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 Quarter Ended June 30, 2001
                                       OR
          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


<TABLE>
<CAPTION>
Commission File           Name of Registrant; State of Incorporation; Address of        IRS Employer
Number                    Principal Executive Offices; and Telephone Number             Identification Number
---------------------     ----------------------------------------------------------    -------------------------
<S>                       <C>                                                           <C>
1-16169                   EXELON CORPORATION                                            23-2990190
                          (a Pennsylvania corporation)
                          10 South Dearborn Street - 37th Floor
                          P.O. Box 805379
                          Chicago, Illinois 60680-5379
                          (312) 394-4321

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

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

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

     The number of shares  outstanding of each  registrant's  common stock as of
August 3, 2001 was as follows:
         Exelon Corporation Common Stock, without par value         320,709,471
         Commonwealth Edison Company Common Stock,
             $12.50 par value                                       128,031,624
         PECO Energy Company Common Stock, without par value        170,478,507

<PAGE>
                                TABLE OF CONTENTS

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

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

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATIONS                                                       34
                Exelon Corporation                                                                       34
                Commonwealth Edison Company                                                              46
                PECO Energy Company                                                                      54
ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                                      62

PART II.  OTHER INFORMATION                                                                              64
ITEM 1.   LEGAL PROCEEDINGS                                                                              64
ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                            66
ITEM 5.   OTHER INFORMATION                                                                              66
ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K                                                               67

SIGNATURES                                                                                               68
</TABLE>

                                       2
<PAGE>
Filing Format
         This  combined   Form  10-Q  is   separately   being  filed  by  Exelon
Corporation,  Commonwealth  Edison Company and PECO Energy Company.  Information
contained  herein  relating to any individual  registrant has been filed by such
registrant on its own behalf.  Each  registrant  makes no  representation  as to
information relating to the other registrants.

Forward-Looking Statements
         Except for the historical  information contained herein, certain of the
matters discussed in this Report are forward-looking statements that are subject
to risks and  uncertainties.  The  factors  that could cause  actual  results to
differ materially include those discussed herein as well as those listed in Note
7 of Notes to Condensed  Consolidated  Financial Statements,  those discussed in
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations--Outlook"  in Exelon  Corporation's  2000  Annual  Report,  and other
factors  discussed in filings with the  Securities  and Exchange  Commission  by
Exelon Corporation, Commonwealth Edison Company and PECO Energy Company. Readers
are cautioned not to place undue reliance on these  forward-looking  statements,
which apply only as of the date of this Report. Exelon Corporation, Commonwealth
Edison  Company and PECO Energy  Company  undertake  no  obligation  to publicly
release any revision to these  forward-looking  statements to reflect  events or
circumstances after the date of this Report.


                                       3
<PAGE>

                          PART I. FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS




                                       4
<PAGE>
EXELON CORPORATION
------------------

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

                                                                                Three Months Ended         Six Months Ended
                                                                                      June 30,                  June 30,
                                                                                ------------------         ----------------
                                                                                 2001         2000         2001         2000
                                                                                 ----         ----         ----         ----

<S>                                                                            <C>          <C>          <C>          <C>
OPERATING REVENUES                                                             $ 3,651      $ 1,385      $ 7,474      $ 2,738

OPERATING EXPENSES
     Fuel and Purchased Power                                                    1,210          476        2,540          939
     Operating and Maintenance                                                   1,134          456        2,192          847
     Depreciation and Amortization                                                 362           81          740          161
     Taxes Other Than Income                                                       153           63          321          130
                                                                               -------      -------      -------      -------
         Total Operating Expenses                                                2,859        1,076        5,793        2,077
                                                                               -------      -------      -------      -------

OPERATING INCOME                                                                   792          309        1,681          661
                                                                               -------      -------      -------      -------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                             (287)        (116)        (581)        (220)
     Distributions on Preferred Securities of Subsidiaries                         (16)          (5)         (25)         (10)
     Equity in Earnings (Losses) of Unconsolidated Affiliates, net                   7           (1)          25            3
     Other, net                                                                     46            7          101           29
                                                                               -------      -------      -------      -------
         Total Other Income and Deductions                                        (250)        (115)        (480)        (198)
                                                                               -------      -------      -------      -------

INCOME BEFORE INCOME TAXES, EXTRAORDINARY ITEM AND
 CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING  PRINCIPLE                            542          194        1,201          463
INCOME TAXES                                                                       227           75          499          176
                                                                               -------      -------      -------      -------
INCOME BEFORE EXTRAORDINARY ITEM AND CUMULATIVE
 EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE                                        315          119          702          287
EXTRAORDINARY ITEM (net of income taxes of $2)                                      --           (3)          --           (3)
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING
 PRINCIPLE  (net of income taxes of $8 and $16 for
 the six months ended June 30, 2001 and 2000, respectively)                         --           --           12           24
                                                                               -------      -------      -------      -------

NET INCOME                                                                         315          116          714          308
                                                                               -------      -------      -------      -------

OTHER COMPREHENSIVE INCOME (LOSS) (net of income taxes)
     SFAS 133 Transition Adjustment                                                 --           --           44           --
     Cash Flow Hedge Fair Value Adjustment                                         (48)          --          (49)          --
     Unrealized Gain (Loss) on Marketable Securities                                31           (3)        (105)          (4)
                                                                               -------      -------      -------      -------
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)                                            (17)          (3)        (110)          (4)
                                                                               -------      -------      -------      -------

TOTAL COMPREHENSIVE INCOME                                                     $   298      $   113      $   604      $   304
                                                                               =======      =======      =======      =======

AVERAGE SHARES OF COMMON STOCK OUTSTANDING - Basic                                 321          174          320          178
                                                                               =======      =======      =======      =======
AVERAGE SHARES OF COMMON STOCK OUTSTANDING - Diluted                               324          175          323          179
                                                                               =======      =======      =======      =======

EARNINGS PER AVERAGE COMMON SHARE:
   BASIC:
       Income Before Extraordinary Item and Cumulative
          Effect of a Change in Accounting Principle                           $  0.98      $  0.69      $  2.19      $  1.62
       Extraordinary Item                                                           --        (0.02)          --        (0.02)
       Cumulative Effect of a Change in Accounting Principle                        --           --         0.04         0.13
                                                                               -------      -------      -------      -------
       Net Income                                                              $  0.98      $  0.67      $  2.23      $  1.73
                                                                               =======      =======      =======      =======

   DILUTED:
       Income Before Extraordinary Item and Cumulative
          Effect of a Change in Accounting Principle                           $  0.97      $  0.68      $  2.17      $  1.61
       Extraordinary Item                                                           --        (0.02)          --        (0.02)
       Cumulative Effect of a Change in Accounting Principle                        --           --         0.04         0.13
                                                                               -------      -------      -------      -------
       Net Income                                                              $  0.97      $  0.66      $  2.21      $  1.72
                                                                               =======      =======      =======      =======

DIVIDENDS PER AVERAGE COMMON SHARE                                             $  0.42      $  0.25      $  0.98      $  0.50
                                                                               =======      =======      =======      =======

                                   See Notes to Condensed Consolidated Financial Statements

                                                              5

</TABLE>
<PAGE>


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


<TABLE>
<CAPTION>
                                                       June 30,     December 31,
                                                         2001          2000
                                                       --------     ------------
<S>                                                    <C>           <C>
ASSETS

CURRENT ASSETS
     Cash and Cash Equivalents                         $ 1,160       $   526
     Restricted Cash                                       330           314
     Accounts Receivable, net                            2,441         2,552
     Inventories, at average cost                          466           454
     Other                                                 639           338
                                                       -------       -------

         Total Current Assets                            5,036         4,184
                                                       -------       -------


PROPERTY, PLANT AND EQUIPMENT, NET                      13,103        12,936

DEFERRED DEBITS AND OTHER ASSETS
     Regulatory Assets                                   6,588         7,135
     Nuclear Decommissioning Trust Funds                 3,020         3,109
     Investments                                         1,616         1,583
     Goodwill, net                                       5,531         5,186
     Other                                                 465           464
                                                       -------       -------
         Total Deferred Debits and Other Assets         17,220        17,477
                                                       -------       -------

TOTAL ASSETS                                           $35,359       $34,597
                                                       =======       =======
</TABLE>


            See Notes to Condensed Consolidated Financial Statements


                                       6
<PAGE>
<TABLE>
<CAPTION>
                   EXELON CORPORATION AND SUBSIDIARY COMPANIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
                                  (In Millions)


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

CURRENT LIABILITIES
     Notes Payable                                           $    424         $  1,373
     Long-Term Debt Due within One Year                           921              908
     Accounts Payable                                           1,178            1,193
     Accrued Expenses                                           1,335              720
     Other                                                        366              457
                                                             --------         --------

         Total Current Liabilities                              4,224            4,651
                                                             --------         --------

LONG-TERM DEBT                                                 13,850           12,958

DEFERRED CREDITS AND OTHER LIABILITIES
     Deferred Income Taxes                                      4,381            4,409
     Unamortized Investment Tax Credits                           321              330
     Nuclear Decommissioning Liability for Retired Plants       1,314            1,301
     Pension Obligation                                           553              567
     Non-Pension Postretirement Benefits Obligation               866              819
     Spent Nuclear Fuel Obligation                                830              810
     Other                                                        856              907
                                                             --------         --------

         Total Deferred Credits and Other Liabilities           9,121            9,143
                                                             --------         --------

PREFERRED SECURITIES OF SUBSIDIARIES                              630              630

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
     Common Stock                                               6,937            6,883
     Retained Earnings                                            755              332
     Accumulated Other Comprehensive Income (Loss)               (158)              --
                                                             --------         --------

         Total Shareholders' Equity                             7,534            7,215
                                                             --------         --------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                   $ 35,359         $ 34,597
                                                             ========         ========




            See Notes to Condensed Consolidated Financial Statements

                                       7
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                    EXELON CORPORATION AND SUBSIDIARY COMPANIES
                                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                    (Unaudited)
                                                   (In Millions)
                                                                                         Six Months Ended June 30,
                                                                                         -------------------------
                                                                                           2001             2000
                                                                                          -------         -------
<S>                                                                                       <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES

     Net Income                                                                           $   714         $   308
     Adjustments to Reconcile Net Income to Net Cash Flows
      Provided by Operating Activities:
       Depreciation and Amortization                                                          939             228
       Cumulative Effect of a Change in Accounting Principle (net of income taxes)            (12)            (24)
       Extraordinary Item (net of income taxes)                                                --               3
       Provision for Uncollectible Accounts                                                    60              25
       Deferred Income Taxes                                                                    7              10
       Deferred Energy Costs                                                                    7              15
       Equity in (Earnings) Losses of Unconsolidated Affiliates, net                          (25)             (3)
       Other Operating Activities                                                             (92)            (36)
     Changes in Working Capital:
       Accounts Receivable                                                                     68             (38)
       Inventories                                                                            (12)             (2)
       Accounts Payable, Accrued Expenses and Other Current Liabilities                       256             (89)
       Other Current Assets                                                                   (21)            (63)
                                                                                          -------         -------

Net Cash Flows provided by Operating Activities                                             1,889             334
                                                                                          -------         -------


CASH FLOWS FROM INVESTING ACTIVITIES
     Investment in Plant                                                                     (902)           (287)
     Acquisitions - Enterprises, net of cash acquired                                         (39)            (91)
     Other Investing Activities                                                                 7             (71)
                                                                                          -------         -------

Net Cash Flows used in Investing Activities                                                  (934)           (449)
                                                                                          -------         -------


CASH FLOWS FROM FINANCING ACTIVITIES
     Change in Short-Term Debt                                                               (949)            189
     Issuance of Long-Term Debt                                                             2,058           1,015
     Retirement of Long-Term Debt                                                          (1,153)           (460)
     Common Stock Repurchase                                                                   --            (496)
     Change in Restricted Cash                                                                (16)              4
     Proceeds from Stock Option Exercises                                                      51              --
     Dividends on Common Stock                                                               (312)            (88)
     Other Financing Activities                                                                --             (10)
                                                                                          -------         -------

Net Cash Flows provided by (used in) Financing Activities                                    (321)            154
                                                                                          -------         -------


INCREASE IN CASH AND CASH EQUIVALENTS                                                         634              39
                                                                                          -------         -------


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


CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                $ 1,160         $    94
                                                                                          =======         =======

                              See Notes to Condensed Consolidated Financial Statements

                                                         8
</TABLE>
<PAGE>

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

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

                                                            Three Months Ended June 30,      Six Months Ended June 30,
                                                            ---------------------------      -------------------------
                                                               2001            2000            2001            2000
                                                              -------         -------         -------         -------
<S>                                                           <C>             <C>             <C>             <C>
OPERATING REVENUES                                            $ 1,530    |    $ 1,711         $ 2,976    |    $ 3,274
                                                                         |                               |
OPERATING EXPENSES                                                       |                               |
     Fuel and Purchased Power                                     586    |        470           1,195    |        796
     Operating and Maintenance                                    248    |        526             466    |        986
     Depreciation and Amortization                                168    |        224             334    |        596
     Taxes Other Than Income                                       69    |        125             141    |        262
                                                              -------    |    -------         -------    |    -------
                                                                         |                               |
         Total Operating Expenses                               1,071    |      1,345           2,136    |      2,640
                                                              -------    |     -------         -------   |     -------
                                                                         |                               |
OPERATING INCOME                                                  459    |        366             840    |        634
                                                              -------    |    -------         -------    |    -------
                                                                         |                               |
OTHER INCOME AND DEDUCTIONS                                              |                               |
     Interest Expense                                            (143)   |       (139)           (284)   |       (282)
     Provision for Dividends on Company-Obligated                        |                               |
       Mandatorily Redeemable Preferred Securities of                    |                               |
       Subsidiary Trusts Holding Solely the Company's                    |                               |
       Subordinated Debt Securities                                (7)   |         (7)            (15)   |        (14)
     Other, net                                                    22    |         47              59    |        183
                                                              -------    |    -------         -------    |    -------
                                                                         |                               |
         Total Other Income and Deductions                       (128)   |        (99)           (240)   |       (113)
                                                              -------    |    -------         -------    |    -------
                                                                         |                               |
INCOME BEFORE INCOME TAXES AND                                           |                               |
 EXTRAORDINARY ITEMS                                              331    |        267             600    |        521
INCOME TAXES                                                      149    |         89             271    |        134
                                                              -------    |    -------         -------    |    -------
INCOME BEFORE EXTRAORDINARY ITEMS                                 182    |        178             329    |        387
EXTRAORDINARY ITEMS (net of income taxes of                              |                               |
    $1 and $2 for the three and six                                      |                               |
    months ended June 30, 2000, respectively)                      --    |         (1)             --    |         (4)
                                                              -------    |    -------         -------    |    -------
                                                                         |                               |
NET INCOME                                                        182    |        177             329    |        383
     Preferred and Preference Stock Dividends                      --    |         (1)             --    |         (2)
                                                              -------    |    -------         -------    |    -------
NET INCOME ON COMMON STOCK                                    $   182    |    $   176         $   329    |    $   381
                                                              =======    |    =======         =======    |    =======
                                                                         |                               |
COMPREHENSIVE INCOME                                                     |                               |
     Net Income                                               $   182    |    $   177         $   329    |    $   383
     Other Comprehensive Income (net of income taxes):                   |                               |
       Unrealized Gain (Loss) on Marketable Securities             --    |         --              (4)   |          1
                                                              -------    |    -------         -------    |    -------
TOTAL COMPREHENSIVE INCOME                                    $   182    |    $   177         $   325    |    $   384
                                                              =======    |    =======         =======    |    =======

                              See Notes to Condensed Consolidated Financial Statements

                                                         9
</TABLE>

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



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

CURRENT ASSETS
     Cash and Cash Equivalents                         $   466        $   141
     Restricted Cash                                        60             60
     Accounts Receivable, net                              985          1,204
     Receivables from Affiliates                           306            468
     Inventories, at average cost                           56            186
     Deferred Income Taxes                                  54             89
     Other                                                 271            285
                                                       -------        -------

         Total Current Assets                            2,198          2,433
                                                       -------        -------

PROPERTY, PLANT AND EQUIPMENT, NET                       7,149          7,657

DEFERRED DEBITS AND OTHER ASSETS
     Regulatory Assets                                     681          1,110
     Nuclear Decommissioning Trust Funds                    --          2,669
     Investments                                            60            152
     Goodwill, net                                       5,094          4,766
     Receivable from Affiliate                           1,316          1,316
     Other                                                 130            178
                                                       -------        -------

         Total Deferred Debits and Other Assets          7,281         10,191
                                                       -------        -------

TOTAL ASSETS                                           $16,628        $20,281
                                                       =======        =======
</TABLE>


            See Notes to Condensed Consolidated Financial Statements

                                       10
<PAGE>
<TABLE>
<CAPTION>
                    COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
                           CONDENSED CONSOLIDATED BALANCE SHEETS
                                        (Unaudited)
                                       (In Millions)


