UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                    FORM 10-Q

           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2000

                                       OR

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

                         Commission file number: 1-1401

                               PECO Energy Company
             (Exact name of registrant as specified in its charter)

                  Pennsylvania                         23-0970240
       (State or other jurisdiction of              (I.R.S. Employer
        incorporation or organization)             Identification No.)

                2301 Market Street, Philadelphia, PA           19103
              (Address of principal executive offices)      (Zip Code)

                                 (215) 841-4000
              (Registrant's telephone number, including area code)


         Indicate by check mark whether the registrant (1) has filed all reports
         required to be filed by Section 13 or 15(d) of the Securities  Exchange
         Act of 1934 during the preceding 12 months (or for such shorter  period
         that the  registrant  was required to file such  reports),  and (2) has
         been subject to such filing requirements for the past 90 days.

                             Yes    X            No
                                  -----              ----

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
         classes of common stock as of the latest practicable date:

         The Company  had  169,694,541  shares of common  stock  outstanding  on
         August 4, 2000.


<PAGE>


PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                        PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
                                         CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                                         (Unaudited)
                                            (In Millions, except per share data)
                                                               Three Months Ended June 30,       Six Months Ended June 30,
                                                               ---------------------------       ------------------------
                                                                    2000         1999                2000         1999
                                                                  -------      -------             -------      -------
<S>                                                               <C>          <C>                 <C>          <C>
OPERATING REVENUES
     Electric                                                     $ 1,129      $ 1,109             $ 2,170      $ 2,144
     Gas                                                               85           90                 287          307
     Infrastructure Services                                          159           --                 259           --
                                                                  -------      -------             -------      -------
TOTAL OPERATING REVENUES                                            1,373        1,199               2,716        2,451
                                                                  -------      -------             -------      -------

OPERATING EXPENSES
     Fuel and Energy Interchange                                      469          501                 926          954
     Operating and Maintenance                                        445          342                 835          634
     Depreciation and Amortization                                     81           58                 161          114
     Taxes Other Than Income Taxes                                     63           45                 130          120
                                                                  -------      -------             -------      -------
TOTAL OPERATING EXPENSES                                            1,058          946               2,052        1,822
                                                                  -------      -------             -------      -------

OPERATING INCOME                                                      315          253                 664          629
                                                                  -------      -------             -------      -------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                (116)        (114)               (220)        (188)
     Company Obligated Mandatorily Redeemable
       Preferred Securities of a Partnership                           (3)          (8)                 (5)         (15)
     Allowance for Funds Used During Construction                      --            2                   1            2
     Equity in Earnings (Losses) of Unconsolidated Affiliates          (1)         (11)                  3          (23)
     Other, Net                                                         6           22                  20           (2)
                                                                  -------      -------             -------      -------

TOTAL OTHER INCOME AND DEDUCTIONS                                    (114)        (109)               (201)        (226)
                                                                  -------      -------             -------      -------

INCOME BEFORE INCOME TAXES AND
     EXTRAORDINARY ITEM                                               201          144                 463          403

INCOME TAXES                                                           77           47                 174          150
                                                                  -------      -------             -------      -------

INCOME BEFORE EXTRAORDINARY ITEM                                      124           97                 289          253

EXTRAORDINARY ITEM - NET OF INCOME TAXES                               (3)         (27)                 (3)         (27)
                                                                  -------      -------             -------      -------

NET INCOME                                                            121           70                 286          226

PREFERRED STOCK DIVIDENDS                                               2            4                   5            7
                                                                  -------      -------             -------      -------

EARNINGS APPLICABLE TO COMMON STOCK                               $   119      $    66             $   281      $   219
                                                                  =======      =======             =======      =======

AVERAGE SHARES OF COMMON STOCK OUTSTANDING                            174          192                 178          208
                                                                  =======      =======             =======      =======

EARNINGS PER AVERAGE COMMON SHARE:
    BASIC:
       Income Before Extraordinary Item                           $  0.70      $  0.48             $  1.60      $  1.19
       Extraordinary Item                                           (0.02)       (0.14)              (0.02)       (0.13)
                                                                  -------      -------             -------      -------
       Net Income                                                 $  0.68      $  0.34             $  1.58      $  1.06
                                                                  =======      =======             =======      =======
    DILUTED:
       Income Before Extraordinary Item                           $  0.70      $  0.48             $  1.59      $  1.18
       Extraordinary Income                                         (0.02)       (0.14)              (0.02)       (0.13)
                                                                  -------      -------             -------      -------
       Net Income                                                 $  0.68      $  0.34             $  1.57      $  1.05
                                                                  =======      =======             =======      =======

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

                                  See Notes to Condensed Consolidated Financial Statements
</TABLE>

                                                             2
<PAGE>

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


<TABLE>
<CAPTION>
                                                                  June 30,       December 31,
                                                                    2000            1999
                                                                 -------          -------
                                                                (Unaudited)
ASSETS

CURRENT ASSETS
<S>                                                              <C>              <C>
     Cash and Cash Equivalents                                   $   263          $   228
     Accounts Receivable, Net                                        728              692
     Inventories, at average cost                                    208              206
     Other                                                           172               87
                                                                 -------          -------

         Total Current Assets                                      1,371            1,213
                                                                 -------          -------


PROPERTY, PLANT AND EQUIPMENT, NET                                 5,155            5,045

DEFERRED DEBITS AND OTHER ASSETS
     Competitive Transition Charge                                 5,248            5,275
     Recoverable Deferred Income Taxes                               638              638
     Deferred Non-Pension Postretirement Benefits Costs               81               84
     Investments                                                     603              538
     Loss on Reacquired Debt                                          68               71
     Goodwill, Net                                                   194              121
     Other                                                           157              135
                                                                 -------          -------

         Total Deferred Debits and Other Assets                    6,989            6,862
                                                                 -------          -------

TOTAL ASSETS                                                     $13,515          $13,120
                                                                 =======          =======
</TABLE>










                   See Notes to Condensed Consolidated Financial Statements



                                              3
<PAGE>

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

<TABLE>
<CAPTION>
                                                               June 30,          December 31,
                                                                 2000               1999
                                                               --------           --------
                                                              (Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
<S>                                                            <C>                <C>
     Notes Payable, Bank                                       $    351           $    163
     Long-Term Debt Due Within One Year                             220                128
     Accounts Payable                                               290                429
     Accrued Taxes                                                  229                203
     Accrued Interest                                               121                119
     Deferred Income Taxes                                           14                 15
     Other                                                          287                247
                                                               --------           --------

         Total Current Liabilities                                1,512              1,304
                                                               --------           --------

LONG-TERM DEBT                                                    6,431              5,969

DEFERRED CREDITS AND OTHER LIABILITIES
     Deferred Income Taxes                                        2,426              2,411
     Unamortized Investment Tax Credits                             279                286
     Pension Obligation                                             212                212
     Non-Pension Postretirement Benefits Obligation                 452                443
     Other                                                          410                401
                                                               --------           --------

