<PAGE>

                         PAYMENT AND GUARANTEE AGREEMENT


                  THIS PAYMENT AND GUARANTEE AGREEMENT ("Guarantee Agreement"),
dated as of April 6, 1998, is executed and delivered by PECO Energy Company, a
Pennsylvania corporation (the "Guarantor"), for the benefit of the Holders (as
defined below) of the Series D Preferred Securities (as defined below) of PECO
Energy Capital, L.P., a Delaware limited partnership ("PECO Energy Capital"),
the general partner of which is PECO Energy Capital Corp. (the "General
Partner"), a Delaware corporation and a wholly owned subsidiary of the
Guarantor.

                  WHEREAS, PECO Energy Capital is issuing on the date hereof
$78,105,000 aggregate stated liquidation preference of limited partner interests
of a series designated the 7.38% Cumulative Preferred Securities, Series D (the
"Series D Preferred Securities"), and the Guarantor desires to enter into this
Guarantee Agreement for the benefit of the Holders, as provided herein;

                  WHEREAS, the Guarantor will issue Series D Subordinated Debt
Securities (as defined below) in accordance with the Indenture (as defined
below) to PECO Energy Capital in an amount equal to the aggregate stated
liquidation preference of the Series D Preferred Securities and the capital
contribution of the General Partner to PECO Energy Capital (the "G.P. Capital
Contribution"); and

                  WHEREAS, the Guarantor desires to irrevocably and
unconditionally agree to the extent set forth herein to pay to the Holders the
Guarantee Payments (as defined below) and to make certain other undertakings on
the terms and conditions set forth herein.

                  NOW, THEREFORE, in consideration of the premises and other
consideration, receipt of which is hereby acknowledged, the Guarantor, intending
to be legally bound hereby, agrees as follows:

                                    ARTICLE I
                                    ---------

                  As used in this Guarantee Agreement, each term set forth
below, unless the context otherwise requires, shall have the following meaning.
Each capitalized term used but not otherwise defined herein shall have the
meaning assigned to such term in the Amended and Restated Limited Partnership
Agreement of 

<PAGE>

PECO Energy Capital dated as of July 25, 1994 (as amended from time
to time, the "Limited Partnership Agreement").

                  "Capital Securities" shall mean the Capital Trust Pass-through
Securities issued by the Trust each representing a Series D Preferred Security.

                  "Guarantee Payments" shall mean the following payments,
without duplication, to the extent not paid by PECO Energy Capital: (i) any
accumulated and unpaid semiannual distributions on the Series D Preferred
Securities out of moneys legally available therefor held by PECO Energy Capital,
(ii) the Redemption Price (as defined below) payable with respect to any Series
D Preferred Securities called for redemption by PECO Energy Capital out of
moneys legally available therefor held by PECO Energy Capital, and (iii) upon
liquidation of PECO Energy Capital, the lesser of (a) the Liquidation
Distribution (as defined below) and (b) the amount of assets of PECO Energy
Capital available for distribution to the Holders in liquidation of PECO Energy
Capital.

                  "Holders" shall mean the persons or entities in whose name any
Series D Preferred Securities are registered on the registration books
maintained by PECO Energy Capital; provided, however, that in determining
whether the Holders of the requisite percentage of Series D Preferred Securities
have given any request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor or any entity owned more than 50% by the Guarantor, either
directly or indirectly.

                  "Indenture" shall mean the Indenture, dated as of July 1, 1994
(the "Original Indenture"), as supplemented by the First Supplemental Indenture,
dated as of December 1, 1995, between the Guarantor and First Union National
Bank, as successor trustee, the Second Supplemental Indenture, dated as of June
1, 1997, between the Guarantor and First Union National Bank, as trustee, and
the Third Supplemental Indenture, dated as of April 1, 1998, between the
Guarantor and First Union National Bank, as trustee, pursuant to which the
Guarantor has issued and will issue its Deferrable Interest Subordinated
Debentures in series.

                  "Liquidation Distribution" shall mean the aggregate of the
stated liquidation preference of $1,000 per Series D Preferred Security and all
accumulated and unpaid distributions to the date of payment.

                  "Redemption Price" shall mean the aggregate of $1,000 per
Series D Preferred Security and all accumulated and unpaid distributions to the
date fixed for redemption.

                                       2
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                  "Special Representative" shall mean any representative of the
Holders appointed pursuant to Section 13.02(d) of the Limited Partnership
Agreement.

                  "Supplemental Indenture" shall mean the Third Supplemental
Indenture, dated as of April 1, 1998, between the Guarantor and First Union
National Bank, as trustee, pursuant to which the Guarantor has issued its 7.38%
Subordinated Deferrable Interest Debentures, Series D (the "Series D
Subordinated Debt Securities") in an amount equal to the aggregate stated
liquidation preference of the Series D Preferred Securities and the G.P.
Capital Contribution.