                                                                 June 30,      December 31,
                                                                   2001             2000
                                                                 --------         --------
<S>                                                              <C>              <C>

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
     Long-Term Debt Due within One Year                          $    346         $    348
     Accounts Payable                                                 285              597
     Accrued Expenses                                                 556              532
     Payables to Affiliates                                           428               --
     Other                                                            125              329
                                                                 --------         --------

         Total Current Liabilities                                  1,740            1,806
                                                                 --------         --------

LONG-TERM DEBT                                                      6,724            6,882

DEFERRED CREDITS AND OTHER LIABILITIES
     Deferred Income Taxes                                          1,773            1,837
     Unamortized Investment Tax Credits                                57               59
     Nuclear Decommissioning Liability for Retired Plants              --            1,301
     Pension Obligation                                               138              285
     Non-Pension Postretirement Benefits Obligation                   154              315
     Payables to Affiliates                                           371               --
     Spent Nuclear Fuel Obligation                                     --              810
     Other                                                            283              475
                                                                 --------         --------

         Total Deferred Credits and Other Liabilities               2,776            5,082
                                                                 --------         --------

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

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
     Common Stock                                                   2,047            2,678
     Preference Stock of Subsidiary                                     7                7
     Other Paid-in Capital                                          5,065            5,388
     Receivable from Parent                                        (1,062)              --
     Retained Earnings                                                314              133
     Treasury Stock, at cost                                       (1,307)          (2,023)
     Accumulated Other Comprehensive Income (Loss)                     (4)              --
                                                                 --------         --------

         Total Shareholders' Equity                                 5,060            6,183
                                                                 --------         --------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                       $ 16,628         $ 20,281
                                                                 ========         ========
</TABLE>

                  See Notes to Condensed Consolidated Financial Statements

                                            11
<PAGE>
<TABLE>
<CAPTION>
                               COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
                                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                   (Unaudited)
                                                  (In Millions)

                                                                                       Six Months Ended June 30,
                                                                                       -------------------------
                                                                                          2001            2000
                                                                                       -------         -------

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

     Net Income                                                                        $   329    |    $   383
     Adjustments to Reconcile Net Income to Net Cash Flows                                        |
      provided by Operating Activities:                                                           |
       Depreciation and Amortization                                                       334    |        661
       Extraordinary Items (net of income taxes)                                            --    |          4
       Gain on Forward Share Arrangement                                                    --    |       (113)
       Provision for Uncollectible Accounts                                                 18    |         21
       Reversal of Provision for Revenue Refund                                            (15)   |         --
       Deferred Income Taxes                                                                38    |       (102)
       Midwest Independent System Operator Exit Fees                                       (36)   |         --
       Early Retirement and Separation Program                                              --    |         (9)
       Other Operating Activities                                                           20    |        133
     Changes in Working Capital:                                                                  |
       Accounts Receivable                                                                 (45)   |         81
       Inventories                                                                          16    |        (19)
       Accounts Payable, Accrued Expenses, and Other Current Liabilities                   332    |       (908)
       Other Current Assets                                                                  7    |         45
                                                                                       -------    |    -------
Net Cash Flows provided by Operating Activities                                            998    |        177
                                                                                       -------    |    -------
                                                                                                  |
CASH FLOWS FROM INVESTING ACTIVITIES                                                              |
     Investment in Plant                                                                  (451)   |       (676)
     Plant Removals, net                                                                    (8)   |        (18)
     Contributions to Nuclear Decommissioning Trust Funds                                   --    |        (39)
     Payables to Affiliates                                                                122    |         --
     Other Investments                                                                       5    |         50
     Other Investing Activities                                                             (4)   |          5
                                                                                       -------    |    -------
Net Cash Flows used in Investing Activities                                               (336)   |       (678)
                                                                                       -------    |    -------
                                                                                                  |
CASH FLOWS FROM FINANCING ACTIVITIES                                                              |
     Common Stock Repurchases                                                               --    |       (153)
     Retirement of Long-Term Debt                                                         (174)   |       (553)
     Retirement of Mandatorily Redeemable Preferred Stock                                   --    |        (70)
     Change in Restricted Cash                                                              --    |        220
     Change in Short-Term Debt                                                              --    |        349
     Dividends on Common and Preferred Stock                                              (163)   |       (176)
     Nuclear Fuel Principal Payments                                                        --    |        (35)
     Common Stock Repurchase Arrangement                                                    --    |        (67)
                                                                                       -------    |    -------
                                                                                                  |
Net Cash Flows used in Financing Activities                                               (337)   |       (485)
                                                                                       -------    |    -------
                                                                                                  |
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                           325    |       (986)
                                                                                                  |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                           141    |      1,255
                                                                                       -------    |    -------
                                                                                                  |
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                             $   466    |    $   269
                                                                                       =======    |    =======
                                                                                                  |
                                                                                                  |
SUPPLEMENTAL CASH FLOW INFORMATION                                                                |
       Noncash Investing and Financing Activities:                                                |
       Net Assets Transferred as a Result of Restructuring, net of Note Payable        $ 1,307    |         --
       Contribution of Receivable from Parent                                          $ 1,062    |         --
       Regulatory Asset Fair Value Adjustment                                          $   347    |         --
       Retirement of Treasury Shares                                                   $ 2,022    |         --
       Deferred Tax on Fossil Plant Sale                                                    --    |    $   481
       Settlement of Common Share Repurchase Arrangement                                    --    |    $   993


                             See Notes to Condensed Consolidated Financial Statements

                                                       12
</TABLE>

<PAGE>
PECO ENERGY COMPANY
-------------------

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

                                                                        Three Months Ended June 30,      Six Months Ended June 30,
                                                                        ---------------------------      -------------------------
                                                                            2001            2000            2001            2000
                                                                          -------         -------         -------         -------
<S>                                                                       <C>             <C>             <C>             <C>
OPERATING REVENUES                                                        $   906         $ 1,385         $ 1,957         $ 2,738

OPERATING EXPENSES
     Fuel and Purchased Power                                                 394             476             882             939
     Operating and Maintenance                                                126             456             258             847
     Depreciation and Amortization                                             99              81             200             161
     Taxes Other Than Income                                                   41              63              84             130
                                                                          -------         -------         -------         -------

         Total Operating Expenses                                             660           1,076           1,424           2,077
                                                                          -------         -------         -------         -------

OPERATING INCOME                                                              246             309             533             661
                                                                          -------         -------         -------         -------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                        (117)           (116)           (227)           (220)
     Company-Obligated Mandatorily Redeemable Preferred
        Securities of a Partnership, which holds Solely
        Subordinated Debentures of the Company                                 (2)             (2)             (5)             (5)
     Equity in Earnings (Losses) of Unconsolidated Affiliates, net             --              (1)             --               3
     Other, net                                                                 2               7              18              29
                                                                          -------         -------         -------         -------

         Total Other Income and Deductions                                   (117)           (112)           (214)           (193)
                                                                          -------         -------         -------         -------

INCOME BEFORE INCOME TAXES, EXTRAORDINARY ITEM AND
    CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE                     129             197             319             468
INCOME TAXES                                                                   44              75             112             176
                                                                          -------         -------         -------         -------
INCOME BEFORE EXTRAORDINARY ITEM AND CUMULATIVE
    EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE                                 85             122             207             292
EXTRAORDINARY ITEM (net of income taxes of $2)                                 --              (3)             --              (3)
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING
    PRINCIPLE  (net of income taxes of $16)                                    --              --              --              24
                                                                          -------         -------         -------         -------

NET INCOME                                                                     85             119             207             313
     Preferred Stock Dividends                                                 (3)             (3)             (5)             (5)
                                                                          -------         -------         -------         -------
NET INCOME ON COMMON STOCK                                                $    82         $   116         $   202         $   308
                                                                          =======         =======         =======         =======

COMPREHENSIVE INCOME
     Net Income                                                           $    85         $   119         $   207         $   313
     Other Comprehensive Income (net of income tax):
        SFAS 133 Transition Adjustment                                         --              --              40              --
        Cash Flow Hedge Fair Value Adjustment                                  (8)             --             (10)             --
        Unrealized Gain (Loss) on Marketable Securities                        --              (1)             --              (1)
                                                                          -------         -------         -------         -------
         Total Other Comprehensive Income (Loss)                               (8)             (1)             30              (1)
                                                                          -------         -------         -------         -------

TOTAL COMPREHENSIVE INCOME                                                $    77         $   118         $   237         $   312
                                                                          =======         =======         =======         =======


                                     See Notes to Condensed Consolidated Financial Statements

                                                                13
</TABLE>

<PAGE>

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


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

CURRENT ASSETS
     Cash and Cash Equivalents                         $    26        $    49
     Restricted Cash                                       270            254
     Accounts Receivable, net                              325          1,024
     Inventories, at average cost                           64            257
     Other                                                 151            195
                                                       -------        -------

         Total Current Assets                              836          1,779
                                                       -------        -------


PROPERTY, PLANT AND EQUIPMENT, NET                       3,976          5,158

DEFERRED DEBITS AND OTHER ASSETS
     Regulatory Assets                                   5,908          6,026
     Nuclear Decommissioning Trust Funds                    --            440
     Investments                                            26            847
     Goodwill, net                                          --            326
     Other                                                  95            200
                                                       -------        -------

         Total Deferred Debits and Other Assets          6,029          7,839
                                                       -------        -------

TOTAL ASSETS                                           $10,841        $14,776
                                                       =======        =======




            See Notes to Condensed Consolidated Financial Statements

                                       14
</TABLE>

<PAGE>

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



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

CURRENT LIABILITIES
     Notes Payable                                           $     41         $    163
     Payables to Affiliates                                       119            1,096
     Long-Term Debt Due within One Year                           567              553
     Accounts Payable                                              61              403
     Accrued Expenses                                             355              481
     Deferred Income Taxes                                         27               27
     Other                                                         19               95
                                                             --------         --------

         Total Current Liabilities                              1,189            2,818
                                                             --------         --------

LONG-TERM DEBT                                                  5,606            6,002

DEFERRED CREDITS AND OTHER LIABILITIES
     Deferred Income Taxes                                      3,009            2,532
     Unamortized Investment Tax Credits                            28              271
     Pension Obligation                                           129              281
     Non-Pension Postretirement Benefits Obligation               238              505
     Other                                                         97              427
                                                             --------         --------

         Total Deferred Credits and Other Liabilities           3,501            4,016
                                                             --------         --------

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

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
     Common Stock                                               1,905            1,449
     Receivable from Parent                                    (1,983)              --
     Preferred Stock                                              137              137
     Deferred Compensation                                         (7)              (7)
     Retained Earnings                                            299              197
     Accumulated Other Comprehensive Income (Loss)                 29               (1)
                                                             --------         --------

         Total Shareholders' Equity                               380            1,775
                                                             --------         --------


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                   $ 10,841         $ 14,776
                                                             ========         ========



                 See Notes to Condensed Consolidated Financial Statements

                                            15
</TABLE>

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

     Net Income                                                                                    $   207         $   313
     Adjustments to Reconcile Net Income to Net Cash Flows
      Provided by Operating Activities:
       Depreciation and Amortization                                                                   200             228
       Cumulative Effect of a Change in Accounting Principle (net of income taxes)                      --             (24)
       Extraordinary Item (net of income taxes)                                                         --               3
       Provision for Uncollectible Accounts                                                             29              25
       Deferred Income Taxes                                                                            13              10
       Deferred Energy Costs                                                                             7              15
       Equity in (Earnings) Losses of Unconsolidated Affiliates, net                                    --              (3)
       Other Operating Activities                                                                      (19)            (36)
     Changes in Working Capital:
       Accounts Receivable                                                                             (19)            (38)
       Inventories                                                                                       6              (2)
       Accounts Payable, Accrued Expenses and Other Current Liabilities                                  1             (89)
       Other Current Assets                                                                           (104)            (63)
                                                                                                   -------         -------

Net Cash Flows provided by Operating Activities                                                        321             339
                                                                                                   -------         -------


CASH FLOWS FROM INVESTING ACTIVITIES
     Investment in Plant                                                                              (122)           (287)
     Exelon Infrastructure Services Acquisitions , net of cash acquired                                 --             (91)
     Other Investing Activities                                                                         35             (71)
                                                                                                   -------         -------

Net Cash Flows used in Investing Activities                                                            (87)           (449)
                                                                                                   -------         -------


CASH FLOWS FROM FINANCING ACTIVITIES
     Change in Short-Term Debt                                                                        (122)            189
     Change in Payable to Affiliate                                                                     75              --
     Issuance of Long-Term Debt                                                                        805           1,015
     Retirement of Long-Term Debt                                                                     (978)           (460)
     Common Stock Repurchase                                                                            --            (496)
     Contribution from Parent                                                                           53              --
     Change in Restricted Cash                                                                         (16)              4
     Dividends on Preferred and Common Stock                                                          (105)            (93)
     Proceeds on Settlement of Interest Rate Swap Agreements                                            31              --
     Other Financing Activities                                                                         --             (10)
                                                                                                   -------         -------


Net Cash Flows provided by (used in) Financing Activities                                             (257)            149
                                                                                                   -------         -------


INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                                       (23)             39
                                                                                                   -------         -------


CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                                        49              55
                                                                                                   -------         -------


CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                         $    26         $    94
                                                                                                   =======         =======


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 Condensed Consolidated Financial Statements

                                                             16
</TABLE>

<PAGE>

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


1.   BASIS OF PRESENTATION (Exelon, ComEd and PECO)
The accompanying condensed consolidated financial statements as of June 30, 2001
and for the three and six  months  then ended are  unaudited,  but  include  all
adjustments  that  Exelon  Corporation  (Exelon),  Commonwealth  Edison  Company
(ComEd)  and  PECO  Energy  Company  (PECO)   consider   necessary  for  a  fair
presentation  of such financial  statements.  All  adjustments  are of a normal,
recurring  nature,  except  as  otherwise  disclosed.   The  year-end  condensed
consolidated  balance sheet data were derived from audited financial  statements
but do not include all  disclosures  required by generally  accepted  accounting
principles.  Certain  prior-year  amounts have been reclassified for comparative
purposes.  Dividends  on  preferred  stock of PECO for the three and six  months
ended June 30, 2000 have been  reclassified on Exelon's  Condensed  Consolidated
Statements  of Income and  Comprehensive  Income to  distributions  on preferred
securities of subsidiaries,  resulting in a deduction before, rather than after,
net income. This reclassification  reflects the current organizational structure
in  which  PECO  is a  subsidiary  of  Exelon.  These  notes  should  be read in
conjunction with the Notes to Consolidated Financial Statements of Exelon, ComEd
and PECO  included in or  incorporated  by  reference  in Item 8 of their Annual
Report on Form 10-K for the year ended December 31, 2000.

ComEd
         ComEd was the principal subsidiary of Unicom Corporation (Unicom) prior
to the merger with Exelon.  See Note 2 - Merger.  The merger was  accounted  for
using the purchase method of accounting.  The effects of the purchase method are
reflected  on  the  financial  statements  of  ComEd  as  of  the  merger  date.
Accordingly,  the financial statements presented for the period after the merger
reflect a new basis of accounting.  ComEd's Condensed Consolidated Statements of
Income and Comprehensive  Income and Condensed  Consolidated  Statements of Cash
Flows are  separated  by a bold black line to indicate  the  different  basis of
accounting existing in each of the periods presented.


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

                                       17
<PAGE>

         Selected  unaudited pro forma combined  results of operations of Exelon
for the three and six months ended June 30, 2000,  assuming the merger  occurred
on January 1, 2000, are as follows:
<TABLE>
<CAPTION>
                                                   Three Months Ended     Six Months Ended
                                                     June 30, 2000          June 30, 2000
                                                     -------------          -------------
<S>                                                      <C>                   <C>
         Operating revenue                               $3,188                $6,188
         Net income                                        $268                  $623
         Net income per common share (basic)              $0.83                 $1.95
         Net income per common share (diluted)            $0.83                 $1.93
</TABLE>

         Pro forma net income for the three months ended June 30, 2000  excludes
extraordinary  items  of $7  million  ($4  million,  net of  income  taxes)  and
merger-related  costs of $29 million ($17 million,  net of income taxes).  These
non-recurring  items total $21 million,  net of income taxes, or $0.07 per share
on a basic and diluted basis.

         Pro forma net income for the six months  ended June 30,  2000  excludes
the benefit from the  cumulative  effect of a change in accounting  principle of
$40 million  ($24  million,  net of income  taxes),  extraordinary  items of $11
million  ($7  million,  net of income  taxes)  and  merger-related  costs of $45
million ($27 million,  net of income taxes). These non-recurring items total $10
million, net of income taxes, or $0.03 per share on a basic and diluted basis.