         Total Deferred Credits and Other Liabilities             3,779              3,753
                                                               --------           --------

COMPANY OBLIGATED MANDATORILY REDEEMABLE
     PREFERRED SECURITIES OF A PARTNERSHIP                          128                128
MANDATORILY REDEEMABLE PREFERRED STOCK                               56                 56

COMMITMENTS AND CONTINGENCIES (NOTE 7)

SHAREHOLDERS' EQUITY
     Common Stock (No Par)                                        3,576              3,576
     Preferred Stock                                                137                137
     Other Paid-In Capital                                            3                  1
     Retained Earnings (Accumulated Deficit)                         89               (103)
     Treasury Stock, at cost                                     (2,196)            (1,705)
     Accumulated Other Comprehensive Income                          --                  4
                                                               --------           --------

         Total Shareholders' Equity                               1,609              1,910
                                                               --------           --------


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                     $ 13,515           $ 13,120
                                                               ========           ========
</TABLE>



                   See Notes to Condensed Consolidated Financial Statements



                                              4
<PAGE>



                               PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
                              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                (Unaudited)
                                               (In Millions)
<TABLE>
<CAPTION>
                                                                                Six Months Ended June 30,
                                                                                  2000             1999
                                                                                -------           -------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                             <C>               <C>
     Net Income                                                                 $   286           $   226
     Adjustments to Reconcile Net Income to Net Cash
         Provided by Operating Activities:
     Depreciation and Amortization                                                  228               149
     Extraordinary Item (net of income taxes)                                         3                27
     Deferred Income Taxes                                                           17               (38)
     Amortization of Investment Tax Credits                                          (7)               (7)
     Deferred Energy Costs                                                           15                56
     Equity in Earnings (Losses) of Unconsolidated Affiliates                        (3)              (23)
     Other Items Affecting Operations                                               (35)               98
     Changes in Working Capital:
         Accounts Receivable                                                        (13)             (279)
         Inventories                                                                 (2)                3
         Accounts Payable                                                          (126)               41
         Accrued Taxes                                                               32                17
         Accrued Interest                                                             2                43
         Other Current Assets and Liabilities                                       (58)              (47)
                                                                                -------           -------

CASH FLOWS PROVIDED BY OPERATING ACTIVITIES                                         339               266
                                                                                -------           -------


CASH FLOWS FROM INVESTING ACTIVITIES
     Investment in Plant                                                           (287)             (244)
     Exelon Infrastructure Services Acquisitions, net of cash acquired              (91)               --
     Increase in Other Investments                                                  (71)              (35)
                                                                                -------           -------

NET CASH FLOWS USED IN INVESTING ACTIVITIES                                        (449)             (279)
                                                                                -------           -------


CASH FLOWS FROM FINANCING ACTIVITIES
     Change in Short-Term Debt                                                      189              (299)
     Issuance of Long-Term Debt                                                   1,015             4,000
     Retirement of Long-Term Debt                                                  (460)           (1,203)
     Common Stock Repurchase                                                       (496)           (1,507)
     Dividends on Preferred and Common Stock                                        (93)             (110)
     Proceeds from Exercise of Stock Options                                         --                14
     Other Items Affecting Financing                                                (10)              (16)
                                                                                -------           -------

NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES                                     145               879
                                                                                -------           -------


INCREASE IN CASH AND CASH EQUIVALENTS                                                35               866
                                                                                -------           -------


CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                    228                48
                                                                                -------           -------


CASH AND CASH EQUIVALENTS AT END OF PERIOD                                      $   263           $   914
                                                                                =======           =======
</TABLE>

                        See Notes to Condensed Consolidated Financial Statements


                                                    5
<PAGE>

                  PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.   BASIS OF PRESENTATION
         The accompanying condensed consolidated financial statements as of June
30, 2000 and for the three and six months then ended are unaudited,  but include
all adjustments  that PECO Energy Company  (Company)  considers  necessary for a
fair presentation of such financial statements. All adjustments are of a normal,
recurring nature.  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.  These notes should be read in
conjunction with the Notes to Consolidated Financial Statements in Item 8 of the
Company's  Annual  Report on Form 10-K for the year ended  December 31, 1999, as
amended by Form 10-K/A filed on April 28, 2000.


2.   MERGER WITH UNICOM CORPORATION
         On September  22,  1999,  the Company and Unicom  Corporation  (Unicom)
entered into an Agreement and Plan of Exchange and Merger providing for a merger
of equals. On January 7, 2000, the Agreement and Plan of Exchange and Merger was
amended and restated (Merger Agreement).  The Merger Agreement has been approved
by both companies' Boards of Directors. The transaction will be accounted for as
a purchase with the Company as acquiror.

         On June 22, 2000,  the  Pennsylvania  Public Utility  Commission  (PUC)
approved  the  proposed  merger  between the Company  and Unicom  following  the
submission,  in March 2000, of the joint  petition for  settlement  reached with
various parties to the Company's  proceedings with the PUC involving the merger.
In the settlement, the Company reached agreement with advocates for residential,
small business and large industrial customers, and representatives of marketers,
environmentalists, municipalities and elected officials. Under the comprehensive
settlement agreement,  the Company has agreed to $200 million in rate reductions
for all customers over the period January 1, 2002 through 2005 and extended rate
caps on the Company's retail electric  distribution charges through December 31,
2006.  The  comprehensive   settlement  agreement  also  provides  for  electric
reliability and customer service  standards,  mechanisms to enhance  competition
and customer  choice,  expanded  assistance to low-income  customers,  extensive
funding  for wind and solar  energy  and  community  education,  nuclear  safety
research   funds,   customer   protection   against  nuclear  costs  outside  of
Pennsylvania,   and  maintenance  of  charitable  and  civic  contributions  and
employment for the Company's headquarters in Philadelphia.

         On June 27,  2000,  at the 2000  Annual  Meeting of  Shareholders,  the
Company's  common  shareholders  approved  the  proposal  to  adopt  the  Merger
Agreement.  On June 28, 2000, at the Unicom 2000 Annual Meeting of Shareholders,
Unicom's  common  shareholders   approved  the  proposal  to  adopt  the  Merger
Agreement.


                                       6
<PAGE>

3.   SERIES 2000-A TRANSITION BONDS
         On May 2, 2000,  PECO Energy  Transition  Trust (PETT),  an independent
statutory business trust organized under the laws of Delaware and a wholly owned
subsidiary of the Company,  issued an additional $1 billion aggregate  principal
amount of transition  bonds  (Series  2000-A  Transition  Bonds) to securitize a
portion of the Company's authorized stranded cost recovery.  As a result of this
transaction,  the  Company  has  securitized  a total of $5 billion of its $5.26
billion  of  stranded  costs  recovery.  The  transition  bonds  issued by PETT,
including the Series 2000-A  Transition  Bonds, are solely  obligations of PETT,
secured  by  intangible   transition  property  sold  by  the  Company  to  PETT
concurrently with the issuance of the transition bonds and certain other related
collateral.

