be required to
write-off the fair value asset,  which  Generation  estimates would result in an
approximate $15 million  reduction in its equity  earnings from Sithe,  based on
Generation's  current 49.9%  investment  ownership in Sithe.  Additionally,  the
future  economic  value of Sithe's  investment in the  Independence  Station and
AmerGen's  purchased  power  arrangement  with Illinois  Power,  a subsidiary of
Dynegy, could be impacted by events related to Dynergy's financial condition.















                                      105
<PAGE>



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Commodity Price Risk
Generation
         Generation's  energy  contracts  are  accounted for under SFAS No. 133.
Most  non-trading  contracts  qualify for a normal  purchases  and normal  sales
exception.  Those  that do not are  recorded  as  assets or  liabilities  on the
balance sheet at fair value.  Changes in the fair value of qualifying  cash-flow
hedge  contracts are recorded in accumulated  other  comprehensive  income,  and
gains and losses are  recognized  in earnings  when the  underlying  transaction
matures.  Mark-to-market  gains and losses on other derivative contracts that do
not meet hedge criteria under SFAS No. 133 and the ineffective  portion of hedge
contracts are recognized in earnings on a current basis.  Amounts  recognized in
earnings  related to energy  contracts  for the three months ended June 30, 2002
and 2001 include $17 million of realized  gains from  cash-flow  hedge  contract
settlements and $5 million in non-cash mark-to-market losses on other derivative
contracts,  and for the six months  ended June 30,  2002  include $54 million of
realized  gains from  cash-flow  hedge  contract  settlements  and $2 million in
non-cash mark-to market losses on other derivative contracts.

         Outlined  below is a summary  of the  changes  in fair  value for those
contracts  included  as  assets  and  liabilities  in  Exelon  and  Generation's
Consolidated  Balance  Sheet for the three  months and six months ended June 30,
2002:

<TABLE>
<CAPTION>
                                                                                    Three Months Ended June 30, 2002
                                                                                    --------------------------------
(in millions)                                                                        Non-trading            Trading
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>               <C>
Fair value of contracts outstanding as of April 1, 2002                                $      (38)       $       10
    Change in fair value during the three months ended June 30, 2002:
        Contracts settled during period                                                       (20)                7
        Mark-to-market gain/(loss) on contracts settled during the period                      10                (7)
        Mark to market gain/(loss) on other contracts                                          29                (9)
        Changes in fair value attributable to changes in valuation techniques and
          assumptions                                                                          --                --
---------------------------------------------------------------------------------------------------------------------
    Total change in fair value                                                                 19                (9)
---------------------------------------------------------------------------------------------------------------------
Fair value of contracts outstanding at June 30, 2002                                   $      (19)       $        1
---------------------------------------------------------------------------------------------------------------------

         The total  change in fair value  during the three months ended June 30,
2002 is reflected in the 2002 financial statements as follows:
                                                                                     Non-trading            Trading
---------------------------------------------------------------------------------------------------------------------
Mark-to-market gain/(loss) on trading activities and non-qualifying
    hedge contracts or hedge ineffectiveness reflected in earnings                     $        4        $       (9)
Mark-to-market gain/(loss) on cash-flow hedge contracts reflected in
    Other Comprehensive Income                                                                 15                --
---------------------------------------------------------------------------------------------------------------------
Total change in fair value                                                             $       19        $       (9)
---------------------------------------------------------------------------------------------------------------------
</TABLE>




                                      106
<PAGE>


<TABLE>
<CAPTION>
                                                                                     Six Months Ended June 30, 2002
                                                                                    --------------------------------
(in millions)                                                                        Non-trading            Trading
------------------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>               <C>
Fair value of contracts outstanding as of January 1, 2002                              $       78        $       14
    Change in fair value during the six months ended June 30, 2002:
        Contracts settled during period                                                       (64)                3
        Mark-to-market gain/(loss) on contracts settled during the period                      21                (8)
        Mark to market gain/(loss) on other contracts                                         (54)               (8)
        Changes in fair value attributable to changes in valuation techniques and
          assumptions                                                                          --                --
------------------------------------------------------------------------------------------------------------------------
    Total change in fair value                                                                (97)              (13)
------------------------------------------------------------------------------------------------------------------------
Fair value of contracts outstanding at June 30, 2002                                   $      (19)       $        1
------------------------------------------------------------------------------------------------------------------------