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

Merger-Related Costs (Exelon, ComEd and PECO)
         Exelon recorded  certain costs in 2000 associated with the merger.  The
costs  associated with PECO were charged to expense.  The costs  associated with
Unicom were recorded as part of the  application of purchase  accounting and did
not affect  results  of  operations.  Exelon  anticipates  that $282  million of
employee costs will be funded from its pension and postretirement  benefit plans
and $149  million for employee  severance  cost  associated  with Unicom will be
funded  from  general   corporate   funds.   The  following   table  provides  a
reconciliation of the reserve for employee severance associated with the merger:

         Employee Severance Reserve as of October 20, 2000         $149
         Deductions for Employee Terminations:
             Fourth Quarter 2000                                     (5)
             First Quarter 2001                                     (25)
             Second Quarter 2001                                    (10)
                                                                  -----
         Employee Severance Reserve as of June 30, 2001            $109
                                                                  =====

                                       18
<PAGE>

         Approximately  2,900 Unicom and PECO  positions  were  identified to be
eliminated  as a result of the merger,  of which 619 and 191 were  eliminated in
the first and second quarters of 2001,  respectively.  The remaining approximate
2,090 positions are expected to be eliminated by the end of 2002.


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

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

                                                      ComEd           PECO
                                                      -----           ----
         Decrease in Assets:
         -------------------
         Current Assets                               ($825)        ($1,085)
         Property, Plant and Equipment, net            (782)         (1,212)
         Investments                                   (104)         (1,262)
         Other Noncurrent Assets                     (3,064)           (431)

         (Increase) Decrease in Liabilities:
         -----------------------------------
         Current Liabilities                            834           1,601
         Long-Term Debt                                  --             205
         Deferred Income Taxes                           84            (479)
         Other Noncurrent Liabilities                 3,000             964
                                                    -------         -------
              Net Assets Transferred                  ($857)        ($1,699)
                                                    =======         =======

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

                                                         ComEd            PECO
                                                         -----            ----

         Treasury Stock Received                         $1,307         $    --
         Return of Capital                                   --           1,624
         Note (Payable)/Receivable -  Affiliates           (450)             75
                                                        -------         -------
                                                           $857          $1,699
                                                        =======         =======

                                       19
<PAGE>
         Selected  unaudited  pro forma  results of operations of ComEd and PECO
for the three and six  months  ended  June 30,  2000,  assuming  the  merger and
corporate  restructuring  occurred  as of  January  1, 2000,  are  presented  as
follows:

<TABLE>
<CAPTION>
                                       Three months ended               Six months ended
                                         June 30, 2000                    June 30, 2000
                                         -------------                    -------------
                                     ComEd             PECO          ComEd             PECO
                                     -----             ----          -----             ----
<S>                                  <C>               <C>           <C>             <C>
         Operating revenues          $1,500            $771          $2,924          $1,620
         Operating income              $394            $258            $606            $602
         Net income                    $179             $94            $336            $248
</TABLE>

         The three  months ended June 30, 2000 pro forma  financial  information
presented  above for ComEd  excludes  merger-related  costs of $13  million  ($8
million,  net of income  taxes)  and an  extraordinary  item of $2  million  ($1
million, net of income taxes). PECO pro forma financial information for the same
period excludes  merger-related  costs of $4 million ($2 million,  net of income
taxes) and an  extraordinary  charge of $5 million  ($3  million,  net of income
taxes.

         The six months  ended  June 30,  2000 pro forma  financial  information
presented  above for ComEd  excludes  merger-related  costs of $17 million  ($10
million, net of income taxes) and extraordinary items of $6 million ($4 million,
net of income taxes).  PECO pro forma financial  information for the same period
excludes  the  benefit  from the  cumulative  effect of a change  in  accounting
principle  of $40 million ($24  million,  net of income  taxes),  merger-related
costs of $10  million ($6  million,  net of income  taxes) and an  extraordinary
charge of $5 million ($3 million, net of income taxes).

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

         Under the PPA between ComEd and  Generation,  Generation  has agreed to
supply all of ComEd's load  requirements  through  2004.  Prices for this energy
vary depending upon the time of day and month of delivery. During 2005 and 2006,
ComEd's PPA is a partial requirements  agreement under which ComEd will purchase
all of its required  energy and capacity  from  Generation,  up to the available
capacity  of  the  nuclear   generating  plants  formerly  owned  by  ComEd  and
transferred  to  Generation.  Under  the terms of  ComEd's  PPA,  Generation  is
responsible  for  obtaining  any  required  transmission  service.  The PPA also
specifies that prior to 2005,  ComEd and Generation  will jointly  determine and
agree on a market-based  price for energy  delivered  under the PPA for 2005 and
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 need to obtain any  additional  supply
required from market sources in 2005 and 2006, and subsequent to 2006, will need
to obtain all of its supply from market sources, which could include Generation.

                                       20
<PAGE>

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


4. CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLES (Exelon and PECO)
On January 1, 2001,  Exelon  recognized a non-cash  gain of $12 million,  net of
income taxes,  in earnings and deferred a non-cash  gain of $44 million,  net of
income  taxes,  in  Accumulated  Other  Comprehensive  Income,  a  component  of
shareholders'  equity, to reflect the initial adoption of Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities"  (SFAS No.  133),  as  amended.  SFAS No. 133 must be applied to all
derivative  instruments  and requires that such  instruments  be recorded in the
balance  sheet  either as an asset or a  liability  measured at their fair value
through  earnings,  with special  accounting  permitted  for certain  qualifying
hedges.

         During the three and six months ended June 30, 2001,  Exelon recognized
net gains of $5 million ($3 million,  net of income  taxes) and $22 million ($13
million,  net of income taxes),  respectively,  relating to mark-to-market (MTM)
adjustments of certain power  purchase and sale  contracts  pursuant to SFAS No.
133.  MTM  adjustments  on power  purchase  contracts  are  reported in fuel and
purchased  power and MTM  adjustments  on power sale  contracts  are reported as
operating  revenues  in the  Condensed  Consolidated  Statements  of Income  and
Comprehensive  Income.  During  the three and six months  ended  June 30,  2001,
Exelon  recognized  net losses  aggregating $6 million ($4 million net of income
taxes) on  derivative  instruments  entered  into for trading  purposes.  Exelon
commenced  financial  trading in the second  quarter of 2001.  These  losses are
reported as other income and deductions in the Condensed Consolidated Statements
of Income and Comprehensive  Income.  During the three and six months ended June
30, 2001, no amounts were  reclassified  from  accumulated  other  comprehensive
income into earnings as a result of forecasted energy commodity  transactions no
longer being  probable.  For the six months ended June 30, 2001,  $6 million ($4
million  after taxes) was  reclassified  from  accumulated  other  comprehensive
income into earnings as a result of forecasted financing  transactions no longer
being probable.

         As of June 30, 2001,  $38 million of deferred net losses on  derivative
instruments  accumulated  in  other  comprehensive  income  are  expected  to be
reclassified to earnings  during the next twelve months.  Amounts in accumulated
other comprehensive  income related to interest rate cash flows are reclassified
into  earnings  when  the  forecasted   interest  payment  occurs.   Amounts  in
accumulated  other  comprehensive  income related to energy commodity cash flows
are  reclassified  into  earnings  when the  forecasted  purchase or sale of the
energy commodity occurs.

                                       21
<PAGE>

5.   EARNINGS PER SHARE (Exelon)
Diluted earnings per share are calculated by dividing net income by the weighted
average  shares of common stock  outstanding,  including  shares  issuable  upon
exercise  of  stock  options  outstanding  under  Exelon's  stock  option  plans
considered to be common stock equivalents.  The following table shows the effect
of these stock options on the weighted average number of shares outstanding used
in calculating diluted earnings per share (in millions):

<TABLE>
<CAPTION>
                                                         Three Months Ended          Six Months Ended
                                                               June 30,                  June 30,
                                                               --------                  --------
                                                           2001         2000         2001         2000
                                                            ---          ---          ---          ---
<S>                                                         <C>          <C>          <C>          <C>
         Average common shares outstanding                  321          174          320          178
         Assumed exercise of stock options                    3            1            3            1
                                                            ---          ---          ---          ---
         Average diluted common shares outstanding          324          175          323          179
                                                            ===          ===          ===          ===
</TABLE>

                                       22

<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.
Exelon's  segment  information as of June 30, 2001 and December 31, 2000 and for
the three and six months  ended June 30, 2001 as compared to the same periods in
2000 is as follows:

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

                                                                    Corporate and
                       Energy                                        Intersegment
                      Delivery       Generation     Enterprises      Eliminations     Consolidated
                      --------       ----------     -----------      ------------     ------------
<S>                    <C>             <C>               <C>             <C>             <C>
Revenues:
         2001          $2,436          $1,618          $  546           $ (949)          $3,651
         2000          $  771          $  633          $  271           $ (290)          $1,385
EBIT (a):
         2001          $  706          $  126          $   (5)          $   (6)          $  821
         2000          $  257          $   78          $  (32)          $    1           $  304
</TABLE>


  Six Months Ended June 30, 2001 as compared to Six Months Ended June 30, 2000
  ----------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                           Corporate and
                           Energy                                           Intersegment
                          Delivery        Generation       Enterprises      Eliminations       Consolidated
                          --------        ----------       -----------      ------------       ------------
<S>                        <C>              <C>              <C>               <C>               <C>
Revenues:
             2001          $ 4,933          $ 3,246          $ 1,213           $(1,918)          $ 7,474
             2000          $ 1,620          $ 1,131          $   517           $  (530)          $ 2,738
EBIT (a):
             2001          $ 1,387          $   419          $   (36)          $   (12)          $ 1,758
             2000          $   594          $   117          $   (44)          $    (1)          $   666


Total Assets:
   June  30, 2001          $27,469          $ 7,035          $ 1,703           $  (848)          $35,359
   December 31, 2000       $27,424          $ 5,734          $ 2,277           $  (838)          $34,597
<FN>
(a)  EBIT -  consists  of  operating  income,  equity in  earnings  (losses)  of
     unconsolidated affiliates, and other income and expenses recorded in other,
     net, with the exception of interest  income.  Interest income for the three
     months  ended June 30,  2001 was $24  million as compared to $11 million in
     the same 2000  period.  Interest  income for the six months  ended June 30,
     2001 was $49 million as compared to $27 million in the same 2000 period.
</FN>
</TABLE>

         The operations of Exelon Energy, Exelon's competitive retail generation
supplier,  for 2000 have been  reclassified  from  Generation to  Enterprises to
reflect the corporate restructuring. See Note 3 - Corporate Restructuring.

                                       23
<PAGE>

7.   COMMITMENTS AND CONTINGENCIES (Exelon, ComEd and PECO)
For  information  regarding  capital  commitments,  nuclear  insurance,  nuclear
decommissioning  and spent fuel storage,  energy  commitments and  environmental
issues,  see  the  Commitments  and  Contingencies  Notes  to  the  Consolidated
Financial  Statements of Exelon,  ComEd and PECO for the year ended December 31,
2000.

Environmental Liabilities
         Exelon has  identified  74 sites where  former  manufactured  gas plant
(MGP) activities have or may have resulted in actual site  contamination.  As of
June 30, 2001, Exelon had accrued $168 million for  environmental  investigation
and  remediation  costs,  including  $137  million  for  MGP  investigation  and
remediation, that currently can be reasonably  estimated. Exelon, ComEd and PECO
cannot  predict  whether  they will  incur  other  significant  liabilities  for
additional  investigation  and  remediation  costs at these or additional  sites
identified  by  environmental  agencies or others,  or whether such costs may be
recoverable from third parties.

     ComEd
         As of June 30, 2001,  ComEd had accrued $114 million  (discounted)  for
environmental  investigation  and remediation  costs. This reserve included $108
million for MGP investigation and remediation, which currently can be reasonably
estimated.

     PECO
         As of June 30, 2001,  PECO had accrued $39 million  (undiscounted)  for
environmental investigation and remediation costs, including $29 million for MGP
investigation and remediation, which currently can be reasonably estimated.

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

<TABLE>
<CAPTION>
                              Net                Net         Transmission
                             Power            Purchased         Rights
                             Sales            Capacity        Purchases
                             -----            --------        ---------
<S>                         <C>               <C>              <C>
         2001               $   398           $   550          $    89
         2002                   409               943               50
         2003                   345               848               32
         2004                   215               840               25
         2005                   139               477               25
         Thereafter             (76)            5,445               80
                            -------           -------          -------
         Total              $ 1,430           $ 9,103          $   301
                            =======           =======          =======
</TABLE>

         See Note 3 - Corporate Restructuring, for information about ComEd's and
PECO's PPAs with Generation.

                                       24
<PAGE>
Litigation
         FERC Municipal Request for Refund. Three of ComEd's wholesale municipal
customers filed a complaint and request for refund with FERC alleging that ComEd
failed to properly  adjust  their rates as provided for under the terms of their
electric service contracts,  and to track certain refunds made to ComEd's retail
customers in the years 1992 through  1994.  In 1998,  FERC granted the complaint
and directed that refunds be made,  with interest.  During the second quarter of
2001, FERC issued an order pursuant to ComEd's request for a rehearing, in which
it  determined  that its 1998 order had been  erroneous and that no refunds were
due from ComEd to the municipal  customers.  In response to the  favorable  FERC
order,  ComEd reversed the reserve of $15 million it had previously  established
in connection with this case. The FERC order is subject to appeal to the Federal
circuit court.

         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 million in various damages. Cotter will appeal the verdict.

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

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

         The United  States  Environmental  Protection  Agency (EPA) has advised
Cotter  that  it  is  potentially   liable  in  connection   with   radiological
contamination  at a site known as the West Lake Landfill in Missouri.  Cotter is
alleged to have disposed of approximately  39,000 tons of soils

                                       25

<PAGE>

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 $10-15 million. Once a final
feasibility  study is complete and a remedy  selected,  it is expected  that the
PRPs will agree on an  allocation  of  responsibility  for the  costs.  Until an
agreement is reached, Exelon cannot predict its share of the costs.

         Godley Park  District  Litigation.  On April 18, 2001,  the Godley Park
District  filed  suit in Will  County  Circuit  Court  against  ComEd and Exelon
alleging  that oil  spills  at  Braidwood  Station  have  contaminated  the Park
District's water supply. The complaint seeks actual damages, punitive damages of
$100  million  and  statutory  penalties.   The  complaint  was  not  served  on
ComEd/Exelon until July 12, 2001. Although ComEd and Exelon have not yet filed a
response to the complaint,  the companies will contest liability and the damages
sought by the plaintiff.

         Cajun  Electric  Power  Cooperative,  Inc. On May 27, 1998,  the United
States  Department of Justice,  on behalf of the Rural Utilities Service and the
Chapter 11 Trustee for the Cajun Electric Power Cooperative, Inc. (Cajun), filed
an action claiming breach of contract against PECO in the United States District
Court for the Middle District of Louisiana arising out of PECO's  termination of
the contract to purchase Cajun's interest in the River Bend nuclear power plant.
This action seeks the full purchase  price of the 30% interest in the River Bend
nuclear plant, $50 million, plus interest and consequential  damages. While PECO
cannot  predict  the  outcome  of this  matter,  PECO  believes  that it validly
exercised  its  right  of  termination  and did not  breach  the  agreement.  In
connection  with  the  corporate  restructuring,   the  responsibility  for  any
liability related to this matter was transferred to Generation.

         Service Interruptions. In August 1999, three class action lawsuits were
filed,  and  subsequently  consolidated,  in the Circuit  Court of Cook  County,
Illinois  seeking  damages for personal  injuries,  property damage and economic
losses from ComEd related to a series of service  interruptions that occurred in
the summer 1999.  The combined  effect of these  interruptions  resulted in over
168,000  customers  losing  service  for more  than 4 hours.  Conditional  class
certification  has been  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, plaintiffs filed a second amended consolidated complaint. A portion of any
settlement  or verdict  may be covered by  insurance  and  discussions  with the
carrier are ongoing.  Exelon's  management  believes adequate reserves have been
established in connection with these cases.

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

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

                                       26

<PAGE>

payments  for  electricity  sold to ComEd after March 15,  1996  violated  their
rights  under the  federal  and state  constitutions,  and  against  ComEd for a
declaratory  order that their rights under their  contracts  with ComEd were not
affected by the amendment.  On August 4, 1999, the Illinois Appellate Court held
that the developers'  claims against the state were premature,  and the Illinois
Supreme Court denied leave to appeal that ruling.  Developers of both facilities
have since filed  amended  complaints  repeating  their  allegations  that ComEd
breached the contracts in question,  and requesting  damages for such breach, in
the amount of the difference  between the  state-subsidized  rate and the amount
ComEd was  willing  to pay for the  electricity.  ComEd  intends  to  vigorously
contest this matter.

         Pennsylvania Real Estate Tax Appeals. Exelon is involved in tax appeals
regarding two of its nuclear facilities, Limerick Generating Station (Montgomery
County)  and Peach  Bottom  (York  County).  Exelon is also  involved in the tax
appeal for Unit No. 1 at Three Mile  Island  Nuclear  Station  (Dauphin  County)
through  AmerGen  Energy  Company,  LLC.  Exelon does not believe the outcome of
these  matters  will have a  material  adverse  effect on  Exelon's  results  of
operations or financial condition.