The terms of the Series 2000-A Transition Bonds are as follows:

<TABLE>
<CAPTION>
                                                                    Expected
                            Approximate                              Final
       Series 2000-A        Face Amount          Interest           Payment               Termination
           Class             (millions)            Rate               Date                    Date
       -------------        -----------          --------         -----------             --------------
<S>                            <C>             <C>             <C>                        <C>
           A-1                   $110            7.18%         September 1, 2001          September 1, 2003
           A-2                   $140            7.30%         September 1, 2002          September 1, 2004
           A-3                   $399            7.63%         March 1, 2009              March 1, 2010
           A-4                   $351            7.65%         September 1, 2009          September 1, 2010
</TABLE>

           The Company is using the proceeds from the  securitization  to reduce
the Company's  stranded costs and related  capitalization.  On May 3, 2000, $502
million of the proceeds were used to settle a forward  purchase  agreement  that
was entered  into in January  2000  resulting  in the  repurchase  of 12 million
shares of common stock.  During May and June 2000, the Company used $463 million
to purchase  and/or redeem First and Refunding  Mortgage  Bonds, to reduce other
debt, to repurchase  accounts  receivable and to pay transaction  expenses.  The
remaining  proceeds  were used to redeem First and Refunding  Mortgage  Bonds on
August 1, 2000.

           During  the  second  quarter  of  2000,   the  Company   incurred  an
extraordinary  charge  of $3  million,  net of  tax,  consisting  of  prepayment
premiums and the write-off of unamortized  deferred  financing costs  associated
with the early retirement of debt.

           In February 2000, the Company entered into forward starting  interest
rate swaps for a notional  amount of $1 billion in  anticipation of the issuance
of the Series 2000-A  Transition  Bonds in the second quarter of 2000. On May 2,
2000, the Company  settled these forward  starting  interest rate swaps and paid
the  counterparties  approximately  $12 million  which was deferred and is being
amortized over the life of the Series 2000-A  Transition Bonds as an increase in
interest expense consistent with the Company's hedge accounting policy.


                                       7
<PAGE>

4.   SEGMENT INFORMATION
         The  Company's  segment  information  as of and for the  three  and six
months ended June 30, 2000 as compared to the same periods in 1999 is as follows
(in millions):

Quarter Ended June 30, 2000 as compared to the Quarter Ended June 30, 1999
--------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S>                          <C>             <C>            <C>           <C>        <C>             <C>
                                                                                      Intersegment
                           Distribution     Generation      Ventures     Corporate      Revenues     Consolidated
Revenues:
    2000                      $    762        $   657        $  168        $   -      $  (214)        $ 1,373
    1999                      $    738        $   641        $    1        $   -      $  (181)        $ 1,199
EBIT (a):
    2000                      $    284        $    95        $   (6)       $ (53)                     $   320
    1999                      $    313        $    11        $  (15)       $ (45)                     $   264


Six Months Ended June 30, 2000 as compared to Six Months Ended June 30, 1999
----------------------------------------------------------------------------

Revenues:
    2000                      $  1,605        $ 1,218        $  276        $   -      $  (383)        $ 2,716
    1999                      $  1,647        $ 1,183        $    1        $   -      $  (380)        $ 2,451
EBIT (a):
    2000                      $    641        $   146        $  (17)       $ (83)                     $   687
    1999                      $    668        $    53        $  (36)       $ (81)                     $   604
Total Assets:
    June 30, 2000             $ 10,489        $ 1,813        $  799        $ 414                      $13,515
    December 31, 1999         $ 10,294        $ 1,779        $  640        $ 407                      $13,120

(a) EBIT - Earnings Before Interest and Income Taxes.

</TABLE>


                                       8
<PAGE>

5.   EARNINGS PER SHARE
         Diluted  earnings per average  common share is  calculated  by dividing
earnings  applicable  to common stock by the average  number of shares of common
stock  outstanding  after  giving  effect to stock  options  issuable  under the
Company's  stock option plans which are  considered to be dilutive  common stock
equivalents.  The following table shows the effect of the stock options issuable
under the Company's  stock option plans on the average  number of shares used in
calculating diluted earnings per average common share (in millions of shares):

<TABLE>
<CAPTION>
                                         Three Months Ended     Six Months Ended
                                              June 30,             June 30,
                                              --------             --------
                                         2000        1999       2000      1999
                                         ----        ----       ----      ----
<S>                                       <C>         <C>        <C>        <C>
Average Common Shares Outstanding         174         192        178        208

Assumed Exercise of Stock Options           1           2          1          1
                                       ------      ------     ------      -----

Potential Average Dilutive
  Common Shares Outstanding                175        194        179        209
                                       =======    =======    =======    =======
</TABLE>


6.   SALES OF ACCOUNTS RECEIVABLE
         The Company 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 2000. At June 30, 2000, the Company had sold a $225 million interest in
accounts  receivable,   consisting  of  a  $187  million  interest  in  accounts
receivable which the Company accounts for as a sale under Statement of Financial
Accounting  Standards (SFAS) No. 125, "Accounting for Transfers and Servicing of
Financial Assets and  Extinguishment of Liabilities," and a $38 million interest
in special agreement accounts  receivable which are accounted for as a long-term
note  payable.  The  Company  retains  the  servicing  responsibility  for these
receivables.  The  agreement  requires  the Company to maintain the $225 million
interest,  which,  if not met,  requires the Company to deposit cash in order to
satisfy such requirements. At June 30, 2000, the Company met such requirements.

         In May 2000, the Company used a portion of the proceeds from the Series
2000-A  Transition  Bonds to repurchase  $50 million of the interest in accounts
receivable,  including $10 million of special agreement accounts receivable (See
Note 3 - Series 2000-A Transition Bonds).  This repurchase reduced the amount of
accounts receivable the Company could sell or finance under the agreement.


7.   COMMITMENTS AND CONTINGENCIES
         For information  regarding the Company's capital  commitments,  nuclear
insurance,  nuclear  decommissioning and spent fuel storage, energy commitments,
environmental  issues  and  litigation,  see  Note 6 of  Notes  to  Consolidated
Financial Statements for the year ended December 31, 1999.


                                       9
<PAGE>

         In July 2000,  the Company  signed an agreement  with the Department of
Energy (DOE) under which the Company will be reimbursed for costs resulting from
the DOE's delay in accepting  spent nuclear fuel. The agreement  applies only to
the Company's  Peach Bottom Atomic Power Station (Peach  Bottom).  The agreement
allows the  Company  to reduce the  charges  paid to the  Nuclear  Waste Fund to
reflect  costs  reasonably  incurred by the Company due to the DOE's  delay.  In
accordance  with the Nuclear  Waste Policy Act of 1982 (NWPA),  the Company pays
the DOE one mil ($.001) per kilowatthour of net nuclear  generation for the cost
of nuclear fuel disposal.  Past and future  expenditures  associated  with Peach
Bottom's  recently  completed on-site dry storage facility are eligible for this
reduction  in future  DOE fees.  Negotiations  of  settlements  relating  to the
Company's plants will be conducted on a plant-by-plant basis.