         The total  change in fair value  during  the six months  ended June 30,
2002 is reflected in the 2002 financial statements as follows:
                                                                                     Non-trading            Trading
------------------------------------------------------------------------------------------------------------------------
Mark-to-market gain/(loss) on trading activities and non-qualifying
    hedge contracts or hedge ineffectiveness reflected in earnings                     $       10        $      (13)
Mark-to-market gain/(loss) on cash-flow hedge contracts reflected in
    Other Comprehensive Income                                                               (107)               --
------------------------------------------------------------------------------------------------------------------------
Total change in fair value                                                             $      (97)       $      (13)
------------------------------------------------------------------------------------------------------------------------
</TABLE>

         The  majority  of  Generation's   contracts  are  non-exchange   traded
contracts  valued using prices  provided by external  sources,  which  primarily
represent  price  quotations  available  through  brokers  or  over-the-counter,
on-line  exchanges.  Prices reflect the average of the bid-ask  midpoint  prices
obtained  from all  sources  that  Generation  believes  provide the most liquid
market  for the  commodity.  The terms  for  which  such  price  information  is
available  varies by commodity,  by region and by product.  The remainder of the
assets  represent  contracts for which  external  valuations  are not available,
primarily option contracts. These contracts are valued using the Black model, an
industry standard option valuation model, and other valuation techniques and are
discounted  using a risk-free  interest  rate.  The fair values in each category
reflect the level of forward prices and  volatility  factors as of June 30, 2002
and may change as a result of future changes in these factors.










                                      107
<PAGE>

         Mark-to market gains and losses on qualifying cash-flow hedge contracts
are recorded in accumulated other comprehensive income, and will be reclassified
into  earnings  when the contract  settles.  Mark-to-market  gains and losses on
derivative  contracts that do not meet hedge criteria under SFAS No. 133 and the
ineffective  portion of hedge  contracts  have been  recognized in earnings on a
current basis. The maturities,  or expected  settlement dates, of the qualifying
cash flow hedge contracts  recorded in accumulated other  comprehensive  income,
and the other non-trading and trading  derivative  contracts and sources of fair
value as of June 30, 2002 are as follows:

<TABLE>
<CAPTION>
                                                                                    Maturities within
                                                              ---------------------------------------    Total Fair
(in millions)                                                  1 Year        2-3 Years      4-5 Years         Value
---------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>              <C>             <C>          <C>
Non-trading, qualifying cash flow hedge contracts (1):
   Prices provided by other external sources                $      --        $     (24)      $     (6)    $     (30)
---------------------------------------------------------------------------------------------------------------------
  Total                                                     $      --        $     (24)      $     (6)    $     (30)
---------------------------------------------------------------------------------------------------------------------

Non-trading, other derivative contracts (2):
   Actively quoted prices                                   $       4        $      --       $     --     $       4
   Prices provided by other external sources                       22               11              5            38
   Prices based on model or other valuation methods                (8)              (6)           (17)          (31)
---------------------------------------------------------------------------------------------------------------------
  Total                                                     $      18        $       5       $    (12)    $      11
---------------------------------------------------------------------------------------------------------------------

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

Credit Risk
Exelon and Generation

         Generation is a counterparty to Dynegy in various energy  transactions.
In early July 2002, the credit  ratings of Dynegy were  downgraded by two credit
rating agencies to below investment grade. As of July 29, 2002, Generation had a
net  receivable  from Dynegy of less than $5 million,  and  consistent  with the
terms of the existing credit arrangement, has requested collateral in support of
this receivable.  Generation also has credit risk associated with Dynegy through
Generation's   equity  investment  in  Sithe.  Sithe  is  a  60%  owner  of  the
Independence  generating  station, a 1,040 MW gas-fired  qualified facility that
has an energy only long-term  tolling  arrangement  with Dynegy,  with a related
financial swap  arrangement.  As of June 30, 2002, Sithe had recognized an asset
on its balance sheet related to the fair value of the financial  swap  agreement
with Dynegy that is marked-to-market  under the terms of SFAS No. 133. If Dynegy
is unable to fulfill  the terms of this  agreement,  Sithe  would be required to
write-off the fair value asset,  which  Generation  estimates would result in an
approximate $15 million  reduction in its equity  earnings from Sithe,  based on
Generation's  current 49.9%  investment  ownership in Sithe.  Additionally,  the
future  economic  value of Sithe's  investment in the  Independence  Station and
AmerGen's


                                      108
<PAGE>

purchased power  arrangement with Illinois Power, a subsidiary of Dynegy,  could
be impacted by events related to Dynergy's financial condition.
