         Other Tax  Issues.  The  Illinois  Department  of Revenue  has issued a
notice of tax  liability to ComEd  alleging  deficiencies  in Illinois  invested
capital tax payments for the years 1988 through 1997. The alleged  deficiencies,
including interest and penalties,  totaled  approximately $54 million as of June
30, 2001. ComEd has protested the notices,  and the matter is currently pending.

         Chicago Franchise.  In March 1999, ComEd reached a settlement agreement
with the City of Chicago to end the  arbitration  proceeding  between  ComEd and
Chicago  regarding  the  January  1, 1992  franchise  agreement.  As part of the
settlement  agreement,  ComEd and  Chicago  agreed to a revised  combination  of
ongoing work under the franchise  agreement and new initiatives that will result
in  defined  transmission  and  distribution  expenditures  by ComEd to  improve
electric services in Chicago. The settlement agreement provides that ComEd would
be subject to  liquidated  damages if the projects are not  completed by various
dates,  unless it was prevented  from doing so by events  beyond its  reasonable
control.  In addition,  ComEd and Chicago  established an Energy Reliability and
Capacity Account, into which ComEd deposited $25 million during each of 1999 and
2000 and has conditionally agreed to deposit $25 million at the end of the years
2001 and 2002,  to help  ensure an adequate  and  reliable  electric  supply for
Chicago.

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


8.   PENSION AND POSTRETIREMENT BENEFIT OBLIGATIONS (ComEd and PECO)
ComEd
         As part of Exelon's corporate restructuring,  approximately 5,500 ComEd
employees were transferred to Generation,  BSC and  Enterprises.  As a result of
the  transfer,   ComEd's   pension

                                       27

<PAGE>

and non-pension postretirement benefits obligations were reduced by $143 million
and $172 million, respectively, as of January 1, 2001.

PECO
         As part of Exelon's corporate  restructuring,  approximately 3,200 PECO
employees were transferred to Generation,  BSC and  Enterprises.  As a result of
the transfer, PECO's pension and non-pension postretirement benefits obligations
were  reduced by $70 million and $271  million,  respectively,  as of January 1,
2001.

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

<TABLE>
<CAPTION>
                                                               ComEd                          PECO
                                                     ------------------------        ------------------------
                                                                        Other                           Other
                                                      Pension  Postretirement         Pension  Postretirement
                                                     Benefits        Benefits        Benefits        Benefits
                                                     --------        --------        --------        --------

<S>                                                  <C>             <C>             <C>             <C>
Net Benefit Obligation at December 31, 2000           $ 2,220         $   539         $ 1,024         $   423
                                                      =======         =======         =======         =======
Fair Value of Plan Assets at December 31, 2000        $ 1,987         $   352         $ 1,380         $   121
                                                      =======         =======         =======         =======

Funded Status at December 31, 2000                    $  (233)        $  (187)        $   356         $  (302)
Unrecognized net actuarial (gain) loss                     91              42            (441)             16
Unrecognized prior service cost                            --              --              35              --
Unrecognized net transition obligation (asset)             --              --              (9)             56
Miscellaneous adjustments                                  --               2              --              --
                                                      -------         -------         -------         -------
   Net amount recognized at December 31, 2000         $  (142)        $  (143)        $   (59)        $  (230)
                                                      =======         =======         =======         =======
Amounts recognized in the consolidated balance
   sheets consist of:
   Prepaid benefit cost                                                               $    70         $     2
   Accrued benefit cost                                                                  (129)           (232)
                                                                                                      -------
Net amount recognized at December 31, 2000                                            $   (59)        $  (230)
                                                                                                      =======
</TABLE>

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

                                       28
<PAGE>

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

         In December  2000,  the Illinois  Commerce  Commission  (ICC) issued an
order,  effective  upon  the  transfer  of the  nuclear  plants  to  Generation,
authorizing  ComEd to recover $73 million  annually  from  customers  during the
first four years of the six-year term of the PPA between  ComEd and  Generation.
See Note 3 - Corporate  Restructuring.  Up to $73 million  annually  can also be
collected in 2005 and 2006, depending on the portion of the output of the former
ComEd  nuclear  stations that ComEd  purchases  from  Generation.  Under the ICC
order,   subsequent  to  2006,   there  would  be  no  further   collection  for
decommissioning costs from customers.  All amounts collected from customers must
be remitted to  Generation  for deposit into the related  trust  funds.  The ICC
order also provides that any surplus  trust funds after ComEd's  former  nuclear
stations are decommissioned must be refunded to ComEd's customers. The ICC order
has been appealed to the Illinois Appellate Court.

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

                                       29
<PAGE>

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

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


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

         In 1999,  PECO entered into interest  rate swaps  relating to the Class
A-3 and Class A-5  Series  1999-A  Transition  Bonds in the  aggregate  notional
amount of $1.1 billion with an average interest rate of 6.65%. PECO also entered
into  forward  starting  interest  rate swaps  relating  to these two classes of
floating rate transition bonds in the aggregate  notional amount of $1.1 billion
with an average  interest rate of 6.01%. In connection with the refinancing of a
portion of the two floating rate series of transition bonds in the first quarter
of 2001,  PECO  settled $318 million of a forward  starting  interest  rate swap
resulting  in a  $6  million  gain  which  is  reflected  in  other  income  and
deductions.  See Note 4 - Cumulative Effect of a Change in Accounting Principle.
Also, in connection with the refinancing, PECO settled a portion of the interest
rate swaps and the remaining portion of the forward starting interest rate swaps
resulting in gains of $25 million,  which were deferred and are being  amortized
over the expected remaining lives of the related debt.

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

                                       30
<PAGE>

11. SALE OF ACCOUNTS RECEIVABLE  (Exelon and PECO)
PECO is party to an agreement  with a financial  institution  under which it can
sell or finance with limited recourse an undivided interest,  adjusted daily, in
up to $225 million of designated  accounts receivable until November 2005. As of
June 30,  2001,  PECO had sold a $225 million  interest in accounts  receivable,
consisting  of a  $176  million  interest  in  accounts  receivable  which  PECO
accounted  for as a sale under  SFAS No.  140,  "Accounting  for  Transfers  and
Servicing of Financial Assets and Extinguishments of Liabilities,  a Replacement
of FASB  Statement  No.  125" and a $49 million  interest  in  special-agreement
accounts  receivable which were accounted for as a long-term note payable.  PECO
retains  the  servicing  responsibility  for these  receivables.  The  agreement
requires PECO to maintain the $225 million interest, which, if not met, requires
PECO to deposit  cash in order to satisfy such  requirements.  At June 30, 2001,
PECO met this requirement and was not required to make any cash deposits.


12.  RELATED-PARTY TRANSACTIONS (ComEd and PECO)
ComEd
         At December 31, 2000,  ComEd had a $400 million  receivable  from PECO,
which was repaid in the second  quarter of 2001.  The average  interest  rate on
this  receivable for the period  outstanding  was 6.5%.  Interest  income on the
receivable  from PECO was $2 million and $8 million for the three and six months
ended June 30, 2001, respectively.

         ComEd had a note  receivable  from an affiliate of $1.3 billion at June
30, 2001 and December 31, 2000, relating to the December 1999 fossil plant sale,
which is  included  in  deferred  debits and other  assets in ComEd's  Condensed
Consolidated Balance Sheets.  Interest income earned on this note receivable was
$15 million and $46 million for the three  months  ended June 30, 2001 and 2000,
respectively. Interest income earned on this note receivable was $37 million and
$89 million for the six months ended June 30, 2001 and 2000, respectively.

         Effective January 1, 2001,  Exelon  contributed to ComEd a $1.0 billion
non-interest  bearing  receivable  related to Exelon's  agreement to fund future
income tax payments resulting from the collection by ComEd of instrument funding
charges.  This receivable is reflected as a reduction of shareholders' equity in
ComEd's Condensed Consolidated Balance Sheets. This receivable is expected to be
settled over the years 2001 through 2008.

         At June 30, 2001, ComEd had a short-term  payable of $391 million and a
long-term   payable  of  $364   million  to   Generation   resulting   from  the
restructuring,  which were included in current  liabilities and deferred credits
and other liabilities,  respectively,  on ComEd's Condensed Consolidated Balance
Sheets.

         In  connection  with  the  transfer  of the  generation  assets  in the
corporate restructuring,  ComEd entered into a PPA with Generation. See Note 3 -
Corporate  Restructuring.  Intercompany  power purchases pursuant to the PPA for
the three and six  months  ended  June 30,  2001 were $585  million  and  $1,193
million, respectively.

                                       31
<PAGE>

         Effective  January 1, 2001,  upon the  corporate  restructuring,  ComEd
receives a variety of corporate support services from BSC including legal, human
resources,  financial and  information  technology  services.  Such services are
provided at cost including applicable overhead.

PECO
         At December 31, 2000, PECO had a $400 million  payable to ComEd,  which
was repaid in the second quarter of 2001.  The average  annual  interest rate on
this payable for the period  outstanding was 6.5%.  Interest  expense related to
this payable for the three and six months ended June 30, 2001 was $2 million and
$8 million, respectively.

         Effective  January 1, 2001,  Exelon  contributed to PECO a $2.0 billion
non-interest  bearing  receivable  related to Exelon's  agreement to fund future
income tax payments  resulting  from the  collection of  competitive  transition
charges.  This receivable is reflected as a reduction of shareholders' equity in
PECO's Condensed  Consolidated Balance Sheets. This receivable is expected to be
settled over the years 2001 through 2010.

         In  connection  with  the  transfer  of the  generation  assets  in the
corporate restructuring,  PECO entered into a PPA with Generation.  See Note 3 -
Corporate  Restructuring.  Intercompany  power purchases pursuant to the PPA for
the three and six months ended June 30, 2001 were $263 million and $508 million,
respectively.

         Effective  January  1, 2001,  upon the  corporate  restructuring,  PECO
receives a variety of corporate support services from BSC including legal, human
resources,  financial and  information  technology  services.  Such services are
provided at cost including applicable overhead.


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

         SFAS No. 141 requires that all business  combinations  be accounted for
under the  purchase  method  of  accounting  and  establishes  criteria  for the
separate  recognition of intangible  assets  acquired in business  combinations.
SFAS No. 141 is effective  for business  combinations  initiated  after June 30,
2001.

         SFAS No. 142  establishes  new accounting  and reporting  standards for
goodwill  and  intangible  assets.  Exelon  expects  to adopt SFAS No. 142 as of
January  1, 2002.  Under  SFAS No.  142,  effective  January  1, 2002,  goodwill
recorded by Exelon will no longer be subject to  amortization.  After January 1,
2002,  goodwill will be subject to an  assessment  for  impairment  using a fair
value  based  test  at  least   annually,   or  more  frequently  if  events  or
circumstances indicate that goodwill might be impaired. An impairment loss would
be reported as a reduction to goodwill and a charge to operating expense, except
at the transition date, when the loss would be reflected as a cumulative  effect
of a change in  accounting  principle.  As of June 30, 2001, Exelon's  Condensed
Consolidated Balance Sheet  reflected approximately $5.5 billion in goodwill net
of accumulated  amortization,  including $5.1 billion of net goodwill related to
the merger of Unicom and PECO recorded on ComEd's Condensed Consolidated Balance
Sheets, with the remainder relating to Enterprises.  Annualized  amortization of
goodwill  related to the  merger  and to  Enterprises  of $128  million  and $24
million, respectively, is expected to be discontinued upon

                                       32


<PAGE>

adoption of SFAS No. 142.  Exelon is in the  process of  evaluating  the overall
impact of SFAS No. 142 on its financial  statements  and is currently  unable to
determine the overall impact, but the effect could be material.

         SFAS  No.  143  provides   accounting   requirements   for   retirement
obligations  associated with tangible long-lived assets. Exelon expects to adopt
SFAS  No.  143 on  January  1,  2003.  Retirement  obligations  associated  with
long-lived  assets included within the scope of SFAS No. 143 are those for which
there is a legal  obligation to settle under  existing or enacted law,  statute,
written  or oral  contract  or by  legal  construction  under  the  doctrine  of
promissory  estoppel.  Upon  adoption  of  SFAS  No.  143,  Exelon  will  use  a
cumulative-effect  approach to  recognize  transition  amounts for any  existing
liabilities,  asset retirement costs and accumulated depreciation.  Exelon is in
the  process  of  evaluating  the  impact  of  SFAS  No.  143 on  its  financial
statements.


14. CHANGE IN ACCOUNTING ESTIMATE (Exelon)
         Effective  April 1,  2001,  Exelon  changed  its  accounting  estimates
related to the depreciation and decommissioning of certain generating  stations.
The  estimated  service  lives  were  extended  by 20 years  for  three  nuclear
stations,  by periods up to 20 years for certain fossil stations and by 50 years
for a pumped  storage  station.  These  changes  were based on  engineering  and
economic  feasibility  studies  performed  by Exelon  considering,  among  other
things, future capital and maintenance expenditures at these plants. As a result
of the  change,  net  income for the three and six  months  ended June 30,  2001
increased $21 million ($12 million, net of income taxes).


                                       33
<PAGE>

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

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

GENERAL

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

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

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

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

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

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


                                       34
<PAGE>
RESULTS OF OPERATIONS

Significant Operating Trends

                                    Expense Items as a Percentage of
                                        Total Operating Revenues

<TABLE>
<CAPTION>
                                               Three Months          Six Months
                                              Ended June 30,       Ended June 30,
                                             ---------------       ---------------
                                             2001       2000       2001       2000
                                             ----       ----       ----       ----
<S>                                           <C>        <C>        <C>        <C>
         Fuel and Purchased Power             33%        34%        34%        34%
         Operating and Maintenance            31%        33%        29%        31%
         Depreciation and Amortization        10%         6%        10%         6%
         Taxes Other Than Income               4%         5%         4%         5%
                                             ----       ----       ----       ----
         Total Operating Expenses             78%        78%        77%        76%
                                             ----       ----       ----       ----

         Operating Income                     22%        22%        23%        24%
                                             ====       ====       ====       ====
</TABLE>



Three Months Ended June 30, 2001 Compared To Three Months Ended June 30, 2000

Net Income and Earnings Per Share
Exelon's net income increased $196 million,  or 165%, for the three months ended
June 30, 2001, excluding the effect of an extraordinary  item.  Diluted earnings
per share on the same  basis  increased  $0.29 per  share,  or 43%.  Net  income
inclusive of the  extraordinary  item increased  $199 million,  or 172%, for the
three months ended June 30, 2001.  Diluted  earnings per share on the same basis
increased  $0.31 per share,  or 47%.  Earnings per share increased less than net
income  because of an increase in the  weighted  average  shares of common stock
outstanding  as a result of the issuance of common stock in connection  with the
merger,  partially  offset by the  repurchase  of common stock with the proceeds
from PECO's May 2000 stranded cost recovery securitization.

Earnings Before Interest and Income Taxes
Exelon  evaluates the  performance  of its business  segments  based on earnings
before interest and income taxes (EBIT).  In addition to components of operating
income as shown on the consolidated  statements of income,  EBIT includes equity
in earnings (losses) of unconsolidated  affiliates, and other income and expense
recorded  in other,  net,  with the  exception  of  interest  income.  Operating
revenues, operating expenses, depreciation and amortization and other income and
expenses  for  each  business   segment  in  the  following   analyses   include
intercompany  transactions,  which are  eliminated  in the  consolidated  Exelon
financial  statements.  Exelon's  EBIT was $821 million and $304 million for the
three  months  ended June 30,  2001 and 2000,  respectively.  EBIT for the three
months  ended June 30,  2000  represents  the  results of PECO only and does not
include the effects of the October 20, 2000 merger of Unicom and

                                       35

<PAGE>

PECO. To provide a more meaningful  analysis of results of operations,  the EBIT
analyses by business  segment  below  identify the portion of the EBIT  variance
that is  attributable  to the addition of Unicom  results of operations  and the
portion  of  the  variance  that  results  from  changes  in  components  of the
underlying  operations.  The merger variance  represents  Unicom results for the
three and six months  ended June 30,  2000 on a pro forma basis as if the merger
and corporate restructuring occurred on January 1, 2000.