         The Company has identified 28 sites where former manufactured gas plant
(MGP) activities have or may have resulted in actual site  contamination.  As of
June  30,  2000,   the  Company  had  accrued  $56  million  for   environmental
investigation and remediation costs, including $31 million for MGP investigation
and remediation that currently can be reasonably  estimated.  The Company cannot
predict  whether it will incur  other  significant  liabilities  for  additional
investigation  and remediation  costs at these or additional sites identified by
the Company, environmental agencies or others, or whether all such costs will be
recoverable from third parties.

         At December  31,  1998,  the Company  incurred a charge of $125 million
($74  million,  net of income  taxes) for its Early  Retirement  and  Separation
Program relating to 1,157 employees.  The estimated cost of separation  benefits
was approximately $47 million.  Retirement benefits of approximately $78 million
are being paid to the retirees over their lives.  All cash  payments  related to
the Early  Retirement and  Separation  Program were funded through the assets of
the Company's Service Annuity Plan. The Early Retirement and Separation  Program
terminated on June 30, 2000.










                                       10
<PAGE>

         At June 30, 2000,  the Company had long-term  commitments,  in megawatt
hours (MWhs) and dollars,  relating to the purchase and sale of energy, capacity
and transmission  rights from unaffiliated  utilities and others as expressed in
the tables below (in millions):

                                          Power Only
                 ---------------------------------------------------------
                           Purchases                         Sales
                 ---------------------------------------------------------
                     MWhs          Dollars           MWhs          Dollars
                 ---------------------------------------------------------

2000                  4            $  62              12          $   410
2001                  7              149              13              527
2002                  7              131              10              460
2003                  7              138               6              233
2004                  5              116               3              107
Thereafter            3               82               5              167
                               ---------                        ---------
Total                              $ 678                          $ 1,904
                               =========                        =========

                           Capacity         Capacity      Transmission
                           Purchases         Sales           Rights
                          in Dollars      in Dollars       in Dollars
                          ----------      ----------       ----------
2000                        $    26            $ 14            $  51
2001                             83              32               60
2002                            149              21               63
2003                            176              16               22
2004                            167               3               21
Thereafter                    1,833              10               79
                         ----------      ----------       ----------
Total                       $ 2,434            $ 96            $ 296
                         ==========      ==========       ==========

         In the first  quarter of 2000,  the  Company  restructured  an existing
power sales  contract from a variable price with fixed capacity sales to a fixed
price power only contract which decreased the Company's commitments for capacity
sales and increased the Company's commitments for power only sales.

         In June 2000, the Company entered into a  fixed-for-floating  financial
swap in order to hedge the physical gas price risk for August and September 2000
associated with one of its tolling agreements. Pursuant to the swap transaction,
the  Company  will  obtain a fixed  price for natural gas based on a natural gas
index plus a premium. If the market price is above or below the fixed price, the
Company would either receive or pay the counterparty the difference  between the
fixed  price and the market  price.  As of June 30,  2000,  no hedging  gains or
losses have been deferred or recognized.


                                       11
<PAGE>

8.   NEW ACCOUNTING PRONOUNCEMENTS
         In June 1998, the Financial  Accounting  Standards  Board (FASB) issued
SFAS 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.

         In June 2000,  the FASB  issued  SFAS No. 138  "Accounting  for Certain
Derivative  Instruments  and Certain  Hedging  Activities,  an amendment of FASB
Statement  No. 133" (SFAS No. 138).  This  standard  amends the  accounting  and
reporting  standards  of SFAS No. 133 for  certain  derivative  instruments  and
certain  hedging  activities.  It also  amends SFAS No. 133 for  decisions  made
arising from the Derivatives  Implementation  Group process. The Company expects
to adopt SFAS No. 133 and SFAS No. 138 on January 1, 2001. The Company is in the
process  of  evaluating  the  impact  of SFAS No.  133 and  SFAS No.  138 on its
financial statements.


9.   EXELON INFRASTRUCTURE SERVICES, INC. ACQUISITIONS
         In the second quarter of 2000,  Exelon  Infrastructure  Services,  Inc.
(EIS), an unregulated subsidiary of the Company, acquired the stock or assets of
four utility service  contracting  companies for an aggregate  purchase price of
approximately  $95  million,  including  stock  of EIS.  The  acquisitions  were
accounted for using the purchase method of accounting.  The preliminary estimate
of the excess of purchase  price over the fair value of net assets  acquired was
approximately $77 million which is being amortized over 20 years.


10.   SUBSEQUENT EVENTS

     Sithe Energies Acquisition
         On August 14,  2000,  the  Company  signed a  definitive  agreement  to
purchase 49.9 percent of Sithe Energies North America's outstanding common stock
for $682  million,  with an  option  to  purchase  the  remaining  common  stock
outstanding  within  two to five  years,  at a price to be  determined  based on
prevailing market conditions.

      Oyster Creek Acquisition
         In August  2000,  AmerGen  Energy  Company,  LLC  (AmerGen),  the joint
venture between the Company and British Energy,  plc,  completed the purchase of
Oyster Creek Nuclear  Generating  Facility from GPU, Inc. (GPU) for $10 million.
Under the terms of the  agreement,  GPU will fund outage costs not to exceed $89
million,  including  the cost of fuel,  for a  refueling  outage  scheduled  for
October  2000.  AmerGen  will  repay  these  costs to GPU in nine  equal  annual
installments  beginning in August 2001.  The sale provides for AmerGen to assume
full  responsibility  for the ultimate  decommissioning  of Oyster Creek. At the
closing of the sale, GPU provided funding for the decommissioning  trust of $440
million. GPU will purchase the electricity  generated by Oyster Creek at a fixed
price through March 2003.


                                       12
<PAGE>


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

GENERAL

On September 22, 1999, the Company and Unicom Corporation  (Unicom) entered into
an Agreement  and Plan of Exchange and Merger  providing for a merger of equals.
On January 7, 2000,  the  Agreement  and Plan of Exchange and Merger was amended
and restated (Merger Agreement).  The Merger Agreement has been approved by both
companies'  Boards of  Directors.  The  transaction  will be accounted  for as a
purchase with the Company as acquiror. For additional information, see "PART II,
ITEM 7. -  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND
RESULTS OF  OPERATIONS - General," in the  Company's  1999 Annual Report on Form
10-K as amended by Form 10-K/A filed on April 28, 2000.