                  "Trust" shall mean PECO Energy Capital Trust III, a Delaware
business trust.

                  "Trust Agreement" shall mean the Amended and Restated Trust
Agreement of PECO Energy Capital Trust III, as amended from time to time, among
PECO Energy Capital, L.P., as Grantor, First Union National Bank, as trustee,
and the General Partner, for the limited purpose stated therein, dated as of
April 6, 1998.

                  "Trustee" shall mean First Union National Bank or a successor
trustee under the Trust Agreement.


                                   ARTICLE II
                                   ----------

                  SECTION 2.01. The Guarantor hereby irrevocably and
unconditionally agrees to pay in full to the Holders the Guarantee Payments, as
and when due (except to the extent paid by PECO Energy Capital), to the fullest
extent permitted by law, regardless of any defense, right of set-off or
counterclaim which the Guarantor may have or assert against PECO Energy Capital,
the General Partner, the Trust or the Trustee. The Guarantor's obligation to
make a Guarantee Payment may be satisfied by direct payment by the Guarantor to
the Holders or by payment of such amounts by PECO Energy Capital to the Holders.
Notwithstanding anything to the contrary herein, the Guarantor retains all of
its rights under Section 4.01(b) of the Indenture to extend the interest payment
period on the Series D Subordinated Debt Securities and the Guarantor shall not
be obligated hereunder to pay during an Extension Period any semiannual
distributions on the Series D Preferred Securities which are not paid by PECO
Energy Capital during such Extension Period.

                  SECTION 2.02. The Guarantor hereby waives notice of acceptance
of this Guarantee Agreement and of any liability to which it applies or may
apply, presentment, demand for payment, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.


                                       3
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                  SECTION 2.03. Except as otherwise set forth herein, the
obligations, covenants, agreements and duties of the Guarantor under this
Guarantee Agreement shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:

                           (a) the release or waiver, by operation of law or
otherwise, of the performance or observance by PECO Energy Capital of any
express or implied agreement, covenant, term or condition relating to the Series
D Preferred Securities to be performed or observed by PECO Energy Capital;

                           (b) the extension of time for the payment by PECO
Energy Capital of all or any portion of the distributions, Redemption Price,
Liquidation Distribution or any other sums payable under the terms of the Series
D Preferred Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Series D Preferred
Securities;

                           (c) any failure, omission, delay or lack of diligence
on the part of the Holders or the Special Representative to enforce, assert or
exercise any right, privilege, power or remedy conferred on the Holders or the
Special Representative pursuant to the terms of the Series D Preferred
Securities, or any action on the part of PECO Energy Capital granting indulgence
or extension of any kind;

                           (d) the voluntary or involuntary liquidation,
dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, PECO Energy Capital or any of the assets
of PECO Energy Capital;

                           (e) any invalidity of, or defect or deficiency in,
any of the Series D Preferred Securities; or

                           (f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred.

                  There shall be no obligation to the Holders to give notice to,
or obtain the consent of, the Guarantor with respect to the occurrence of any of
the foregoing.

                  SECTION 2.04. The Guarantor expressly acknowledges that (i)
this Guarantee Agreement will be deposited with the General Partner to be held
for the benefit of the Holders; (ii) in the event of the appointment of a
Special Representative, the Special Representative may enforce this Guarantee
Agreement for such purpose; (iii) if no Special Representative has been
appointed, the General Partner has the right to enforce this 

                                       4
<PAGE>

Guarantee Agreement on behalf of the Holders; (iv) the holders of Capital
Securities, together with the holders of the Series D Preferred Securities other
than the Trust, representing not less than 10% in aggregate stated liquidation
preference of the Series D Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available in
respect of this Guarantee Agreement including the giving of directions to the
General Partner or the Special Representative as the case may be; and (v) if the
General Partner or the Special Representative fails to enforce this Guarantee
Agreement as above provided, any holder of Capital Securities representing
Series D Preferred Securities may institute a legal proceeding directly against
the Guarantor to enforce its rights under this Guarantee Agreement, without
first instituting a legal proceeding against PECO Energy Capital or any other
person or entity.

                  SECTION 2.05. This is a guarantee of payment and not of
collection. The General Partner or Special Representative may enforce this
Guarantee Agreement directly against the Guarantor, and the Guarantor will waive
any right or remedy to require that any action be brought against PECO Energy
Capital or any other person or entity before proceeding against the Guarantor.
The Guarantor agrees that this Guarantee Agreement shall not be discharged
except by payment of the Guarantee Payments in full (to the extent not paid by
PECO Energy Capital) and by complete performance of all obligations of the
Guarantor contained in this Guarantee Agreement.

                  SECTION 2.06. The Guarantor will be subrogated to all rights
of the Holders against PECO Energy Capital in respect of any amounts paid to the
Holders by the Guarantor under this Guarantee Agreement and shall have the right
to waive payment by PECO Energy Capital pursuant to Section 2.01; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) exercise any rights which it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of a payment under this Guarantee Agreement, if, at the time of any
such payment, any amounts remain due and unpaid under this Guarantee Agreement.
If any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guarantor agrees to pay over such amount to the Holders.