EBIT Contribution by Business Segment

<TABLE>
<CAPTION>
                             Three Months                                Components of Variance
                            Ended June 30,                               ----------------------
                         --------------------                             Merger          Normal
                         2001            2000          Variance         Variance       Operations
                         ----            ----          --------         --------       ----------
                                                   (In millions)
<S>                      <C>             <C>             <C>             <C>             <C>
Energy Delivery          $ 706           $ 257           $ 449           $ 386           $  63
Generation                 126              78              48              (2)             50
Enterprises                 (5)            (32)             27             (10)             37
Corporate                   (6)              1              (7)              7             (14)
                         -----           -----           -----           -----           -----
Total                    $ 821           $ 304           $ 517           $ 381           $ 136
                         =====           =====           =====           =====           =====
</TABLE>


Energy Delivery

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

Operating Revenue                    $2,436          $  771          $1,665          $1,500          $  165
Operating Expense and Other           1,464             474             990             937              53
Depreciation & Amortization             266              40             226             177              49
                                     ------          ------          ------          ------          ------
EBIT                                 $  706          $  257          $  449          $  386          $   63
                                     ======          ======          ======          ======          ======
</TABLE>

         Energy  Delivery's  EBIT  increased  $449  million for the three months
ended  June 30,  2001,  as  compared  to the same  period  in 2000.  The  merger
accounted  for $386  million of the  variance  and normal  operations  added $63
million. The increase in EBIT from normal operations was primarily  attributable
to higher  customer  retention  and rate  adjustments  at PECO  aggregating  $55
million,  lower  operating  and  maintenance  expenses at ComEd of $29  million,
principally  reflecting  customer credit and billing process  improvements and a
decrease in storm restoration and service reliability costs, and the reversal of
a $15 million reserve for revenue  refunds related to ComEd municipal  customers
as a result of a favorable FERC ruling. These increases were partially offset by
an increase in regulatory asset  amortization  expense of $51 million related to
Competitive Transition Charges (CTC) at PECO.

                                       36
<PAGE>

         The  $165   million   growth  in  operating   revenues  was   primarily
attributable to increased  electric  revenues of $137 million and additional gas
revenues of $28 million.

         ComEd's operating  revenues  increased $30 million,  or 2%, compared to
the same period in 2000,  excluding the effects of restructuring.  Revenues from
retail customers increased $14 million,  before a $21 million reduction due to a
change in recording  certain revenue taxes as operating  revenue and tax expense
to collections recorded as liabilities resulting from Illinois legislation. This
revenue  tax change had no effect on EBIT.  Retail  revenues  also  reflect  the
negative  effect of the migration of  non-residential  customers to  alternative
electric suppliers or the power purchase option.  Additionally,  the increase in
operating  revenues  reflects a $22  million  increase in  transmission  service
revenues  and the  reversal  of a $15 million  reserve  for  revenue  refunds to
ComEd's municipal  customers as the result of a favorable FERC ruling.  Revenues
from retail customers  reflect a consistent amount of total  kilowatthour  (kWh)
sales for the three months ended June 30, 2001 compared to the same 2000 period.
Residential sales and small commercial and industrial sales,  which increased 3%
and 5%  respectively,  were  offset by a 10%  decrease in large  commercial  and
industrial sales primarily due to a slowing regional economy.

         PECO's operating revenue increased by $135 million, or 18%, compared to
the same period in 2000, excluding the effects of restructuring. The increase in
operating  revenues was attributable to higher electric revenues of $107 million
and  additional gas revenues of $28 million.  The increase in electric  revenues
was  primarily  attributable  to $112  million from  customers  in  Pennsylvania
selecting or returning to PECO as their  electric  generation  supplier and rate
adjustments,  partially  offset by a  decrease  of $5 million  from  unfavorable
weather conditions. Total kWh sales to retail customers decreased 2% compared to
the same 2000 period.  Large  commercial and industrial  sales  decreased 3% and
residential  sales  decreased 1%. These  decreases were  partially  offset by an
increase  in small  commercial  and  industrial  sales of 2%.  The  increase  in
regulated  gas revenues was  primarily  attributable  to $28 million  related to
higher natural gas prices,  partially offset by a decrease of $2 million related
to the  elimination  of the gross  receipts tax on gas sales  effective  July 1,
2000.


Generation

<TABLE>
<CAPTION>
                                          Three Months                               Components of Variance
                                         Ended June 30,                            -------------------------
                                     ----------------------                         Merger           Normal
                                      2001            2000          Variance       Variance        Operations
                                     ------          ------         --------       --------        ----------
                                                                  (In millions)
<S>                                  <C>             <C>             <C>             <C>              <C>
Operating Revenue                    $1,618          $  633          $  985          $  781           $  204
Operating Expense and Other           1,416             523             893             757              136
Depreciation & Amortization              76              32              44              26               18
                                     ------          ------          ------          ------           ------
EBIT                                 $  126          $   78          $   48          $   (2)          $   50
                                     ======          ======          ======          ======           ======
</TABLE>

         Generation's EBIT increased $48 million for the three months ended June
30,  2001  compared  to the same  period in 2000.  The  increase  was  primarily
attributable to normal operations and resulted from higher margins on market and
affiliate wholesale energy sales,

                                       37

<PAGE>

coupled  with a decrease in  operating  costs at the nuclear  plants,  partially
offset by an $18 million  increase in  depreciation  and  amortization  expense.
During the three months ended June 30, 2001, Generation benefited from increased
power marketing  activities relative to the comparable prior year period,  which
contributed  to higher  margins  on energy  sales.  Lower  operating  costs were
attributable to reductions in the number of employees and decreased  utilization
of contractors,  which offset the effect of an increase in legal  reserves.  The
increase in  depreciation  and  amortization  expense  primarily  reflects a net
increase in decommissioning expense of $27 million reflecting the discontinuance
of regulatory  accounting  practices and the extension of  depreciable  lives of
certain  nuclear  generating  stations,  partially  offset  by  an  $11  million
reduction in depreciation  expense  attributable to the extension of depreciable
lives of certain nuclear and fossil generating plants.

         For the three  months  ended  June 30,  2001,  Generation's  sales were
48,522 gigawatt-hours (GWhs), of which 26,998 GWhs were supplied by Generation's
nuclear  units,  16,845  GWhs from  purchases,  1,808 GWhs from fossil and hydro
units  and  2,871  GWhs  from  Generation  investments.   Approximately  58%  of
Generation's  sales  were to ComEd  and PECO and the  remaining  42% were in the
wholesale market.

         Since June 30, 2000,  Generation has added 3,034 megawatts (MWs) of new
capacity.  Generation's nuclear units added 243 MWs through power uprates and 84
MWs through the acquisition of an additional  3.75% of Peach Bottom Atomic Power
Station. Exelon's fossil stations added 15 MWs through power uprates. Additional
capacity  through PPAs added 2,692 MWs.  Generation's  nuclear fleet,  including
AmerGen, performed at a capacity factor of 93.6% for the three months ended June
30, 2001 compared to 94.8% in the same 2000 period.  Generation's nuclear units'
production  costs for the three  months  ended  June 30,  2001 were  $13.02  per
megawatt-hour (MWh) compared to $13.28 per MWh for the same period in 2000.


Enterprises

<TABLE>
<CAPTION>
                                         Three Months                               Components of Variance
                                        Ended June 30,                           --------------------------
                                    ----------------------                         Merger           Normal
                                     2001            2000          Variance       Variance        Operations
                                    ------          ------         --------       --------        ----------
                                                                 (In millions)
<S>                                  <C>             <C>             <C>            <C>             <C>
Operating Revenue                    $ 546           $ 271           $ 275          $ 130           $ 145
Operating Expense and Other            535             294             241            137             104
Depreciation & Amortization             16               9               7              3               4
                                     -----           -----           -----          -----           -----
EBIT                                 $  (5)          $ (32)          $  27          $ (10)          $  37
                                     =====           =====           =====          =====           =====
</TABLE>

         Enterprises' EBIT increased $27 million for the three months ended June
30, 2001 compared to the same period in 2000. Normal operations  contributed $37
million of the variance,  which was partially offset by a $10 million  reduction
attributable  to the  merger.  The  increase  in  EBIT  from  normal  operations
primarily  reflects  an  $18  million  gain  on  the  sale  of a  communications
investment and a $9 million  increase in margins at Exelon Energy primarily from
operations  in  Pennsylvania.  Enterprises  EBIT  reflects  lower margins in the
infrastructure

                                       38

<PAGE>

business  associated  with the  significant  downturn in the  telecommunications
industry,  partially offset by additional margins associated with infrastructure
services acquisitions.

         Enterprises' revenues increased $275 million for the three months ended
June 30, 2001 compared to the same period in 2000. Normal operations contributed
$145 million and the merger added $130 million.  Operating revenues attributable
to  normal   operations   increased  as  a  result  of  acquisitions  by  Exelon
Infrastructure Services and Exelon Services, which increased by $113 million and
$68  million,  respectively.  These  increases  were  partially  offset by a $31
million  decrease  in  revenues  at Exelon  Infrastructure  Services  due to the
downturn in the  telecommunications  industry resulting in a decline in business
volumes and increased price pressure.

         Enterprises'  operating  expenses  increased $241 million for the three
months  ended  June 30,  2001  compared  to the  same  period  in  2000.  Normal
operations  accounted  for $104  million  and the  merger  added  $137  million.
Operating expenses  attributable to normal operations include  incremental costs
associated with acquisitions made by Exelon  Infrastructure  Services and Exelon
Services of $91 million and $65  million,  respectively.  These  increases  were
partially  offset  by the gain on the sale of a  communications  investment  and
lower operating expenses at Exelon Infrastructure Services and Exelon Energy.

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


Other Components of Net Income

Interest Charges
Interest  charges  consist of interest  expense and  distributions  on preferred
securities of subsidiaries.  Interest charges  increased $182 million,  or 150%,
for  the  three  months  ended  June  30,  2001.   The  increase  was  primarily
attributable to $162 million from the effects of the merger, $17 million related
to  borrowings  by Exelon  and  additional  interest  expense of $5 million as a
result of the issuance of  transition  bonds in May 2000 to securitize a portion
of PECO's  stranded  cost  recovery,  partially  offset by $2  million  of lower
interest  charges as a result of the reduction of PECO's long-term debt with the
proceeds from the securitization.

Income Taxes
The effective income tax rate was 41.9% for the three months ended June 30, 2001
as compared to 38.7% in the same period in 2000.  The increase in the  effective
income tax rate was primarily  attributable to goodwill amortization  associated
with the merger, which is not deductible for tax purposes and a higher effective
state income tax rate due to operations in Illinois subsequent to the merger.

                                       39

<PAGE>

Six Months Ended June 30, 2001 Compared To Six Months Ended June 30, 2000

Net Income and Earnings Per Share
Exelon's net income  increased  $415 million,  or 145%, for the six months ended
June 30, 2001,  excluding the effect of an extraordinary item and the cumulative
effect of a change in accounting  principle.  Diluted  earnings per share on the
same basis  increased  $0.56 per share,  or 35%.  Net  income,  inclusive  of an
extraordinary  item  and  the  cumulative  effect  of  a  change  in  accounting
principle,  increased  $406 million,  or 132%, for the six months ended June 30,
2001. Diluted earnings per share on the same basis increased $0.49 per share, or
28%. Earnings per share increased less than net income because of an increase in
the  weighted  average  shares of common  stock  outstanding  as a result of the
issuance of common stock in connection with the merger,  partially offset by the
repurchase  of common stock with the proceeds from PECO's May 2000 stranded cost
recovery securitization.


Earnings Before Interest and Income Taxes

EBIT Contribution by Business Segment

<TABLE>
<CAPTION>
                                 Six Months                                      Components of Variance
                               Ended June 30,                                  -------------------------
                         -------------------------                              Merger            Normal
                           2001              2000            Variance          Variance         Operations
                           ----              ----            --------          --------         ----------
                                                          (In millions)
<S>                      <C>               <C>               <C>               <C>               <C>
Energy Delivery          $ 1,387           $   594           $   793           $   666           $   127
Generation                   419               117               302                69               233
Enterprises                  (36)              (44)                8               (10)               18
Corporate                    (12)               (1)              (11)               16               (27)
                         -------           -------           -------           -------           -------
Total                    $ 1,758           $   666           $ 1,092           $   741           $   351
                         =======           =======           =======           =======           =======
</TABLE>


Energy Delivery

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

<S>                                  <C>             <C>             <C>             <C>             <C>
Operating Revenue                    $4,933          $1,620          $3,313          $2,924          $  389
Operating Expense and Other           3,011             945           2,066           1,754             312
Depreciation & Amortization             535              81             454             504             (50)
                                     ------          ------          ------          ------          ------
EBIT                                 $1,387          $  594          $  793          $  666          $  127
                                     ======          ======          ======          ======          ======
</TABLE>

         Energy  Delivery's  EBIT increased $793 million in the six months ended
June 30, 2001, as compared to the same period in 2000. The merger  accounted for
$666 million of the  variance  and normal  operations  added $127  million.  The
increase in EBIT from normal  operations  was  primarily  attributable  to lower
regulatory asset amortization at ComEd of $182

                                       40

<PAGE>

million,  higher customer retention and rate adjustments at PECO aggregating $70
million,  lower  operating  and  maintenance  expenses at ComEd of $34  million,
principally  associated with customer  credit and billing process  improvements,
and a decrease in storm  restoration  and  service  reliability  costs,  and the
reversal of a $15 million reserve for revenue refunds related to ComEd municipal
customers as a result of a favorable FERC ruling. These increases were partially
offset by an increase in regulatory asset  amortization  expense of $102 million
related to the CTC at PECO and higher fuel and purchased power costs at ComEd of
$69 million.

         The  $389   million   growth  in  operating   revenues  was   primarily
attributable to increased  electric  revenues of $267 million and additional gas
revenues of $122 million.

         ComEd's operating  revenues  increased $52 million,  or 2%, compared to
the same  six-month  period in 2000,  excluding  the  effects of  restructuring.
Revenues  from  retail  customers  increased  $7  million,  before a $44 million
reduction  due to a change  in  recording  certain  revenue  taxes as  operating
revenue and tax expense to collections  recorded as  liabilities  resulting from
Illinois  legislation.  This  revenue  tax change had no effect on EBIT.  Retail
revenues also reflect the negative  effect of the  migration of  non-residential
customers  to  alternative  electric  suppliers  or the power  purchase  option.
Additionally, the increase in operating revenues reflects a $37 million increase
in  transmission  service  revenues,  the reversal of a $15 million  reserve for
revenue refunds to ComEd's municipal customers as the result of a favorable FERC
ruling,  and a $26  million  increase  in  revenues  from  sales to  alternative
electric  suppliers.  Revenues from retail customers reflect a consistent amount
of total kWh sales for the six months  ended June 30,  2001 as  compared  to the
same 2000 period.  Residential  sales and small commercial and industrial sales,
which both  increased 4%, were offset by a 9% decrease in large  commercial  and
industrial sales primarily due to a slowing regional economy.

         PECO's operating revenues  increased by $337 million,  or 21%, compared
to the same  six-month  period in 2000.  The increase in  operating  revenue was
attributable  to higher  electric  revenue of $215  million and  additional  gas
revenue of $122  million.  The  increase  in  electric  revenues  was  primarily
attributable  to $205  million  from  customers  in  Pennsylvania  selecting  or
returning to PECO as their electric generation supplier and rate adjustments and
an $11 million settlement of competitive transition charges by a large customer.
Total kWh  sales to  retail  customers  remained  consistent  with the same 2000
period. Residential sales increased 2% and small commercial and industrial sales
increased 3%. These increases were offset by a decrease in large  commercial and
industrial  sales of 3%. The  increase in regulated  gas revenues was  primarily
attributable  to increases of $108 million  related to higher natural gas prices
and $10 million as a result of favorable weather conditions, partially offset by
$7 million  related to the  elimination  of the gross  receipts tax on gas sales
effective July 1, 2000.

                                       41
<PAGE>

Generation

<TABLE>
<CAPTION>
                                           Six Months                                Components of Variance
                                         Ended June 30,                             -------------------------
                                      --------------------                           Merger         Normal
                                      2001            2000          Variance        Variance       Operations
                                      ----            ----          --------        --------       ----------
                                                                 (In millions)
<S>                                  <C>             <C>             <C>             <C>             <C>
Operating Revenue                    $3,246          $1,131          $2,115          $1,475          $  640
Operating Expense and Other           2,660             951           1,709           1,356             353
Depreciation & Amortization             167              63             104              50              54
                                     ------          ------          ------          ------          ------
EBIT                                 $  419          $  117          $  302          $   69          $  233
                                     ======          ======          ======          ======          ======
</TABLE>

         Generation's  EBIT increased $302 million for the six months ended June
30,  2001  compared  to the same period in 2000.  The merger  accounted  for $69
million of the variance.  The remaining $233 million increase primarily resulted
from higher margins on market and affiliate wholesale energy sales, coupled with
decreased operating costs at the nuclear plants,  partially offset by additional
depreciation  and  amortization of $54 million.  During the first five months of
2001,   Generation   benefited  from  increases  in  wholesale   market  prices,
particularly  in the  Pennsylvania-New  Jersey-Maryland  control  area (PJM) and
Mid-America  Interconnected  Network (MAIN)  regions.  Generation also benefited
from higher  nuclear plant output due to increased  capacity  factors during the
six months  ended June 30,  2001.  Lower  operating  costs are  attributable  to
reductions in the number of employees and decreased  utilization  of contractors
which  offset the effect of an  increase  in legal  reserves.  The  increase  in
depreciation  and  amortization  expense  primarily  reflects a net  increase in
decommissioning   expense  of  $63  million  reflecting  the  discontinuance  of
regulatory  accounting  practices  and the  extension of  depreciable  lives for
certain  nuclear  generating  stations,  partially  offset  by  an  $11  million
reduction in depreciation  expense  attributable to the extension of depreciable
lives of certain  nuclear  and  fossil  generating  stations.  The  increase  in
wholesale market prices was primarily driven by significant  increases in fossil
fuel prices.  The large  concentration  of nuclear  generation in the Generation
portfolio  allowed  Exelon to capture the higher prices in the wholesale  market
for sales to non-affiliates, with minimal increase in fuel prices.