         On June 22, 2000,  the  Pennsylvania  Public Utility  Commission  (PUC)
approved  the  proposed  merger  between the Company  and Unicom  following  the
submission,  in March 2000, of the joint  petition for  settlement  reached with
various parties to the Company's  proceedings with the PUC involving the merger.
In the settlement, the Company reached agreement with advocates for residential,
small business and large industrial customers, and representatives of marketers,
environmentalists, municipalities and elected officials. Under the comprehensive
settlement agreement,  the Company has agreed to $200 million in rate reductions
for all customers over the period January 1, 2002 through 2005 and extended rate
caps on the Company's retail electric  distribution charges through December 31,
2006.  The  comprehensive   settlement  agreement  also  provides  for  electric
reliability and customer service  standards,  mechanisms to enhance  competition
and customer  choice,  expanded  assistance to low-income  customers,  extensive
funding  for wind and solar  energy  and  community  education,  nuclear  safety
research   funds,   customer   protection   against  nuclear  costs  outside  of
Pennsylvania,   and  maintenance  of  charitable  and  civic  contributions  and
employment for the Company's headquarters in Philadelphia.

         On June 27,  2000,  at the 2000  Annual  Meeting of  Shareholders,  the
Company's  common  shareholders  approved  the  proposal  to  adopt  the  Merger
Agreement.  On June 28, 2000, at the Unicom 2000 Annual Meeting of Shareholders,
Unicom's  common  shareholders   approved  the  proposal  to  adopt  the  Merger
Agreement.

         Retail   competition   for  electric   generation   services  began  in
Pennsylvania on January 1, 1999. Effective January 1, 2000, all of the Company's
retail electric customers in its traditional service territory have the right to
choose their generation  suppliers.  At June 30, 2000,  approximately 18% of the
Company's residential load, 44% of its commercial load and 40% of its industrial
load were purchasing  generation service from an alternative electric generation
supplier.  As of that date,  Exelon  Energy,  the Company's  alternative  energy
supplier,  was providing electric  generation  service to approximately  112,000
business and residential customers located throughout Pennsylvania.

         On May 2, 2000,  PECO Energy  Transition  Trust (PETT),  an independent
statutory business trust organized under the laws of Delaware and a wholly owned
subsidiary of the


                                       13
<PAGE>

Company,   issued  an  additional  $1  billion  aggregate  principal  amount  of
transition bonds (Series 2000-A Transition Bonds) to securitize a portion of the
Company's  authorized  stranded cost recovery.  See Note 3 of Notes to Condensed
Consolidated Financial Statements.

         In the second quarter of 2000,  Exelon  Infrastructure  Services,  Inc.
(EIS)  acquired  four  additional   infrastructure  services  companies.   These
aquisitions,  combined with EIS'  acquisitions  of six  infrastructure  services
companies in the fourth  quarter of 1999,  contributed  to the growth in revenue
and  operating and  maintenance  expenses in the quarterly and six month periods
ended June 30, 2000 as compared to the same prior year periods.

RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
Revenue and Expense Items as a
Percentage of Total Operating
Revenues                                                                           Percentage Dollar Changes
                                                                                         2000 vs. 1999
                                                                                   -------------------------

       Quarter          Six Months                                                  Quarter       Six Months
        Ended             Ended                                                      Ended          Ended
       June 30,          June 30,                                                   June 30,       June 30,
       --------          --------                                                   --------       --------
     2000     1999    2000     1999
     ----     ----    ----     ----
     <C>     <C>      <C>      <C>      <S>                                       <C>              <C>
       82%     92%      80%      87%       Electric                                    2%               1%
        6%      8%      11%      13%       Gas                                        (6%)             (7%)
       12%      --       9%       --       Infrastructure Services                   100%             100%
     -----   -----    -----    -----

      100%    100%     100%     100%       Total Operating Revenues                   15%              11%
     -----   -----    -----    -----

       34%     42%      34%      39%       Fuel and Energy Interchange               (6%)              (3%)
       32%     28%      31%      26%       Operating and Maintenance                  30%              32%
        6%      5%       6%       5%       Depreciation and Amortization              40%              41%
        5%      4%       5%       5%       Taxes Other Than Income                    40%               8%
     -----   -----    -----    -----
       77%     79%      76%      75%       Total Operating Expenses                   12%              13%
     -----   -----    -----    -----

       23%     21%      24%      25%       Operating Income                           25%               6%
     -----   -----    -----    -----

       (9%)   (10%)     (8%)     (8%)      Interest Charges                           (1%)             11%
                                           Equity in Earnings (Losses) of
        --     (1%)      --      (1%)        Unconsolidated Affiliates                91%             113%
        1%      2%       1%       --       Other, Net                                (73%)          1,100%
     -----   -----    -----    -----

                                           Income Before Income Taxes and
       15%     12%      17%      16%         Extraordinary Item                       40%              15%
        6%      4%       6%       6%       Income Taxes                               64%              16%
     -----   -----    -----    -----
        9%      8%      11%      10%       Income Before Extraordinary Item           28%              14%
        --     (2%)     --%      (1%)      Extraordinary Items                       (89%)            (89%)
     -----   -----    -----    -----

        9%      6%      11%       9%       Net Income                                 73%              27%
     =====   =====    =====    =====
</TABLE>


Second Quarter 2000 Compared To Second Quarter 1999
Operating Revenues
         Electric revenues  increased $20 million,  or 2%, to $1,129 million for
the quarter ended June 30, 2000  compared to the same 1999 period.  The increase
was attributable to higher revenues from the  distribution  business unit of $27
million partially offset by lower revenues from the generation  business unit of
$7 million.


                                       14
<PAGE>

         The  increase  from  the  distribution   business  unit  was  primarily
attributable to $21 million as a result of additional volume from the effects of
weather  conditions  and $8 million  related to a decrease in the rate reduction
from 8% to 6% on January 1, 2000 in accordance with the May 1998 PUC Opinion and
Order (Final  Restructuring  Order).  The decrease from the generation  business
unit  was  primarily   attributable  to  lower  sales  of  competitive  electric
generation  services by Exelon  Energy of $27 million as a result of $40 million
from decreased  volume  partially offset by $13 million as a result of increased
prices. In addition,  the termination of the operating agreement for the Clinton
Nuclear Power Station (Clinton) resulted in lower revenues of $14 million.  As a
result of AmerGen  Energy  Company,  LLC's  (AmerGen)  acquisition of Clinton in
December 1999,  the operating  agreement was  terminated  and  accordingly,  the
operations  of Clinton  have been  included  in Equity in  Earnings  (Losses) of
Unconsolidated Affiliates on the Company's Statements of Income since that date.
These  decreases were partially  offset by increased  wholesale  revenues of $28
million as a result of $48  million  associated  with  higher  prices  partially
offset by $20 million associated with lower volume from existing customers.

         Gas  revenues  decreased  $5  million,  or 6%, to $85  million  for the
quarter ended June 30, 2000  compared to the same 1999 period.  The decrease was
primarily  attributable to $7 million as a result of lower prices and $6 million
resulting from the  elimination of the gross receipts tax in connection with gas
restructuring  in  Pennsylvania.  These  decreases were  partially  offset by $8
million from increased volume.