                  SECTION 2.07. The Guarantor acknowledges that its obligations
hereunder are independent of the obligations of PECO Energy Capital with respect
to the Series D Preferred Securities and that the Guarantor shall be liable as
principal and sole debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (f), inclusive, of Section 2.03 hereof.

                                       5
<PAGE>

                                   ARTICLE III
                                   -----------

                  SECTION 3.01. So long as any Series D Preferred Securities
remain outstanding, neither the Guarantor nor any majority owned subsidiary of
the Guarantor shall declare or pay any dividend on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any of its capital stock (other
than dividends by a wholly owned subsidiary) if at such time the Guarantor shall
be in default with respect to its payment or other obligations hereunder or
there shall have occurred any event that, with the giving of notice or the lapse
of time or both, would constitute an Event of Default under the Indenture. The
Guarantor shall take all actions necessary to ensure the compliance of its
subsidiaries with this Section 3.01.

                  SECTION 3.02. So long as any Series D Preferred Securities are
outstanding, the Guarantor agrees to maintain its corporate existence; provided
that, the Guarantor may consolidate with or merge with or into, or sell, convey,
transfer or lease all or substantially all of its assets (either in one
transaction or a series of transactions) to, any person, corporation,
partnership, limited liability company, joint venture association, joint stock
company, trust or unincorporated association if such entity formed by or
surviving such consolidation or merger or to which such sale, conveyance,
transfer or lease shall have been made, if other than the Guarantor, (i) is
organized and existing under the laws of the United States of America or any
state thereof or the District of Columbia, and (ii) shall expressly assume all
the obligations of the Guarantor under this Guarantee Agreement.

                  SECTION 3.03. This Guarantee Agreement will constitute an
unsecured obligation of the Guarantor and will rank subordinate and junior in
right of payment to all general liabilities of the Guarantor.


                                   ARTICLE IV
                                   ----------

                  This Guarantee Agreement shall terminate and be of no further
force and effect upon full payment of the Redemption Price of all Series D
Preferred Securities or upon full payment of the amounts payable to the Holders
upon liquidation of PECO Energy Capital; provided, however, that this Guarantee
Agreement shall continue to be effective or shall be reinstated, as the case may
be, if at any time the Holders must restore payments of any sums paid under the
Series D Preferred Securities or under this Guarantee Agreement for any reason
whatsoever.


                                       6
<PAGE>
                                    ARTICLE V
                                    ---------

                  SECTION 5.01. All guarantees and agreements contained in this
Guarantee Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders.
Except as provided in Section 3.02, the Guarantor may not assign its obligations
hereunder without the prior approval of the Holders of not less than 66 2/3% of
the aggregate stated liquidation preference of all Series D Preferred Securities
then outstanding.

                  SECTION 5.02. This Guarantee Agreement may only be amended by
a written instrument executed by the Guarantor; provided that, so long as any of
the Series D Preferred Securities remain outstanding, any amendment that
materially adversely affects the Holders, any termination of this Guarantee
Agreement or any waiver of compliance with any covenant hereunder shall be
effected only with the prior approval of the holders of Capital Securities
together with the holders of Series D Preferred Securities other than the Trust,
representing not less than 66 2/3% of the aggregate liquidation preference of 
all Series D Preferred Securities then outstanding.

                  SECTION 5.03. All notices, requests or other communications
required or permitted to be given hereunder to the Guarantor shall be deemed
given if in writing and delivered personally or by recognized overnight courier
or express mail service or by facsimile transmission (confirmed in writing) or
by registered or certified mail (return receipt requested), addressed to the
Guarantor at the following address (or at such other address as shall be
specified by like notice to the Holders):

                           PECO Energy Company
                           2301 Market Street
                           P.O. Box 8699
                           Philadelphia, Pennsylvania  19101

                           Facsimile No.:  (215) 557-9885
                           Attention:  Treasurer

                  All notices, requests or other communications required or
permitted to be given hereunder to the Holders shall be deemed given if in
writing and delivered by the Guarantor in the same manner as notices sent by
PECO Energy Capital to the Holders.

                  SECTION 5.04. This Guarantee Agreement is solely for the
benefit of the Holders and is not separately transferable from the Series D
Preferred Securities.


                                       7
<PAGE>

                  SECTION 5.05. This Guarantee Agreement shall be governed by
and construed and interpreted in accordance with the laws of the Commonwealth of
Pennsylvania without giving effect to the conflict of law principles thereof.

                  THIS GUARANTEE AGREEMENT is executed as of the day and year
first above written.

                                      PECO ENERGY COMPANY


                                      By:  /s/  J. Barry Mitchell
                                           -----------------------------------
                                           Name:   J. Barry Mitchell
                                           Title:  Vice President-Finance





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