         For the six months ended June 30, 2001,  Generation's sales were 96,776
GWhs, of which 54,950 GWhs were supplied by Generation's  nuclear units,  32,408
GWhs from  purchases,  3,294 GWhs by fossil and hydro  units and 6,124 GWhs from
Generation  investments.  Approximately 59% of Generation's  sales were to ComEd
and PECO and the remaining 41% were into the wholesale market.

         Generation's nuclear fleet, including AmerGen,  performed at a capacity
factor of 96.2% for the six months ended June 30, 2001  compared to 95.0% in the
same 2000  period.  Generation's  nuclear  units'  production  costs for the six
months  ended June 30, 2001 were $12.34 per MWh,  compared to $13.78 per MWh for
the same period in 2000.


                                       42

<PAGE>

Enterprises

<TABLE>
<CAPTION>
                                             Six Months                                     Components of Variance
                                           Ended June 30,                                 -------------------------
                                     -------------------------                             Merger           Normal
                                       2001              2000            Variance         Variance        Operations
                                       ----              ----            --------         --------        ----------
                                                                       (In millions)
<S>                                  <C>               <C>               <C>              <C>               <C>
Operating Revenue                    $ 1,213           $   517           $   696          $   239           $   457
Operating Expense and Other            1,218               544               674              243               431
Depreciation & Amortization               31                17                14                6                 8
                                     -------           -------           -------          -------           -------
EBIT                                 $   (36)          $   (44)          $     8          $   (10)          $    18
                                     =======           =======           =======          =======           =======
</TABLE>


         Enterprises'  EBIT  increased  $8 million for the six months ended June
30, 2001 compared to the same period in 2000. Normal operations  contributed $18
million of the variance,  which was partially offset by a $10 million  reduction
attributable  to the merger.  The  increase in EBIT from  normal  operations  is
primarily attributable to $28 million in gains on investments,  partially offset
by increased  wholesale natural gas prices and electric capacity costs at Exelon
Energy.

         Enterprises'  revenues  increased $696 million for the six months ended
June 30, 2001 compared to the same period in 2000. Normal operations contributed
$457 million and the merger added $239 million.  Operating  revenues from normal
operations  increased  as a result  of  acquisitions  by  Exelon  Infrastructure
Services and Exelon Services,  which increased  revenue by $167 million and $156
million, respectively.  Exelon Energy's revenue increased $132 million primarily
from an acquisition  of a retail natural gas marketing  company and increases in
wholesale natural gas prices compared to the same period in 2000.

         Enterprises'  operating  expense  increased  $674  million  for the six
months  ended  June 30,  2001  compared  to the  same  period  in  2000.  Unicom
contributed  $243 million and normal  operations  added $431 million.  Operating
expenses  from normal  operations  included  $145  million and $149 million as a
result  of  acquisitions  made by  Exelon  Infrastructure  Services  and  Exelon
Services,  respectively. The remainder of the operating expense increase related
to Exelon Energy's retail natural gas marketing  company  acquisition and higher
first quarter 2001 expenses at Exelon Infrastructure  Services.  These increases
were partially offset by gains on investments.

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

                                       43
<PAGE>


Other Components of Net Income

Interest Charges
Interest charges increased $376 million,  or 163%, for the six months ended June
30,  2001.  The  increase was  primarily  attributable  to $326 million from the
effects  of the  merger,  $41  million  related  to  borrowings  by  Exelon  and
additional  interest  of $21 million as a result of the  issuance of  transition
bonds in May 2000 to  securitize  a portion of PECO's  stranded  cost  recovery,
partially  offset by $12  million of lower  interest  charges as a result of the
reduction of PECO's long-term debt with the proceeds from the securitization.

Income Taxes
The  effective  income tax rate was 41.5% for the six months ended June 30, 2001
as compared to 38.0% for the same period in 2000.  The increase in the effective
income tax rate was primarily  attributable to goodwill amortization  associated
with the merger which is not deductible for tax purposes and a higher  effective
state income tax rate due to operations in Illinois subsequent to the merger.

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


LIQUIDITY AND CAPITAL RESOURCES

Cash flows provided by operations  for the six-month  period ended June 30, 2001
were $1,889  million as compared to $334 million for the same 2000  period.  The
increase was primarily  attributable  to depreciation  and  amortization of $711
million,  changes in  working  capital  of $483  million  and net income of $406
million.

         Cash flows used in investing  activities for the six-month period ended
June 30, 2001 were $934  million as  compared to $449  million for the same 2000
period.  The increase was  attributable to capital  expenditures of $615 million
partially  offset by lower  Enterprises  acquisitions  and  investments  of $130
million.

         Cash flows  used in  financing  activities  were $321  million  for the
six-month  period  ended June 30,  2001 as  compared  to cash flows  provided by
financing  activities of $154 million for the same 2000 period.  The decrease in
cash flows from financing  activities was primarily  attributable  to additional
debt  service of $234  million and  additional  payments of  dividends on common
stock of $224  million.  The common stock  dividends  of $312 million  cover the
period from October 20, 2000, the date of the merger, through May 15, 2001.

                                       44
<PAGE>

         At June  30,  2001,  Exelon's  capital  structure  consisted  of 63% of
long-term debt of Exelon and  subsidiaries,  32% common stock,  2% notes payable
and 3% preferred  securities  of  subsidiaries.  Long-term  debt  included  $7.2
billion of securitization debt constituting  obligations of certain consolidated
special purpose entities, representing 31% of capitalization.

         At June 30, 2001,  Exelon had outstanding $424 million of notes payable
consisting  principally of commercial  paper.  For the six months ended June 30,
2001, the average interest rate on notes payable was approximately 5.4%. Certain
of the credit  agreements  to which  Exelon,  ComEd and PECO are a party require
each of them to  maintain  a debt to total  capitalization  ratio of 65% or less
(excluding securitization debt and for PECO, the receivable from parent recorded
in  PECO's  shareholders'   equity).  At  June  30,  2001,  the  debt  to  total
capitalization  ratios on that basis for Exelon,  ComEd and PECO were 50%,  46%,
and 36%, respectively.

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


                                       45
<PAGE>

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

GENERAL

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

                                       46
<PAGE>

RESULTS OF OPERATIONS

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

Significant Operating Trends
<TABLE>
<CAPTION>
                                                      Three Months Ended                       Components of Variance
                                                            June 30,                 --------------------------------------------
                                                     ----------------------          Restructuring       Normal
                                                     2001              2000             Impact         Operations           Total
                                                     ----              ----             ------         ----------           -----
                                                                                    (In millions)
<S>                                                <C>               <C>               <C>               <C>               <C>
Operating Revenues                                 $ 1,530           $ 1,711           $  (211)          $    30           $  (181)

Fuel and Purchased Power                               586               470               100                16               116
Operating and Maintenance                              248               526              (249)              (29)             (278)
Depreciation and Amortization                          168               224               (79)               23               (56)
Taxes Other Than Income                                 69               125               (34)              (22)              (56)
                                                   -------           -------           -------           -------           -------
     Total Operating Expenses                        1,071             1,345              (262)              (12)             (274)
                                                   -------           -------           -------           -------           -------

Operating Income                                       459               366                51                42                93
                                                   -------           -------           -------           -------           -------

Interest Expense                                      (143)             (139)               10               (14)               (4)
Provision for Dividends on Company-
     Obligated Mandatorily Redeemable
     Preferred Securities of Subsidiary
     Trusts Holding Solely the Company's
     Subordinated Debt Securities                       (7)               (7)               --                --                --
Other, Net                                              22                47                --               (25)              (25)
                                                   -------           -------           -------           -------           -------

Income Before Income Taxes and
    Extraordinary Items                                331               267                61                 3                64

Income Taxes                                           149                89                29                31                60
                                                   -------           -------           -------           -------           -------

Net Income Before Extraordinary Items                  182               178                32               (28)                4
Extraordinary Items (net of income taxes)               --                (1)               --                 1                 1
                                                   -------           -------           -------           -------           -------
Net Income                                             182               177                32               (27)                5
Preferred and Preference Stock Dividends                --                (1)               --                 1                 1
                                                   -------           -------           -------           -------           -------
Net Income on Common Stock                         $   182           $   176           $    32           $   (26)          $     6
                                                   =======           =======           =======           =======           =======
</TABLE>

                                       47
<PAGE>

Net Income
Net income  decreased  $36  million,  or 17%,  as compared to the same period in
2000,  excluding  the  effects  of  restructuring,  an  extraordinary  item  and
non-recurring  merger  costs.  Net income  increased  $5 million,  or 3%,  after
reflecting the effects of the $32 million  restructuring  impact, the $1 million
extraordinary  item, and $13 million of non-recurring  merger costs ($8 million,
net of tax) incurred for the three months ended June 30, 2000.

Operating Revenues
Operating revenues increased $30 million, or 2%, for the three months ended June
30,  2001,  compared  to  the  same  2000  period,   excluding  the  effects  of
restructuring.  Revenues from retail customers  increased $14 million,  before a
$21 million  reduction  due to a change in recording  certain  revenue  taxes as
operating  revenue  and tax  expense  to  collections  recorded  as  liabilities
resulting from Illinois  legislation.  Retail revenues also reflect the negative
effect of the migration of  non-residential  customers to  alternative  electric
suppliers or the power purchase option. Additionally,  the increase in operating
revenues  reflects a $22 million  increase in transmission  service revenues and
the reversal of a $15 million reserve for revenue  refunds to ComEd's  municipal
customers as the result of a favorable FERC ruling.

         Revenues from retail customers reflect a consistent amount of total kWh
sales for the three  months  ended June 30,  2001 as  compared  to the same 2000
period.  Residential  sales and small  commercial  and industrial  sales,  which
increased  3% and 5%  respectively,  were  offset  by a 10%  decrease  in  large
commercial and industrial sales primarily due to a slowing regional economy.  As
of June 30, 2001,  approximately 14,000 retail customers had elected to purchase
energy  from  alternative  electric  suppliers  or the  power  purchase  option,
compared to approximately 7,000 customers as of June 30, 2000. Delivered kWhs to
such customers  increased from approximately 3.2 billion to 4.6 billion, or from
16% to 23% of total quarterly retail sales.

Fuel and Purchased Power Expense
Fuel and purchased power expense  increased $16 million,  or 3%, compared to the
same 2000 period,  excluding the effects of restructuring.  The increase in fuel
and purchased  power expense was primarily  attributable to a slight increase in
the weighted average on-peak/off-peak cost per MWh.

Operating and Maintenance Expense
Operating and maintenance (O&M) expense decreased $29 million or 10% compared to
the same 2000 period,  excluding the effects of  restructuring.  The decrease in
O&M expense is primarily  related to a $15 million  decrease in customer  credit
and billing  costs due to process  improvements  and a $20  million  decrease in
storm  restoration and service  reliability  costs,  partially  offset by higher
administrative and general costs.

                                       48
<PAGE>

Depreciation and Amortization Expense
Depreciation and amortization expense increased $23 million, or 16%, compared to
the same 2000 period,  excluding the effects of  restructuring.  The increase in
depreciation  and  amortization  expense was primarily  attributable to goodwill
amortization of $32 million and an $8 million  increase in depreciation  expense
from increased plant in service due to continued  transmission  and distribution
capital  improvements,  partially offset by a $17 million decrease in regulatory
asset amortization.

Taxes Other Than Income
Taxes other than income decreased $22 million, or 24%, compared to the same 2000
period, excluding the effects of restructuring. The decrease in taxes other than
income was  primarily  attributable  to the  effect of the  change in  municipal
utility taxes from operating revenue and tax expense to collections  recorded as
liabilities resulting from Illinois legislation.

Interest Charges
Interest  charges  consist of interest  expense and  provisions for dividends on
Company-Obligated  Mandatorily  Redeemable  Preferred  Securities  of Subsidiary
Trusts.  Interest charges  increased $14 million,  or 10%,  compared to the same
2000 period, excluding the effects of restructuring.  The increase was primarily
due to increased interest accrued on estimated tax liabilities.

Other Income and Deductions
Other income and deductions,  excluding interest charges, decreased $25 million,
or  53%,  compared  to  the  same  2000  period.   The  decrease  was  primarily
attributable to less interest income in 2001 reflecting a $850 million reduction
in notes receivable from an affiliate,  Unicom  Investment,  Inc., in the fourth
quarter of 2000.

Income Taxes
The effective  income tax rate was 45% for the three months ended June 30, 2001,
compared to 33.3% for the same 2000 period.  The increase in the  effective  tax
rate was primarily  attributable to goodwill  amortization in 2001, which is not
deductible  for tax  purposes,  and lower  investment  tax  credit  amortization
resulting  from the  application of purchase  accounting in connection  with the
merger.

Extraordinary Items
Extraordinary  charges aggregating $2 million ($1 million,  net of income taxes)
were incurred for the three months ended June 30, 2000, consisting of prepayment
premiums and the write-off of unamortized  deferred  financing costs  associated
with the early retirement of debt.

                                       49
<PAGE>


Six Months Ended June 30, 2001 Compared to Six Months Ended June 30, 2000

Significant Operating Trends

<TABLE>
<CAPTION>
                                                        Six Months Ended                       Components of Variance
                                                            June 30,                ---------------------------------------------
                                                    ------------------------        Restructuring         Normal
                                                     2001              2000             Impact          Operations          Total
                                                     ----              ----             ------          ----------          -----
                                                                                     (In millions)
<S>                                                <C>               <C>               <C>               <C>               <C>
Operating Revenues                                 $ 2,976           $ 3,274           $  (350)          $    52           $  (298)

Fuel and Purchased Power                             1,195               796               330                69               399
Operating and Maintenance                              466               986              (486)              (34)             (520)
Depreciation and Amortization                          334               596              (158)             (104)             (262)
Taxes Other Than Income                                141               262               (65)              (56)             (121)
                                                   -------           -------           -------           -------           -------
     Total Operating Expenses                        2,136             2,640              (379)             (125)             (504)
                                                   -------           -------           -------           -------           -------

Operating Income                                       840               634                29               177               206
                                                   -------           -------           -------           -------           -------

Interest Expense                                      (284)             (282)               20               (22)               (2)
Provision for Dividends on Company-
     Obligated Mandatorily Redeemable
     Preferred Securities of Subsidiary
     Trusts Holding Solely the Company's
     Subordinated Debt Securities                      (15)              (14)               --                (1)               (1)
Other, Net                                              59               183                --              (124)             (124)
                                                   -------           -------           -------           -------           -------

Income Before Income Taxes and
    Extraordinary Items                                600               521                49                30                79

Income Taxes                                           271               134                28               109               137
                                                   -------           -------           -------           -------           -------

Net Income Before Extraordinary Items                  329               387                21               (79)              (58)
Extraordinary Items (net of income taxes)               --                (4)               --                 4                 4
                                                   -------           -------           -------           -------           -------
Net Income                                             329               383                21               (75)              (54)
Preferred and Preference Stock Dividends                --                (2)               --                 2                 2
                                                   -------           -------           -------           -------           -------
Net Income on Common Stock                         $   329           $   381           $    21           $   (73)          $   (52)
                                                   =======           =======           =======           =======           =======
</TABLE>


Net Income
Net income  decreased  $89  million,  or 21%,  as compared to the same period in
2000,   excluding  the  effects  of  restructuring, an  extraordinary  item  and
non-recurring  merger costs.  Net income  decreased $54 million,  or 14%,  after
reflecting the effects of the $21 million  restructuring  impact, the $4 million
extraordinary item,

                                       50

<PAGE>

and $17 million of non-recurring merger costs ($10 million, net of tax) incurred
for the six months ended June 30, 2000.

Operating Revenues
Operating revenues for the six months ended June 30, 2001 increased $52 million,
or  2%,  compared  to  the  same  period  in  2000,  excluding  the  effects  of
restructuring. Revenues from retail customers increased $7 million, before a $44
million  reduction  due to a  change  in  recording  certain  revenue  taxes  as
operating  revenue  and tax  expense  to  collections  recorded  as  liabilities
resulting from Illinois  legislation.  Retail revenues also reflect the negative
effect of the migration of  non-residential  customers to  alternative  electric
suppliers or the power purchase option. Additionally,  the increase in operating
revenues reflects a $37 million increase in transmission  service revenues,  the
reversal of a $15  million  reserve  for  revenue  refunds to ComEd's  municipal
customers as the result of a favorable FERC ruling,  and a $26 million  increase
in revenues from sales to alternative electric suppliers.