                                      109
<PAGE>



PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

         As  previously  reported  in Exelon's  March 2002 Form 10-Q,  on May 8,
2002, a class action lawsuit was filed against Exelon on behalf of purchasers of
Exelon securities  between April 24, 2001 and September 27, 2001 (Class Period).
The  lawsuit  was filed in the United  States  District  Court for the  Northern
District of  Illinois,  Eastern  Division.  The  complaint  alleges  that Exelon
violated  Federal  securities  laws by issuing a series of materially  false and
misleading  statements  relating to its 2001  earnings  expectations  during the
Class Period.  Corbin A.  McNeill,  Jr., John Rowe and Ruth Ann Gillis were also
named as defendants.  Between May 8 and June 14, 2002, an additional five nearly
identical  class actions  lawsuits were filed.  On May 30 and July 2, 2002,  the
Court consolidated the cases into one lawsuit.  Exelon believes that the lawsuit
is without merit and will vigorously contest this matter.

         As  previously  reported  in the 2001 Form 10-K and the March 2002 Form
10-Q, several developers of non-utility  generating  facilities filed litigation
against various Illinois  officials claiming that the enforcement of an Illinois
law  amendment,  which removed the  entitlement  of those  facilities to receive
state-subsidized  payments for  electricity  sold to ComEd after March 15, 1996,
violated their rights under the Federal and state  constitutions.  Subsequently,
the developers  filed  complaints  alleging that ComEd breached the contracts in
question and requested damages reflecting the state-subsidized rate to which the
developers claim they were entitled under their contracts. In July 2002, certain
of the plaintiffs produced an expert report claiming  approximately $175 million
in damages, a quantification  ComEd vigorously  disputes.  Virtually all parties
have filed motions for summary  judgment.  ComEd is contesting each case and has
filed its motion for summary  judgment  arguing that, as a matter of law, it did
not breach any of the contracts.


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

         Information  regarding the  submission of matters to a vote of security
holders is presented in the Form 10-Q for the  Quarterly  period ended March 31,
2002.

ITEM 5.  OTHER INFORMATION


ComEd
         On May 28, 2002,  ComEd filed a declaration  with the FERC to join PJM.
ComEd  committed  to place  its  transmission  system  under the  control  of an
independent transmission company that would operate within PJM West, which would
be managed by National Grid USA and would also include the transmission  systems
of American Electric Power East and Illinois Power.


                                      110
<PAGE>

         On July 19, 2002, ComEd filed a request with the ICC to revise the POLR
obligation in Illinois.  ComEd is seeking  permission  from the ICC to limit the
availability by June 2006 of Rate 6L for 370 of ComEd's largest energy customers
with demands of at least three MWs, totaling approximately 2,500 MWs. Rate 6L is
a bundled  fixed rate  offered to large  customers  including  heavy  industrial
plants,  large office  buildings,  government  facilities and a variety of other
businesses.  The ICC has 120  days  to act on the  filing  or it will be  deemed
approved.

         On August  1,  2002,  ComEd  set a new  record  for  highest  peak load
experienced to date of 21,852 MWs.

PECO
         As previously  disclosed in the 2001 Form 10-K, in February  2002,  New
Power notified PECO of its intent to withdraw from providing Competitive Default
Service ("CDS") to approximately 180,000 residential  customers.  As a result of
that withdrawal, those CDS customers were returned to PECO in the second quarter
of 2002. Pursuant to a tariff filing approved by the Pennsylvania Public Utility
Commission,  PECO will serve those  returned  customers at the  discount  energy
rates on generation  provided for under the original New Power CDS Agreement for
the remaining  term of that  contract.  Subsequently,  in the second  quarter of
2002, New Power also advised PECO it planned to withdraw from serving all of its
customers  in  Pennsylvania,   including   approximately   15,000  non-CDS  PECO
customers, and to return those customers to PECO in September 2002.

         On  July  29,  2002,  PECO  set a new  record  for  highest  peak  load
experienced to date of 8,193 MWs.

Generation

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

         On June 21, 2002,  Generation signed an agreement with Peoples Calumet,
LLC to form Southeast  Chicago Energy  Project,  LLC.  Southeast  Chicago Energy
Project LLC will operate a 350MW simple cycle peaking power generating  facility
consisting of 8 turbines  located in Chicago.  As of June 30, 2002  Generation's
investment in the Southeast Chicago Project, LLC was $166 million.