         Infrastructure  services revenues increased $159 million as a result of
the EIS acquisitions which occurred in the fourth quarter of 1999 and the second
quarter of 2000.

Fuel and Energy Interchange Expense
         Fuel and energy  interchange  expense decreased $32 million,  or 6%, to
$469  million  for the  quarter  ended June 30,  2000  compared to the same 1999
period.  The  decrease  was  attributable  to lower fuel and energy  interchange
expenses  associated  with the  generation  business unit of $24 million and the
distribution  business unit of $8 million. As a percentage of revenue,  fuel and
interchange  expenses were 34% as compared to 42% in the  comparable  prior year
period.

         The decrease from the generation  business unit was attributable to $52
million  principally  related to  decreased  volume  from Exelon  Energy  sales,
partially  offset by $29 million of higher fuel and energy  interchange  expense
associated with increased distribution business unit volume primarily related to
the effect of weather  conditions.  The generation  business unit is the primary
source of supply for the distribution business unit,  accordingly,  sales volume
changes at the  distribution  business unit have a direct impact on fuel expense
at the generation  business unit.  The decrease from the  distribution  business
unit  was   primarily   attributable   to  a  decrease  of  $6  million  in  PJM
Interconnection, LLC (PJM) ancillary charges.

Operating and Maintenance Expense
         Operating and maintenance expense (O&M) increased $103 million, or 30%,
to $445  million for the quarter  ended June 30, 2000  compared to the same 1999
period. As a percentage


                                       15
<PAGE>

of revenue,  operating and  maintenance  expenses were 32% as compared to 28% in
the same 1999 period.  The ventures business unit's O&M expenses  increased $145
million related to the  infrastructure  services business as a result of the EIS
acquisitions.  The generation business unit's O&M expenses decreased $33 million
primarily as a result of lower O&M expenses  related to the operating  agreement
for Clinton of $25 million in 1999 and lower  marketing  expenses of $10 million
principally  related to Exelon Energy.  These increases were partially offset by
higher  compensation  expense of $2 million as compared to the same 1999 period.
In addition,  the Company  experienced a decrease in general corporate  expenses
consisting  of  $11  million  of  lower  pension  expense  as a  result  of  the
performance  of the  investments  in the  Company's  pension plan, $4 million of
lower  Year  2000  (Y2K)  remediation  expenditures  and  $3  million  in  lower
compensation expense. These decreases were partially offset by an increase of $9
million in incremental merger expenses.

Depreciation and Amortization Expense
         Depreciation and amortization expense increased $23 million, or 40%, to
$81  million  for the  quarter  ended June 30,  2000  compared  to the same 1999
period. As a percentage of revenue, depreciation and amortization expense was 6%
as  compared  to 5% in the  comparable  prior  year  period.  The  increase  was
primarily  attributable to $12 million  associated with the  commencement of the
amortization  of $5.26 billion of  Competitive  Transition  Charges in 2000. The
increase also included $8 million related to EIS  depreciation  and amortization
expense and $3 million related to increased plant in service.

Taxes Other Than Income
         Taxes other than income  increased $18 million,  or 40%, to $63 million
for the quarter  ended June 30,  2000  compared  to the same 1999  period.  As a
percentage  of  revenue,  taxes other than income were 5%, as compared to 4%, in
the comparable prior year period.  The increase was primarily  attributable to a
$22 million 1999 Capital Stock Tax credit  related to an  adjustment  associated
with the impact of the 1997 restructuring  charge on the Company's equity value.
The  increase  was  partially  offset by lower real  estate  taxes of $2 million
relating to a change in tax laws for utility  property  in  Pennsylvania  and $1
million as a result of the  elimination  of the gross  receipts tax on gas sales
partially offset by a net increase in gross receipts tax on electric sales.

Interest Charges
         Interest charges consist of interest expense,  distributions on Company
Obligated Mandatorily  Redeemable Preferred Securities of a Partnership (COMRPS)
and  Allowance  for Funds Used During  Construction  (AFUDC).  Interest  charges
decreased $1 million, or 1%, to $119 million for the quarter ended June 30, 2000
compared to the same 1999 period.  As a percentage of revenue,  interest charges
were 9% as compared to 10% in the comparable prior year period. The decrease was
primarily  attributable  to the Company's  reduction of long-term  debt with the
proceeds of  transition  bonds  which  reduced  interest  charges by $15 million
partially  offset by the  interest  on the  transition  bonds of $11 million and
lower AFUDC of $2 million.


                                       16
<PAGE>

Equity in Earnings (Losses) of Unconsolidated Affiliates
         Equity in earnings (losses) of unconsolidated  affiliates increased $10
million,  or 91%, to losses of $1 million for the quarter ended June 30, 2000 as
compared  to losses of $11 million in the same 1999  period.  The  increase  was
attributable to $8 million from the Company's equity  investment in AmerGen as a
result of the  acquisitions  of Three Mile Island Unit No. 1 Nuclear  Generating
Facility  (TMI) and  Clinton  in  December  1999 and $2  million  from  improved
performance of the Company's  telecommunications  equity investments as a result
of customer base growth.

Other Income and Deductions
         Other income and deductions  excluding  interest  charges and equity in
earnings (losses) of unconsolidated affiliates decreased $16 million, or 73%, to
income of $6 million  for the  quarter  ended June 30,  2000 as  compared to $22
million in the same 1999 period. The decrease in other income and deductions was
primarily  attributable  to  a  decrease  in  interest  income  of  $16  million
principally related to earnings on unused transition bond proceeds in 1999.

Income Taxes
         The effective tax rate was 38.3% for the quarter ended June 30, 2000 as
compared to 32.6% in the same 1999  period.  The increase in the  effective  tax
rate was primarily a result of the  disproportionate  relationship  of regulated
plant tax  adjustments to income before income taxes and  extraordinary  item in
1999.

Extraordinary Items
         During  the  second   quarter  of  2000,   the   Company   incurred  an
extraordinary  charge  of $3  million,  net of  tax,  consisting  of  prepayment
premiums and the write-off of unamortized  deferred  financing costs  associated
with the  early  retirement  of debt  with a portion  of the  proceeds  from the
issuance of Series 2000-A Transition Bonds in May 2000.

         During  the  second   quarter  of  1999,   the   Company   incurred  an
extraordinary  charge  of $27  million,  net of tax,  consisting  of  prepayment
premiums and the write-off of unamortized  deferred  financing costs  associated
with the  early  retirement  of debt  with a portion  of the  proceeds  from the
issuance of transition bonds in 1999.

Preferred Stock Dividends
         Preferred stock dividends for the quarter ended June 30, 2000 decreased
$2  million,  or 50%, to $2 million as  compared  to the same 1999  period.  The
decrease  was  attributable  to the  retirement  of $37  million of  Mandatorily
Redeemable  Preferred  Stock in August 1999 with a portion of the proceeds  from
the issuance of transition bonds.