         Revenues from retail customers reflect a consistent amount of total KWh
sales for the six  months  ended June 30,  2001,  as  compared  to the same 2000
period.  Residential sales and small commercial and industrial sales, which both
increased 4%, were offset by a 9% decrease in large  commercial  and  industrial
sales  primarily  due to a  slowing  regional  economy.  As of  June  30,  2001,
approximately  14,000  retail  customers  had  elected to  purchase  energy from
alternative  electric  suppliers  or the  power  purchase  option,  compared  to
approximately  7,000  customers  as of June  30,  2000.  Delivered  kWhs to such
customers increased from approximately 5.8 billion to 8.7 billion, or 14% to 21%
of total retail sales for the six-month period.

Fuel and Purchased Power Expense
Fuel and  purchased  power  expense  for the six  months  ended  June  30,  2001
increased $69 million, or 6%, compared to the same period in 2000, excluding the
effects of  restructuring.  The increase in fuel and purchased power expense was
primarily  attributable to increases in MWhs purchased and the weighted  average
on-peak/off-peak cost per MWh.

Operating and Maintenance Expense
O&M expense for the six months ended June 30, 2001 decreased $34 million, or 7%,
compared to the same period in 2000, excluding the effects of restructuring. The
decrease  in O&M  expense is  primarily  related to a $30  million  decrease  in
customer credit and billing costs due to process  improvements and a $26 million
decrease in storm restoration and service reliability costs, partially offset by
higher administrative and general costs.

Depreciation and Amortization Expense
Depreciation and amortization  expense decreased $104 million,  or 24%, compared
to the same period in 2000,  excluding the effects of restructuring.  Regulatory
asset amortization decreased $182 million primarily due to the settlement of the
common  stock  forward  purchase  arrangement  in the  first  quarter  of  2000,
partially offset by goodwill amortization of $65 million and an increase in

                                       51

<PAGE>

depreciation  expense of $13  million  from  increased  plant in service  due to
continued transmission and distribution capital improvements.


Taxes Other Than Income
Taxes other than income  decreased $56 million,  or 28%, from the same period in
2000,  excluding the effects of restructuring.  The decrease in taxes other than
income was  primarily  attributable  to the  effect of the  change in  municipal
utility taxes from operating revenue and tax expense to collections  recorded as
liabilities resulting from Illinois legislation.

Interest Charges
Interest  charges  increased $23 million,  or 8%, compared to the same period in
2000, excluding the effects of restructuring.  The increase was primarily due to
increased interest accrued on estimated tax liabilities.

Other Income and Deductions
Other income and deductions, excluding interest charges, decreased $124 million,
or 68%,  compared  to the  same  period  in 2000.  The  decrease  was  primarily
attributable  to  the  $113  million  gain  on  the  forward  share   repurchase
arrangement  recognized  during  the  first  quarter  of 2000 and a $49  million
reduction in interest  income in 2001  reflecting  a $850  million  reduction in
notes  receivable  from an  affiliate,  Unicom  Investment,  Inc., in the fourth
quarter of 2000,  partially offset by the $38 million loss on the sale of Cotter
Corporation, a ComEd subsidiary, recognized during the first quarter of 2000.

Income Taxes
The effective  income tax rate was 45.2% for the six months ended June 30, 2001,
compared to 25.7% for the same period in 2000. The increase in the effective tax
rate was primarily  attributable to the effects of the gain on the forward share
repurchase  arrangement  recorded  in the first  quarter of 2000,  which was not
recognized  for tax  purposes,  goodwill  amortization  in  2001,  which  is not
deductible  for tax  purposes,  and lower  investment  tax  credit  amortization
resulting  from the  application of purchase  accounting in connection  with the
merger.

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



LIQUIDITY AND CAPITAL RESOURCES

Cash flows  provided by  operations  were $998  million for the six months ended
June 30, 2001 compared to $177 million for the same six months

                                       52

<PAGE>

in 2000.  The  increase  in cash flows was  primarily  attributable  to a $1,111
million  increase in working  capital  due to a decrease in income tax  payments
from the first quarter of 2000,  which included tax payments related to the 1999
gain on the sale of fossil  plants,  partially  offset by $290  million in lower
cash flows from other operating  activities  following the transfer of assets to
Generation.

         Cash flows used in investing  activities  were $336 million for the six
months  ended June 30, 2001  compared to $678 million for the same six months in
2000.  The  decrease  in cash flows  used in  investing  activities  in 2001 was
primarily  attributable to lower plant investment as a result of the transfer of
assets to Generation and a $122 million increase in payables to affiliates.

         Cash flows used in financing  activities  were $337 million for the six
months  ended June 30, 2001  compared to $485 million for the same six months in
2000.  The  decrease  in cash flows  used in  financing  activities  in 2001 was
primarily  attributable to $70 million of mandatorily redeemable preferred stock
retirements and $35 million in nuclear fuel principal  payments in the first six
months of 2000.

         Effective January 1, 2001,  Exelon  contributed to ComEd a $1.0 billion
non-interest  bearing  receivable  for the purpose of funding  future income tax
payments resulting from the collection of instrument  funding charges.  See ITEM
1. Financial Statements - Note 12 - Related-Party Transactions.

         At June 30, 2001,  ComEd's capital  structure,  excluding the deduction
from shareholders' equity of the $1.0 billion receivable from Exelon,  consisted
of 53% long-term  debt, 45% of common stock,  and 2% of preferred  securities of
subsidiaries.  Long-term debt included $2.5 billion of transitional  trust notes
constituting  obligations  of  certain  consolidated  special  purpose  entities
representing 18% of capitalization.

         ComEd meets its short-term liquidity requirements primarily through the
issuance of commercial paper and borrowings under bank credit facilities. ComEd,
along with Exelon and PECO, entered into a $2 billion unsecured revolving credit
facility  with a group of banks.  ComEd has a $200 million  sublimit  under this
364-day credit  facility and expects to use the credit  facility  principally to
support its $200 million commercial paper program.  The credit facility requires
ComEd to maintain a debt to total capitalization ratio of 65% or less (excluding
transitional   trust   notes).   At  June  30,  2001,   ComEd's  debt  to  total
capitalization  ratio on that  basis  was 46%.  At June 30,  2001,  ComEd had no
short-term borrowings.


                                       53

<PAGE>

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

GENERAL

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


                                       54
<PAGE>

RESULTS OF OPERATIONS

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

Significant Operating Trends

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

<S>                                                 <C>              <C>              <C>              <C>              <C>
Operating Revenues                                  $   906          $ 1,385          $  (614)         $   135          $  (479)

Fuel and Purchased Power                                394              476             (176)              94              (82)
Operating and Maintenance                               126              456             (325)              (5)            (330)
Depreciation and Amortization                            99               81              (41)              59               18
Taxes Other Than Income                                  41               63              (17)              (5)             (22)
                                                    -------          -------          -------          -------          -------
Total Operating Expenses                                660            1,076             (559)             143             (416)
                                                    -------          -------          -------          -------          -------

Operating Income                                        246              309              (55)              (8)             (63)
                                                    -------          -------          -------          -------          -------

Interest Expense                                       (117)            (116)              13              (14)              (1)
Company-Obligated Mandatorily Redeemable
     Preferred Securities of a Partnership,
     which holds Solely Subordinated
     Debentures of the Company                           (2)              (2)              --               --               --
Equity in Earnings (Losses) of
     Unconsolidated Affiliates, Net                      --               (1)               1               --                1
Other, Net                                                2                7               (4)              (1)              (5)
                                                    -------          -------          -------          -------          -------

Income Before Income Taxes and
     Extraordinary Item                                 129              197              (45)             (23)             (68)

Income Taxes                                             44               75              (15)             (16)             (31)
                                                    -------          -------          -------          -------          -------

Net Income Before Extraordinary Item                     85              122              (30)              (7)             (37)
Extraordinary Item (net of income taxes)                 --               (3)               3               --                3
                                                    -------          -------          -------          -------          -------
Net Income                                               85              119              (27)              (7)             (34)
Preferred Stock Dividends                                (3)              (3)              --               --               --
                                                    -------          -------          -------          -------          -------
Net Income on Common Stock                          $    82          $   116          $   (27)         $    (7)         $   (34)
                                                    =======          =======          =======          =======          =======
</TABLE>

                                       55
<PAGE>

Net Income
Net income  decreased  $7 million,  or 8%, for the three  months  ended June 30,
2001,  excluding the effects of the  restructuring  as compared to the same 2000
period.

Operating Revenue

Operating  revenue  for the three  months  ended June 30,  2001  increased  $135
million,  or 18%, as compared to the same 2000 period,  excluding the effects of
the restructuring.  The increase in operating revenue was attributable to higher
electric revenue of $107 million and additional gas revenue of $28 million.  The
increase in electric  revenue was  primarily  attributable  to $112 million from
customers in  Pennsylvania  selecting  or  returning  to PECO as their  electric
generation  supplier and rate adjustments,  partially offset by a decrease of $5
million from unfavorable weather conditions. Total kWh sales to retail customers
decreased 2% compared to the same 2000 period.  Large  commercial and industrial
sales  decreased 3% and  residential  sales  decreased 1%. These  decreases were
partially  offset by an increase in small commercial and industrial sales of 2%.
The increase in regulated gas revenues was primarily attributable to $28 million
related to higher  natural  gas  prices,  partially  offset by a decrease  of $2
million  related  to the  elimination  of the  gross  receipts  tax on gas sales
effective July 1, 2000.

Fuel and Purchased Power Expense
Fuel and  purchased  power  expense  for the three  months  ended June 30,  2001
increased  $94 million,  or 31%, as compared to the same 2000 period,  excluding
the  effects of the  restructuring.  The  increase in fuel and  purchased  power
expense was primarily attributable to $57 million from customers in Pennsylvania
selecting  or  returning  to PECO as their  electric  generation  supplier,  $29
million from  increased  prices related to gas and $12 million in additional PJM
ancillary charges.

Operating and Maintenance Expense
O&M expense for the three  months ended June 30, 2001  decreased $5 million,  or
4%,  as  compared  to  the  same  2000  period,  excluding  the  effects  of the
restructuring.  The decrease in O&M expense was primarily  attributable  to a $6
million reduction in employee fringe benefits expense.

Depreciation and Amortization Expense
Depreciation and  amortization  expense for the three months ended June 30, 2001
increased $59 million,  or 148%, as compared to the same 2000 period,  excluding
the effects of the restructuring. The increase was primarily attributable to $51
million of additional  amortization of PECO's CTC and an $8 million  increase in
depreciation expense associated with additional plant in service. The additional
amortization of the CTC is in accordance with PECO's original  settlement  under
the  Pennsylvania  Electricity  Generation  Customer  Choice and Competition Act
(Pennsylvania Competition Act).

                                       56
<PAGE>

Taxes Other Than Income
Taxes other than income for the three  months  ended June 30, 2001  decreased $5
million,  or 11%, as compared to the same 2000 period,  excluding the effects of
the  restructuring.  The  decrease  was  attributable  to $3  million  from  the
reduction  of the  gross  receipts  tax  rate on  electric  sales in 2001 and $2
million  related to the elimination of gross receipts tax on gas sales effective
July 1, 2000.

Interest Charges
Interest   charges   consist  of   interest   expense   and   distributions   on
Company-Obligated  Mandatorily  Redeemable Preferred Securities of a Partnership
(COMRPS).  Interest  charges for the three months ended June 30, 2001  increased
$14 million, or 14%, as compared to the same 2000 period,  excluding the effects
of the restructuring.  The increase was primarily attributable to interest of $5
million on the  additional  transition  bonds issued in May 2000 to securitize a
portion of PECO's stranded cost recovery and interest  expense related to a loan
from an affiliate in 2001 of $2 million.

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

Other Income and Deductions
Other income and deductions  excluding  interest  charges and equity in earnings
(losses) of  unconsolidated  affiliates for the three months ended June 30, 2001
decreased  by $1 million,  as compared to the same 2000  period,  excluding  the
effects of the restructuring.

Income Taxes
The  effective  tax rate was 34.1% for the three  months  ended June 30, 2001 as
compared to 38.1% for the same 2000 period. The decrease in the effective income
tax  rate  was  primarily  attributable  to tax  benefits  associated  with  the
implementation of state tax planning strategies.

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


                                       57
<PAGE>

Six Months Ended June 30, 2001 Compared to Six Months Ended June 30, 2000

Significant Operating Trends

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

<S>                                                 <C>        <C>        <C>              <C>       <C>
Operating Revenues                                  $1,957     $2,738     $(1,118)         $337      $(781)

Fuel and Purchased Power                               882        939        (332)          275        (57)
Operating and Maintenance                              258        847        (599)           10       (589)
Depreciation and Amortization                          200        161         (80)          119         39
Taxes Other Than Income                                 84        130         (38)           (8)       (46)
                                                   -------    -------      ------         -----    -------
Total Operating Expenses                             1,424      2,077      (1,049)          396       (653)
                                                   -------    -------      ------         -----    -------

Operating Income                                       533        661         (69)          (59)      (128)
                                                   -------    -------      ------         -----    -------

Interest Expense                                      (227)      (220)         28           (35)        (7)
  Company-Obligated Mandatorily Redeemable
     Preferred Securities of a Partnership,
     which holds Solely Subordinated
     Debentures of the Company                          (5)        (5)         --            --         --
Equity in Earnings (Losses) of
     Unconsolidated Affiliates, Net                     --          3          (3)           --         (3)
Other, Net                                              18         29         (21)           10        (11)
                                                   -------    -------      ------         -----    -------

Income Before Income Taxes, Extraordinary Item
     and Cumulative Effect of a Change of
     Accounting Principle                              319        468         (65)          (84)      (149)

Income Taxes                                           112        176         (22)          (42)       (64)
                                                   -------    -------      ------         -----    -------

Net Income Before Extraordinary Item and
     Cumulative Effect of a Change of
     Accounting Principle                              207        292         (43)          (42)       (85)
Extraordinary Item (net of income taxes)                --         (3)          3            --          3
Cumulative Effect of a Change
     of Accounting Principle                            --         24         (24)           --        (24)
                                                   -------    -------      ------         -----    -------
Net Income                                             207        313         (64)          (42)      (106)
Preferred Stock Dividends                               (5)        (5)         --            --         --
                                                   -------    -------      ------         -----    -------
Net Income on Common Stock                         $   202    $   308      $  (64)        $ (42)   $  (106)
                                                   =======    =======      ======         =====    =======
</TABLE>


Net Income
Net income  decreased  $42  million,  or 17%,  for the six months ended June 30,
2001,  excluding the effects of the  restructuring  as compared to the same 2000
period.

                                       58

<PAGE>


Operating Revenue
Operating revenue for the six months ended June 30, 2001 increased $337 million,
or 21%,  as  compared  to the same 2000  period,  excluding  the  effects of the
restructuring.  The increase in  operating  revenue was  attributable  to higher
electric revenue of $215 million and additional gas revenue of $122 million. The
increase in electric  revenue was  primarily  attributable  to $205 million from
customers in  Pennsylvania  selecting  or  returning  to PECO as their  electric
generation  supplier  and rate  adjustments  and an $11  million  settlement  of
competitive  transition  charges by a large customer.  Total kWh sales to retail
customers  remained  consistent  compared to the same 2000  period.  Residential
sales increased 2% and small commercial and industrial sales increased 3%. These
increases were offset by a decrease in large  commercial and industrial sales of
3%. The  increase  in  regulated  gas  revenue  was  primarily  attributable  to
increases of $108 million  related to higher  natural gas prices and $10 million
as a result of  favorable  weather  conditions,  partially  offset by $7 million
related to the elimination of the gross receipts tax on gas sales effective July
1, 2000.

Fuel and Purchased Power Expense
Fuel and  purchased  power  expense  for the six  months  ended  June  30,  2001
increased $275 million,  or 45%, as compared to the same 2000 period,  excluding
the  effects of the  restructuring.  The  increase in fuel and  purchased  power
expense  was  primarily   attributable   to  $135  million  from   customers  in
Pennsylvania  selecting  or  returning  to PECO  as  their  electric  generation
supplier,  $97 million  from  increased  prices  related to gas,  $23 million in
additional PJM ancillary charges and $9 million as a result of favorable weather
conditions.

Operating and Maintenance Expense
O&M expense for the six months ended June 30, 2001 increased $10 million, or 4%,
as compared to the same 2000 period, excluding the effects of the restructuring.
The  increase  in O&M  expense  was  primarily  attributable  to $6  million  of
incremental costs related to a storm in the first quarter of 2001 and $4 million
associated with the write-off of excess and obsolete inventory.