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


         99.1  -  Certification  Pursuant to Section 1350 of Chapter 63 of Title
                  18 United States Code (Sarbanes - Oxley Act of 2002) as to the
                  Quarterly  Report on Form 10-Q for the quarterly  period ended
                  June 30,  2002,  by John W.  Rowe and Ruth Ann M.  Gillis  for
                  Exelon Corporation.

         99.2  -  Certification  Pursuant to Section 1350 of Chapter 63 of Title
                  18 United States Code (Sarbanes - Oxley Act of 2002) as to the
                  Quarterly  Report on Form 10-Q for the quarterly  period ended
                  June 30,  2002,  by Frank M.  Clark  for  Commonwealth  Edison
                  Company.

         99.3  -  Certification  Pursuant to Section 1350 of Chapter 63 of Title
                  18 United States Code (Sarbanes - Oxley Act of 2002) as to the
                  Quarterly  Report on Form 10-Q for the quarterly  period ended
                  June 30, 2002, by Robert E. Berdelle for  Commonwealth  Edison
                  Company.

         99.4  -  Certification  Pursuant to Section 1350 of Chapter 63 of Title
                  18 United States Code (Sarbanes - Oxley Act of 2002) as to the
                  Quarterly  Report on Form 10-Q for the quarterly  period ended
                  June 30, 2002, by Kenneth G. Lawrence for PECO Energy Company.

         99.5  -  Certification  Pursuant to Section 1350 of Chapter 63 of Title
                  18 United States Code (Sarbanes - Oxley Act of 2002) as to the
                  Quarterly  Report on Form 10-Q for the quarterly  period ended
                  June 30, 2002, by Frank F. Frankowski for PECO Energy Company.

         99.6  -  Certification  Pursuant to Section 1350 of Chapter 63 of Title
                  18 United States Code (Sarbanes - Oxley Act of 2002) as to the
                  Quarterly  Report on Form 10-Q for the quarterly  period ended
                  June 30, 2002,  by Oliver D.  Kingsley  for Exelon  Generation
                  Company, LLC.

         99.7  -  Certification  Pursuant to Section 1350 of Chapter 63 of Title
                  18 United States Code (Sarbanes - Oxley Act of 2002) as to the
                  Quarterly  Report on Form 10-Q for the quarterly  period ended
                  June 30,  2002,  by Ruth Ann M.  Gillis for Exelon  Generation
                  Company, LLC.

         99.8  -  Management's  Discussion  and Analysis of Financial  Condition
                  and Results of Operations and Index to Financial Statements of
                  Exelon  Generation  Company,  LLC, filed by Exelon  Generation
                  Company,  LLC with the Securities Exchange Commission on April
                  24,  2002  on  Registration   Statement  Form  S-4  (File  No.
                  333-85496).



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<PAGE>



(b)      Reports on Form 8-K:

                  Exelon  filed  Current  Reports  on Form 8-K  during the three
         months ended June 30, 2002 regarding the following items:

         Date of Earliest
         Event Reported             Description of Item Reported
--------------------------------------------------------------------------------
         April 2, 2002              "ITEM 5. OTHER EVENTS"  regarding an interim
                                    order  in  Commonwealth   Edison's  Delivery
                                    Services Rate Case.

         April 4, 2002              "ITEM  5.  OTHER   EVENTS"   regarding   the
                                    announcement that an indirect  subsidiary of
                                    Exelon filed for protection under Chapter 11
                                    of the Bankruptcy Code.

         April 10, 2002             "ITEM 9. REGULATION FD DISCLOSURE" regarding
                                    a presentation by  representatives  of Power
                                    Team,     Generation's    Power    Marketing
                                    Organization,  to Capital  Group  Companies.
                                    The exhibit  includes the slides used during
                                    the presentation.

         April 19, 2002             "ITEM 5.  OTHER  EVENTS  and  REGULATION  FD
                                    DISCLOSURE"  regarding the announcement that
                                    Ruth Ann M.  Gillis,  Senior Vice  President
                                    and Chief  Financial  Officer,  will  become
                                    Senior Vice President and President,  Exelon
                                    Business Services Company.