Earnings
         Earnings  applicable to common stock increased $53 million,  or 80%, to
$119 million in the second  quarter of 2000.  Earnings per average  common share
increased  $0.34 per share or 100%, to $0.68 per share in the second  quarter of
2000,  reflecting  the  increase  in net income and a decrease  in the  weighted
average  shares of common stock  outstanding  as a result of the use of proceeds
from  the   Company's   April  1999  and  May  2000   stranded   cost   recovery
securitizations.


                                       17
<PAGE>

Six Months Ended June 30, 2000 Compared To Six Months Ended June 30, 1999
Operating Revenues
         Electric revenues  increased $26 million,  or 1%, to $2,170 million for
the six  months  ended  June 30,  2000  compared  to the same 1999  period.  The
increase was  attributable to higher revenues from the generation  business unit
of $47 million partially offset by lower revenues from the distribution business
unit of $21 million.

         The  increase   from  the   generation   business  unit  was  primarily
attributable to $48 million from increased wholesale revenues as a result of $93
million associated with higher prices partially offset by $45 million associated
with lower volume.  In addition,  the sale of  competitive  electric  generation
services by Exelon Energy increased $7 million which was primarily  attributable
to $15 million from increased  prices partially offset by $8 million as a result
of decreased  volume.  These  increases were partially  offset by $14 million of
lower  revenues  related  to the  termination  of the  operating  agreement  for
Clinton.  The  decrease  from  the  distribution  business  unit  was  primarily
attributable  to a decrease  of $30  million  from lower  volume  from  existing
customers  principally as a result of Customer Choice and $11 million related to
the 8%  across-the-board  rate  reduction in 1999 which did not take place until
the first full month of service in 1999. Accordingly,  the six months ended June
30, 1999, included approximately five months of rate reduction at 8% as compared
to the current  period which includes one month of rate reduction at 8% and five
months of rate  reduction at 6%. These  decreases  were  partially  offset by an
increase  of $20  million  related to  additional  volume as a result of weather
conditions.

         Gas revenues decreased $20 million,  or 7%, to $287 million for the six
months ended June 30, 2000  compared to the same 1999  period.  The decrease was
primarily  attributable  to $17  million  as a result  of lower  prices  and $15
million from the  elimination of the gross  receipts tax in connection  with gas
restructuring  in  Pennsylvania.  These  decreases were partially  offset by $11
million from increased volume from new and existing  customers and $1 million of
additional volume as a result of weather conditions.

         Infrastructure  services revenues increased $259 million as a result of
the EIS acquisitions which occurred in the fourth quarter of 1999 and the second
quarter of 2000.

Fuel and Energy Interchange Expense
         Fuel and energy  interchange  expense decreased $28 million,  or 3%, to
$926  million for the six months  ended June 30, 2000  compared to the same 1999
period.  The  decrease  was  attributable  to lower fuel and energy  interchange
expenses  associated with the distribution  business unit of $27 million and the
generation  business unit of $1 million.  As a percentage  of revenue,  fuel and
energy interchange  expenses were 34% as compared to 39% in the comparable prior
year period.

         The  decrease  from  the  distribution   business  unit  was  primarily
attributable  to $31 million of lower PJM ancillary  charges.  The decrease from
the generation business unit was primarily attributable to lower fuel and energy
interchange expenses of $51 million principally related to decreased volume from
Exelon  Energy sales  partially  offset by $38 million of higher fuel and energy
interchange expenses associated with increased cost to supply the distribution



                                       18
<PAGE>

business  unit's  volume  and $8  million  of  additional  interchange  expenses
associated with wholesale operations.

Operating and Maintenance Expense
         O&M expense increased $201 million, or 32%, to $835 million for the six
months ended June 30, 2000 compared to the same 1999 period.  As a percentage of
revenue,  operating and maintenance  expenses were 31% as compared to 26% in the
same 1999 period.  The ventures  business  unit's O&M  expenses  increased  $242
million related to the  infrastructure  services business as a result of the EIS
acquisitions.  The generation business unit's O&M expenses decreased $29 million
primarily as a result of lower O&M expenses  related to the operating  agreement
for Clinton of $25 million in 1999, lower marketing  expenses of $9 million,  $7
million related to the abandonment of an information  system  implementation  in
1999 and  additional  joint-owner  expense of $4 million as compared to the same
1999  period.  These  decreases  were  partially  offset by higher  compensation
expense of $16  million.  In  addition,  the Company  experienced  a decrease in
general corporate expenses of $23 million from lower pension expense as a result
of the  performance  of the  investments  in the Company's  pension plan and $15
million of lower Y2K  remediation  expenditures.  These decreases were partially
offset by an increase of $20 million in incremental merger expenses.

Depreciation and Amortization Expense
         Depreciation and amortization expense increased $47 million, or 41%, to
$161  million for the six months  ended June 30, 2000  compared to the same 1999
period. As a percentage of revenue, depreciation and amortization expense was 6%
as  compared  to 5% in the  comparable  prior  year  period.  The  increase  was
primarily  attributable to $27 million  associated with the  commencement of the
amortization  of $5.26 billion of  Competitive  Transition  Charges in 2000. The
increase also included $14 million related to EIS  depreciation and amortization
expense and $6 million related to increased plant in service.

Taxes Other Than Income
         Taxes other than income  increased $10 million,  or 8%, to $130 million
for the six months ended June 30, 2000  compared to the same 1999  period.  As a
percentage of revenue, taxes other than income were 5% which was consistent with
the comparable prior year period.  The increase was primarily  attributable to a
$22 million 1999 Capital Stock Tax credit  related to an  adjustment  associated
with the impact of the 1997 restructuring  charge on the Company's equity value.
This  increase  was  partially  offset by lower real estate  taxes of $7 million
relating to a change in tax laws for utility  property  in  Pennsylvania  and $4
million as a result of the  elimination  of the gross  receipts tax on gas sales
partially offset by a net increase in gross receipts tax on electric sales.


                                       19
<PAGE>

Interest Charges
         Interest charges consist of interest  expense,  distributions on COMRPS
and AFUDC.  Interest charges increased $23 million,  or 11%, to $224 million for
the six months  ended  June 30,  2000  compared  to the same 1999  period.  As a
percentage of revenue,  interest  charges were 8% which was consistent  with the
comparable  prior year  period.  The  increase  was  primarily  attributable  to
interest  on the  transition  bonds  of $69  million,  partially  offset  by the
Company's  reduction of long-term  debt with the proceeds of  transition  bonds,
which reduced interest charges by $50 million.

Equity in Earnings (Losses) of Unconsolidated Affiliates
         Equity in earnings (losses) of unconsolidated  affiliates increased $26
million,  or 113%,  to earnings of $3 million for the six months  ended June 30,
2000 as compared to losses of $23 million in the same 1999 period.  The increase
of $20 million was primarily  attributable to the Company's equity investment in
AmerGen as a result of the  acquisitions of TMI and Clinton in December 1999 and
$6 million from improved performance of the Company's  telecommunications equity
investments as a result of customer base growth.