Depreciation and Amortization Expense
Depreciation  and  amortization  expense for the six months  ended June 30, 2001
increased $119 million, or 147%, as compared to the same 2000 period,  excluding
the effects of the  restructuring.  The increase was primarily  attributable  to
$102 million of additional amortization of PECO's CTC and a $17 million increase
in  depreciation  expense  associated  with  additional  plant in  service.  The
additional  amortization  of  the  CTC is in  accordance  with  PECO's  original
settlement under the Pennsylvania Competition Act.

                                       59

<PAGE>

Taxes Other Than Income
Taxes other than  income for the six months  ended June 30,  2001  decreased  $8
million,  or 9%, as compared to the same 2000 period,  excluding  the effects of
the restructuring. The decrease was primarily attributable to the elimination of
gross receipts tax on gas sales effective July 1, 2000.

Interest Charges
Interest  charges for the six months ended June 30, 2001  increased $35 million,
or 18%,  as  compared  to the same 2000  period,  excluding  the  effects of the
restructuring.  The  increase  was  primarily  attributable  to  interest of $21
million on the  additional  transition  bonds issued in May 2000 to securitize a
portion of PECO's stranded cost recovery and interest  expense related to a loan
from an affiliate in 2001 of $8 million.

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

Other Income and Deductions
Other income and deductions  excluding  interest  charges and equity in earnings
(losses) of  unconsolidated  affiliates  for the six months  ended June 30, 2001
increased  by $10  million as compared to the same 2000  period,  excluding  the
effects of the restructuring.  The increase was primarily 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.

Income Taxes
The  effective  tax rate was 35.1% for the six  months  ended  June 30,  2001 as
compared to 37.6% for the same 2000 period.  The decrease in the  effective  tax
rate  was  primarily   attributable   to  tax  benefits   associated   with  the
implementation of state tax planning strategies.

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

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



LIQUIDITY AND CAPITAL RESOURCES

Cash flows  provided by  operations  were $321  million for the six months ended
June 30, 2001 as compared to $339 million in the same 2000 period.  The decrease
was attributable to less cash generated by operations of $94 million,  partially
offset by an increase in working capital of $76 million.

                                       60
<PAGE>

         Cash flows used in  investing  activities  were $87 million for the six
months  ended June 30, 2001 as compared to $449 million in the same 2000 period.
The decrease was attributable to lower capital  expenditures of $165 million,  a
decrease in other  investing  activities of $106 million and the  acquisition of
four infrastructure services businesses in 2000 of $91 million.

         Cash flows used in financing  activities  were $257 million for the six
months  ended June 30,  2001 as compared  to cash flows  provided  by  financing
activities  of $149  million for the same period in 2000.  The  decrease in cash
flows from financing  activities was primarily  attributable  to short-term debt
repayments of $122 million as compared to borrowings of $189 million in the same
2000 period and debt service including  refinancings of $120 million. Cash flows
from financing activities in 2000 includes net proceeds of $120 million from the
securitization  of $1 billion of stranded  cost recovery in May 2000 and the use
of related  proceeds,  partially  offset by $61 million of debt  service.  These
decreases were partially offset by $75 million of borrowings from affiliates and
$31 million of proceeds from the settlement of interest rate swaps.

         Effective  January 1, 2001,  Exelon  contributed to PECO a $2.0 billion
non-interest  bearing  receivable  for the purpose of funding  future income tax
payments resulting from collection of intangible transition charges. See ITEM 1.
Financial Statements - Note 12 - Related-Party Transactions.

         At June 30, 2001,  PECO's  capital  structure,  excluding the deduction
from shareholders' equity of the $2.0 billion receivable from Exelon,  consisted
of 25% common  equity,  1% notes payable,  3% preferred  stock and COMRPS (which
comprised 1% of PECO's total capitalization  structure),  and 71% long-term debt
including  transition  bonds  issued by PECO  Energy  Transition  Trust  (PETT).
Long-term  debt included $4.7 billion of transition  bonds  representing  54% of
capitalization.

         PECO meets its short-term liquidity  requirements primarily through the
issuance of commercial paper and borrowings under bank credit facilities.  PECO,
along with  Exelon  and ComEd,  entered  into a $2 billion  unsecured  revolving
credit facility with a group of banks.  PECO has an $800 million  sublimit under
this 364-day credit facility and expects to use the credit facility  principally
to support its $800  million  commercial  paper  program.  This credit  facility
requires  PECO to maintain a debt to total  capitalization  ratio of 65% or less
(excluding  transition  bonds and the receivable  from parent recorded in PECO's
shareholders' equity). As a result of the corporate  restructuring,  at June 30,
2001, PECO's debt to total  capitalization  ratio on that basis was 36%. At June
30,  2001,  PECO  had  outstanding  $41  million  of  notes  payable  consisting
principally of commercial paper.


                                       61
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

EXELON
------

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

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

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

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

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

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

                                       62
<PAGE>

         In June 1998, the Financial  Accounting  Standards  Board (FASB) issued
Statement of Financial  Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging  Activities," (SFAS No. 133) to establish accounting and
reporting standards for derivatives.  The new standard requires  recognizing all
derivatives  as either assets or  liabilities on the balance sheet at their fair
value and specifies the accounting for changes in fair value  depending upon the
intended use of the derivative. On January 1, 2001, Exelon recognized a non-cash
gain of $12 million,  net of income  taxes,  in earnings and deferred a non-cash
gain of $44 million,  net of income taxes,  in accumulated  other  comprehensive
income, a component of  shareholders'  equity to reflect the initial adoption of
SFAS No. 133, as amended.

         During the three and six months ended June 30, 2001,  Exelon recognized
net gains of $5 million ($3 million,  net of income  taxes) and $22 million ($13
million,  net of income taxes),  respectively,  relating to mark-to-market (MTM)
adjustments of certain power  purchase and sale  contracts  pursuant to SFAS No.
133.  MTM  adjustments  on power  purchase  contracts  are  reported in fuel and
purchased  power and MTM  adjustments  on power sale  contracts  are reported as
operating  revenues  in the  Condensed  Consolidated  Statements  of Income  and
Comprehensive  Income.  During  the three and six months  ended  June 30,  2001,
Exelon  recognized  net losses  aggregating $6 million ($4 million net of income
taxes) on  derivative  instruments  entered  into for trading  purposes.  Exelon
commenced  financial  trading in the second  quarter of 2001.  These  losses are
reported as other income and deductions in the Condensed Consolidated Statements
of Income and Comprehensive  Income.  During the three and six months ended June
30, 2001, no amounts were  reclassified  from  accumulated  other  comprehensive
income into earnings as a result of forecasted energy commodity  transactions no
longer being  probable.  For the six months ended June 30, 2001,  $6 million ($4
million  after taxes) was  reclassified  from  accumulated  other  comprehensive
income into earnings as a result of forecasted financing  transactions no longer
being probable.

PECO
----
Interest Rate Risk

         PECO has  entered  into  interest  rate swaps to manage  interest  rate
exposure associated with two classes of floating rate transition bonds issued to
securitize  stranded cost recovery.  At June 30, 2001, these interest rate swaps
had a fair  market  value  exposure of $12  million  based on the present  value
difference between the contract and market rates at June 30, 2001.

         The aggregate  fair value exposure of the  transition  bond  derivative
instruments that would have resulted from a hypothetical 50 basis point decrease
in the spot  yield at June  30,  2001 is  estimated  to be $15  million.  If the
derivative instruments had been terminated at June 30, 2001, this estimated fair
value represents the amount to be paid by PECO to the counterparties.

         The aggregate  fair value exposure of the  transition  bond  derivative
instruments that would have resulted from a hypothetical 50 basis point increase
in the  spot  yield at June  30,  2001

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<PAGE>

is estimated to be $8 million. If the derivative instruments had been terminated
at June 30, 2001, this estimated fair value  represents the amount to be paid by
PECO to the counterparties.

         In connection  with the refinancing of a portion of PETT's two variable
rate series of transition  bonds in the first quarter of 2001, PECO settled $318
million of a forward starting  interest rate swap resulting in a $6 million gain
which is reflected in other  income.  Also in connection  with the  refinancing,
PECO settled a portion of the interest rate swaps and the  remaining  portion of
the forward  starting  interest rate swaps resulting in net gains of $25 million
which were deferred and are being amortized over the expected remaining lives of
the related debt.


PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

As previously  reported in Exelon's Annual Report to the Securities and Exchange
Commission  on Form 10-K for the year ended  December 31, 2000 (2000 Form 10-K),
on May 27, 1998, the United States Department of Justice, on behalf of the Rural
Utilities  Service  and the  Chapter 11  Trustee  for the Cajun  Electric  Power
Cooperative,  Inc. (Cajun),  filed an action claiming breach of contract against
PECO in the United States  District  Court for the Middle  District of Louisiana
arising out of PECO's  termination of the contract to purchase  Cajun's interest
in the River Bend nuclear power plant and seeking  damages of $50 million,  plus
interest and consequential  damages. Trial is scheduled to commence on September
10, 2001. In connection with the corporate restructuring, the responsibility for
any liablility related to this matter was transferred to Generation.

         As previously  reported in Exelon's 2000 Form 10-K,  Exelon is involved
in tax appeals  challenging  the assessed value of two of  Generation's  nuclear
facilities, Limerick Generating Station (Montgomery County, PA) and Peach Bottom
Atomic Power Station (Peach Bottom) (York County,  PA). AmerGen is involved in a
tax appeal  challenging  the  assessed  value of Unit No. 1 at Three Mile Island
Nuclear  Station  (Dauphin  County).  As of  January  11,  2001,  Exelon and the
Montgomery  County  taxing  authorities  entered  into a  stipulation  agreement
providing for partial payment of the taxes pending the interim  determination of
the appeal. As of March 29, 2001, AmerGen and the York County taxing authorities
entered into a stipulation  agreement providing for partial payment of the taxes
pending the interim determination of the appeal.

         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

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<PAGE>

monitoring.  On appeal,  the Tenth  Circuit  Court of Appeals  reversed the jury
verdict,  and  remanded  the case for new trial.  These  plaintiffs'  cases were
consolidated with the remaining 26 plaintiffs'  cases, which had not been tried.
The  consolidated  trial was  completed  on June 28, 2001.  The jury  returned a
verdict against Cotter and awarded $16 million in various  damages.  Cotter will
appeal the verdict.

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

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

         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 $10-15  million.  Once a final
feasibility  study is complete and a remedy  selected,  it is expected  that the
PRPs will agree on an  allocation  of  responsibility  for the  costs.  Until an
agreement is reached, Exelon cannot predict its share of the costs.

         As  previously  reported  in  Exelon's  2000 Form  10-K,  and  Exelon's
Quarterly  Report on Form 10-Q for the quarter  ended March 31, 2001 (March 2001
Form 10-Q), three of ComEd's wholesale municipal customers filed a complaint and
request for refund with the United States Federal Energy  Regulatory  Commission
(FERC)  alleging that ComEd failed to properly adjust its rates, as provided for
under the terms of the electric service  contracts with the municipal  customers
and to track certain refunds made to ComEd's retail  customers in the years 1992
through  1994.  In the third  quarter of 1998,  FERC granted the  complaint  and
directed  that  refunds  be made,  with  interest.  ComEd  filed a  request  for
rehearing.  On April 30, 2001, FERC issued an order granting  rehearing in which
it  determined  that its 1998 order had been  erroneous and that no refunds were
due from ComEd to the  municipal  customers.  On June 29, 2001,  FERC denied the
customers' requests for rehearing of the order granting rehearing. The April 30,
2001 FERC order is subject to appeal to the federal circuit court.

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<PAGE>

         As  previously  reported in Exelon's  2000 Form 10-K and the March 2001
Form  10-Q,  in  August  1999,  three  class  action  lawsuits  were  filed  and
subsequently  consolidated in the Circuit Court of Cook County, Illinois seeking
damages for personal  injuries,  property  damage and economic losses from ComEd
related  to a series of service  interruptions  that  occurred  in the summer of
1999.  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,
plaintiffs filed a second amended consolidated complaint.

         On April 18, 2001,  the Godley Park District  filed suit in Will County
Circuit  Court  against  ComEd and Exelon  alleging that oil spills at Braidwood
Station have contaminated the Park District's water supply.  The complaint seeks
actual damages,  punitive damages of $100 million and statutory  penalties.  The
complaint was not served on ComEd/Exelon until July 12, 2001. Although ComEd and
Exelon  have not yet filed a  response  to the  complaint,  the  companies  will
contest liability and the damages sought by the plaintiff.


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

Exelon
------

Information regarding the submission of matters to a vote of security holders is
presented in the March 2001 Form 10-Q.


ComEd and PECO
--------------

None.


ITEM 5.  OTHER INFORMATION

As previously  reported in Exelon's 2000 Form 10-K and the March 2001 Form 10-Q,
approximately 7,400 employees are covered by a collective  bargaining  agreement
with Local 15 of the International Brotherhood of Electrical Workers (Local 15),
which was scheduled to expire on March 31, 2001.  On April 20, 2001,  Exelon and
Local  15  officials  signed  an  agreement  for  a  new  three-year  collective
bargaining  agreement,  effective April 1, 2001 through March 31, 2004. Local 15
membership ratified the agreement as of June 8, 2001.

         On June 1,  2001,  ComEd  filed  with the ICC new  proposed  rates  for
delivery services.  The proposed rates include rates for residential  customers,
who will be eligible to take delivery  services for the first time in 2002,  and
revised  rates for  nonresidential  customers.  Although the proposed  rates for
nonresidential customers would result in an increase over the rates currently in
effect,  the ICC has  authority  to  investigate  and modify the rates  prior to
approving them. A final ICC order is expected by May 1, 2002.

         As previously  reported in Exelon's 2000 Form 10-K, Exelon entered into
an agreement with the United States Department of Energy (DOE) relating to Peach
Bottom to address the DOE's  failure to begin  removal of spent  nuclear fuel in
January 1998, as required by contract.  In November 2000, several utilities with
nuclear power plants filed a Joint  Petition for Review against the DOE with the
United  States Court of Appeals for the Eleventh  Circuit  seeking to invalidate
the portion of that agreement  providing for credits  against nuclear waste fund
payments. In April 2001, an individual plaintiff filed suit against officials of
the  DOE in the  United  States  District  Court  for  the  Middle  District  of
Pennsylvania, alleging that the agreement was entered by the DOE in violation of
procedural  requirements  of the  Administrative  Procedure Act and the National
Environmental  Policy  Act.  Exelon  has  intervened  as  a  defendant  in  both
proceedings.

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<PAGE>



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

         None.

(b)      Reports on Form 8-K:

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

          Date of earliest event reported:
                  April 4,  2001  reporting  information  under  "ITEM 5.  OTHER
                  EVENTS"  regarding a  presentation  at Salomon Smith  Barney's
                  Global Power & Merchant Energy  Conference to explain Exelon's
                  integrated strategy involving its Energy Delivery,  Generation
                  and Power Marketing, and Enterprises businesses.

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

          Date of earliest event reported:
                  May 3, 2001 reporting information under "ITEM 5. OTHER EVENTS"
                  that  Exelon  announced  that it agreed  to sell $500  million
                  unsecured senior notes to partially  refinance a term loan due
                  October 12, 2001. "ITEM 7. FINANCIAL  STATEMENTS AND EXHIBITS"
                  includes the Purchase  Agreement,  the  Officer's  Certificate
                  setting  forth  the  terms of the  senior  notes,  the form of
                  global certificate,  and the Computation of Ratios of Earnings
                  to Fixed Charges for Exelon.

          Date of earliest event reported:
                  June 13, 2001 reporting  information under "ITEM 9. REGULATION
                  FD DISCLOSURE"  regarding a presentation  at the Deutsche Bank
                  Alex Brown  Electric  Power  Conference in New York to explain
                  Exelon's earnings target and integrated strategy.

          Date of earliest event reported:
                  June 14,  2001  reporting  information  under  "ITEM 5.  OTHER
                  EVENTS" that Exelon Generation Company, LLC, sold $700 million
                  of unsecured  senior notes. The proceeds will be used to repay
                  an intercompany  obligation to Exelon.  "ITEM 9. REGULATION FD
                  DISCLOSURE"  includes  a  discussion  of  Exelon  Generation's
                  structure, strategy and historical data.

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<PAGE>

                                   SIGNATURES
                                   ----------

         Pursuant to  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                               EXELON CORPORATION
                               /s/ Jean H. Gibson
                               --------------------------------
                               JEAN H. GIBSON
                               Vice President and
                               Vice President and
                               Controller
                               (Chief Accounting Officer)

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

                               PECO ENERGY COMPANY
                               /s/ Thomas P. Hill, Jr.
                               --------------------------------
                               THOMAS P. HILL, JR.
                               Vice President and
                               Vice President and
                               Chief Financial Officer
                               (Chief Accounting Officer)


Date:  August 14, 2001


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