         April 22, 2002             "ITEM 5. OTHER  EVENTS"  reporting  Exelon's
                                    first quarter 2002 earnings results.  Exelon
                                    also  announced  that Nicholas  DeBenedictis
                                    was  elected  to the board of  directors  of
                                    Exelon  Corporation.  "ITEM 9. REGULATION FD
                                    DISCLOSURE"   regarding  highlights  of  the
                                    Exelon  First  Quarter  Earnings  Conference
                                    Call.


         May 2, 2002                "ITEM  5.  OTHER   EVENTS"   regarding   the
                                    announcement   of  the   completion  of  the
                                    purchase of two TXU Corp. power plants.

         May 14, 2002               "ITEM 9. REGULATION FD DISCLOSURE" regarding
                                    a presentation by Ruth Ann M. Gillis, Senior
                                    Vice    President    and   CFO   of   Exelon
                                    Corporation,  to  investors  at the  Salomon
                                    Smith  Barney  Power & Merchant  Energy 2002
                                    Conference.  The exhibits include the slides
                                    used  and  copies  of  the  materials   made
                                    available   to   investors   attending   the
                                    conference.



                                      112
<PAGE>

         May 17, 2002               "ITEM    5.    OTHER    EVENTS"    regarding
                                    Commonwealth  Edison's  resolution of a FERC
                                    reporting issue with Illinois Regulators.

         May 22, 2002               "ITEM 5. OTHER  EVENTS"  regarding  Exelon's
                                    affirmation  of Power Team's  delivery-based
                                    trading strategy.

         May 22, 2002               "ITEM   9.    REGULATION   FD    DISCLOSURE"
                                    representatives    of   Exelon   Corporation
                                    attended  the  Edison  Electric  Institute's
                                    International Finance Conference held in New
                                    York.  The  exhibits  include the  materials
                                    made available at the conference.

         May 23, 2002               "ITEM 5. OTHER  EVENTS"  regarding  Exelon's
                                    response  to FERC  that  Power  Team did not
                                    engage in any of the strategies put forth in
                                    the Enron Corp. (Enron) memos referred to in
                                    FERC's  data  request.  A copy  of  Exelon's
                                    response  to  the  FERC  data   request  was
                                    included as an exhibit.

         June 10, 2002              "ITEM 5. OTHER  EVENTS"  regarding  Exelon's
                                    reaffirmation  of  the  company's   earnings
                                    outlook for 2002 and the  announcement  that
                                    it will host an investor conference.

         June 12, 2002              "ITEM 9.  REGULATION FD DISCLOSURE"  John W.
                                    Rowe,  President  and CEO of Exelon,  made a
                                    presentation  to  investors  at the Deutsche
                                    Bank  Electric  and  Power  Conference.  The
                                    exhibits include the presentation slides and
                                    other   materials   made  available  at  the
                                    conference.

         June 20, 2002              "ITEM 9.  REGULATION FD  DISCLOSURE"  senior
                                    officers of Exelon made presentations at the
                                    Exelon Investor Conference in New York City.
                                    The exhibits include the presentation slides
                                    and other  materials  made  available at the
                                    conference.

         June 20, 2002              "ITEM 9. REGULATION FD DISCLOSURE" regarding
                                    additional  information  management provided
                                    during Exelon's  Investor  Conference in New
                                    York on June 20, 2002.

         June 27, 2002              "ITEM 5.  OTHER  EVENTS" a note to  Exelon's
                                    financial    community    regarding   Exelon
                                    Generation's agreement to purchase Sithe New
                                    England Holdings, LLC.

--------------------------------------------------------------------------------

                  ComEd  filed  Current  Reports  on Form 8-K  during  the three
         months ended June 30, 2002 regarding the following items:

         Date of Earliest
         Event Reported             Description of Item Reported
--------------------------------------------------------------------------------



                                      113
<PAGE>

         April 2, 2002              "ITEM 5. OTHER EVENTS"  regarding an interim
                                    order  in  Commonwealth   Edison's  Delivery
                                    Services Rate Case.

         April 22, 2002             "ITEM 5. OTHER  EVENTS"  reporting  Exelon's
                                    first quarter 2002 earnings results.  Exelon
                                    also  announced  that Nicholas  DeBenedictis
                                    was  elected  to the board of  directors  of
                                    Exelon  Corporation.  "ITEM 9. REGULATION FD
                                    DISCLOSURE"   regarding  highlights  of  the
                                    Exelon  First  Quarter  Earnings  Conference
                                    Call.

         May 14, 2002               "ITEM 9. REGULATION FD DISCLOSURE" regarding
                                    a presentation by Ruth Ann M. Gillis, Senior
                                    Vice    President    and   CFO   of   Exelon
                                    Corporation,  to  investors  at the  Salomon
                                    Smith  Barney  Power & Merchant  Energy 2002
                                    Conference.  The exhibits include the slides
                                    used  and  copies  of  the  materials   made
                                    available   to   investors   attending   the
                                    conference.

         May 17, 2002               "ITEM    5.    OTHER    EVENTS"    regarding
                                    Commonwealth  Edison's  resolution of a FERC
                                    reporting issue with Illinois Regulators.

         May 22, 2002               "ITEM   9.    REGULATION   FD    DISCLOSURE"
                                    representatives    of   Exelon   Corporation
                                    attended  the  Edison  Electric  Institute's
                                    International Finance Conference held in New
                                    York.  The  exhibits  include the  materials
                                    made available at the conference.

         June 12, 2002              "ITEM 9.  REGULATION FD DISCLOSURE"  John W.
                                    Rowe,  President  and CEO of Exelon,  made a
                                    presentation  to  investors  at the Deutsche
                                    Bank  Electric  and  Power  Conference.  The
                                    exhibits include the presentation slides and
                                    other   materials   made  available  at  the
                                    conference.

         June 20, 2002              "ITEM 9.  REGULATION FD  DISCLOSURE"  senior
                                    officers of Exelon made presentations at the
                                    Exelon Investor Conference in New York City.
                                    The exhibits include the presentation slides
                                    and other  materials  made  available at the
                                    conference.

         June 20, 2002              "ITEM 9. REGULATION FD DISCLOSURE" regarding
                                    additional  information  management provided
                                    during Exelon's  Investor  Conference in New
                                    York on June 20, 2002.
--------------------------------------------------------------------------------

                  PECO filed Current Reports on Form 8-K during the three months
         ended June 30, 2002 regarding the following items:

         Date of Earliest
         Event Reported             Description of Item Reported
--------------------------------------------------------------------------------



                                      114
<PAGE>

         April 22, 2002             "ITEM 5. OTHER  EVENTS"  reporting  Exelon's
                                    first quarter 2002 earnings results.  Exelon
                                    also  announced  that Nicholas  DeBenedictis
                                    was  elected  to the board of  directors  of
                                    Exelon  Corporation.  "ITEM 9. REGULATION FD
                                    DISCLOSURE"   regarding  highlights  of  the
                                    Exelon  First  Quarter  Earnings  Conference
                                    Call.

         May 14, 2002               "ITEM 9. REGULATION FD DISCLOSURE" regarding
                                    a presentation by Ruth Ann M. Gillis, Senior
                                    Vice    President    and   CFO   of   Exelon
                                    Corporation,  to  investors  at the  Salomon
                                    Smith  Barney  Power & Merchant  Energy 2002
                                    Conference.  The exhibits include the slides
                                    used  and  copies  of  the  materials   made
                                    available   to   investors   attending   the
                                    conference.

         May 22, 2002               "ITEM   9.    REGULATION   FD    DISCLOSURE"
                                    representatives    of   Exelon   Corporation
                                    attended  the  Edison  Electric  Institute's
                                    International Finance Conference held in New
                                    York.  The  exhibits  include the  materials
                                    made available at the conference.

         June 12, 2002              "ITEM 9.  REGULATION FD DISCLOSURE"  John W.
                                    Rowe,  President  and CEO of Exelon,  made a
                                    presentation  to  investors  at the Deutsche
                                    Bank  Electric  and  Power  Conference.  The
                                    exhibits include the presentation slides and
                                    other   materials   made  available  at  the
                                    conference.

         June 20, 2002              "ITEM 9.  REGULATION FD  DISCLOSURE"  senior
                                    officers of Exelon made presentations at the
                                    Exelon Investor Conference in New York City.
                                    The exhibits include the presentation slides
                                    and other  materials  made  available at the
                                    conference.

         June 20, 2002              "ITEM 9. REGULATION FD DISCLOSURE" regarding
                                    additional  information  management provided
                                    during Exelon's  Investor  Conference in New
                                    York on June 20, 2002.

--------------------------------------------------------------------------------


                  Generation  filed Current Reports on Form 8-K during the three
         months ended June 30, 2002 regarding the following items:

         Date of Earliest
         Event Reported             Description of Item Reported
--------------------------------------------------------------------------------
         May 2, 2002                "ITEM  5.  OTHER   EVENTS"   regarding   the
                                    announcement   of  the   completion  of  the
                                    purchase of two TXU Corp. power plants.

         May 14, 2002               "ITEM 9. REGULATION FD DISCLOSURE" regarding
                                    a presentation by Ruth Ann M. Gillis, Senior
                                    Vice    President    and   CFO   of   Exelon
                                    Corporation,  to  investors  at the  Salomon
                                    Smith  Barney  Power & Merchant  Energy 2002


                                       115
<PAGE>

                                    Conference.  The exhibits include the slides
                                    used  and  copies  of  the  materials   made
                                    available   to   investors   attending   the
                                    conference.

         May 22, 2002               "ITEM 5. OTHER  EVENTS"  regarding  Exelon's
                                    affirmation  of Power Team's  delivery-based
                                    trading strategy.

         May 22, 2002               "ITEM   9.    REGULATION   FD    DISCLOSURE"
                                    representatives    of   Exelon   Corporation
                                    attended  the  Edison  Electric  Institute's
                                    International Finance Conference held in New
                                    York.  The  exhibits  include the  materials
                                    made available at the conference.

         May 23, 2002               "ITEM 5. OTHER  EVENTS"  regarding  Exelon's
                                    response  to FERC  that  Power  Team did not
                                    engage in any of the strategies put forth in
                                    the Enron  memos  referred to in FERC's data
                                    request.  A copy of Exelon's response to the
                                    FERC  data   request  was   included  as  an
                                    exhibit.

         June 12, 2002              "ITEM 9.  REGULATION FD DISCLOSURE"  John W.
                                    Rowe,  President  and CEO of Exelon,  made a
                                    presentation  to  investors  at the Deutsche
                                    Bank  Electric  and  Power  Conference.  The
                                    exhibits include the presentation slides and
                                    other   materials   made  available  at  the
                                    conference.

         June 20, 2002              "ITEM 9.  REGULATION FD  DISCLOSURE"  senior
                                    officers of Exelon made presentations at the
                                    Exelon Investor Conference in New York City.
                                    The exhibits include the presentation slides
                                    and other  materials  made  available at the
                                    conference.

         June 20, 2002              "ITEM 9. REGULATION FD DISCLOSURE" regarding
                                    additional  information  management provided
                                    during Exelon's  Investor  Conference in New
                                    York on June 20, 2002.

         June 27, 2002              "ITEM 5.  OTHER  EVENTS" a note to  Exelon's
                                    financial    community    regarding   Exelon
                                    Generation's agreement to purchase Sithe New
                                    England Holdings, LLC.

--------------------------------------------------------------------------------


                                      116
<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/ John W. Rowe
                       --------------------------------
                            JOHN W. ROWE
                            President and CEO


                       /s/ Ruth Ann M. Gillis
                       --------------------------------
                            RUTH ANN M. GILLIS
                            Senior Vice President and Chief Financial Officer


                       /s/ Matthew F. Hilzinger
                       --------------------------------
                            MATTHEW F. HILZINGER
                            Vice President and Corporate Controller
                            (Principal Accounting Officer)



August 6, 2002










                                      117
<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.

                      COMMONWEALTH EDISON COMPANY


                       /s/ Pamela B. Strobel
                       --------------------------------
                            PAMELA B. STROBEL
                            Chairman and CEO
                            Exelon Energy Delivery


                       /s/ Frank M. Clark
                       --------------------------------
                            FRANK M. CLARK
                            President


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



August 6, 2002















                                      118
<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.

                      PECO ENERGY COMPANY


                       /s/ Pamela B. Strobel
                       --------------------------------
                            PAMELA B. STROBEL
                            Chairman and CEO
                            Exelon Energy Delivery


                       /s/ Ken G. Lawrence
                       --------------------------------
                            KEN G. LAWRENCE
                            President


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



August 6, 2002











                                      119
<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 GENERATION COMPANY, LLC


                       /s/ Oliver D. Kingsley Jr.
                       --------------------------------
                            OLIVER D. KINGSLEY JR.
                            CEO and President


                       /s/ Ruth Ann M. Gillis
                       --------------------------------
                            RUTH ANN M. GILLIS
                            Senior Vice President and Chief Financial Officer
                            Exelon Corporation
                            (Principal Financial Officer)


August 6, 2002
















                                      120