Other Income and Deductions
         Other income and deductions  excluding  interest  charges and equity in
earnings (losses) of unconsolidated  affiliates  increased $22 million to income
of $20 million  for the six months  ended June 30, 2000 as compared to a loss of
$2 million in the same 1999 period.  The increase in other income and deductions
was  primarily  attributable  to a  $15  million  write-off,  in  1999,  of  the
investment  in Grays  Ferry  Cogeneration  Partnership  in  connection  with the
settlement of litigation, an increase of $11 million from non-utility operations
and $6 million from the favorable settlement of litigation. These increases were
partially  offset by a decrease in  interest  income on unused  transition  bond
proceeds of $14 million.

Income Taxes
         The  effective  tax  rate  was  37.6%  which  was  consistent  with the
comparable prior year period.

Extraordinary Items
         During  the  second   quarter  of  2000,   the   Company   incurred  an
extraordinary  charge  of $3  million,  net of  tax,  consisting  of  prepayment
premiums and the write-off of unamortized  deferred  financing costs  associated
with the  early  retirement  of debt  with a portion  of the  proceeds  from the
issuance of Series 2000-A Transition Bonds in May 2000.

         During  the  second   quarter  of  1999,   the   Company   incurred  an
extraordinary  charge  of $27  million,  net of tax,  consisting  of  prepayment
premiums and the write-off of unamortized  deferred  financing costs  associated
with the  early  retirement  of debt  with a portion  of the  proceeds  from the
issuance of transition bonds in 1999.

Preferred Stock Dividends
         Preferred  stock  dividends  for the six  months  ended  June 30,  2000
decreased $2 million, or 29%, to $5 million as compared to the same 1999 period.
The decrease was  attributable  to the


                                       20
<PAGE>

retirement of $37 million of Mandatorily  Redeemable  Preferred  Stock in August
1999 with a portion of the proceeds from the issuance of transition bonds.

Earnings
         Earnings  applicable to common stock increased $62 million,  or 28%, to
$281 million for the six months ended June 30, 2000. Earnings per average common
share  increased  $0.52 per share or 49%,  to $1.58 per share for the six months
ended June 30, 2000, reflecting the increase in net income and a decrease in the
weighted  average  shares of common stock  outstanding as a result of the use of
proceeds  from the  Company's  April 1999 and May 2000  stranded  cost  recovery
securitizations.


DISCUSSION OF LIQUIDITY AND CAPITAL RESOURCES

         Cash flows  provided by operating  activities  increased $73 million to
$339  million for the six months ended June 30, 2000 as compared to $266 million
in the same 1999 period. The increase was primarily  attributable to an increase
in changes in working  capital of $57 million and  additional  cash generated by
operations  of $16  million.  The  increase  in changes in working  capital  was
principally related to improvement in cash collections of Exelon Energy accounts
receivable, partially offset by higher cash payments for accounts payable.

         Cash flows used by investing  activities  were $449 million for the six
months  ended June 30, 2000 as compared to $279 million in the same 1999 period.
The increase was attributable to capital expenditures and ventures business unit
investments,   including  the  acquisition  of  four   infrastructure   services
companies.

         Cash flows provided by financing  activities  were $145 million for the
six months  ended June 30,  2000,  as compared to $879  million in the same 1999
period.  The decrease was primarily  attributable  to the  securitization  of $4
billion of stranded cost recovery in March 1999 and the use of related  proceeds
partially offset by the  securitization  of $1 billion of stranded cost recovery
in May 2000 and the use of related proceeds.

         At June 30,  2000,  the Company had  outstanding  $351 million of notes
payable which included $350 million of commercial  paper and $1 million of lines
of credit. At June 30, 2000, the Company had available formal and informal lines
of  bank  credit  aggregating  $100  million  and  available   revolving  credit
facilities  aggregating $900 million which support its commercial paper program.
At June 30, 2000, the Company had $33 million in short-term investments.

         On March 16, 2000,  the PUC issued an order  approving a Joint Petition
for Full  Settlement  of PECO Energy  Company's  Application  for  Issuance of a
Qualified  Rate Order  (QRO)  authorizing  the  Company to  securitize  up to an
additional $1 billion of its authorized stranded cost recovery.  Under the terms
of the Joint Petition for Full Settlement, the Company, through its distribution
business unit,  will provide its retail  customers  with rate  reductions in the
total amount of $60 million  beginning on January 1, 2001.  This rate  reduction
will be effective for calendar year 2001 only.


                                       21
<PAGE>

         On May 2, 2000,  PECO Energy  Transition  Trust (PETT),  an independent
statutory business trust organized under the laws of Delaware and a wholly owned
subsidiary of the Company,  issued an additional $1 billion aggregate  principal
amount of transition  bonds  (Series  2000-A  Transition  Bonds) to securitize a
portion of the Company's authorized stranded cost recovery.  As a result of this
transaction,  the  Company  has  securitized  a total of $5 billion of its $5.26
billion of stranded  cost  recovery  through the issuance by PETT of  transition
bonds.  The  transition  bonds  are  solely  obligations  of  PETT,  secured  by
intangible transition property sold by the Company to PETT concurrently with the
issuance of the  transition  bonds and certain  other  related  collateral.  The
Company has used the proceeds  from the  securitization  to reduce the Company's
stranded costs and related  capitalization.  On May 3, 2000, $502 million of the
proceeds from the Series 2000-A  Transition  Bonds were used to settle a forward
purchase  agreement  that was  entered  into in January  2000  resulting  in the
repurchase of 12 million  shares of common stock.  During May and June 2000, the
Company used $451 million to purchase and/or redeem First and Refunding Mortgage
Bonds,  to reduce other debt,  to  repurchase  accounts  receivable,  and to pay
transaction  expenses.  The  remaining  proceeds  were used to redeem  First and
Refunding Mortgage Bonds on August 1, 2000. The Company currently estimates that
the issuance of the Series  2000-A  Transition  Bonds,  the  application  of the
proceeds  and the 2001  rate  reduction  will  increase  earnings  per  share by
approximately  $0.01  to  $0.02  in  2000  and  reduce  earnings  per  share  by
approximately $0.05 in 2001.

         In June 2000, the Financial  Accounting  Standards  Board (FASB) issued
Statement of  Financial  Accounting  Standards  (SFAS) No. 138  "Accounting  for
Certain Derivative  Instruments and Certain Hedging Activities,  an amendment of
FASB Statement No. 133" (SFAS No. 138).  This standard amends the accounting and
reporting  standards  of SFAS No. 133 for  certain  derivative  instruments  and
certain  hedging  activities.  It also  amends SFAS No. 133 for  decisions  made
arising from the Derivatives  Implementation  Group process. The Company expects
to adopt SFAS No. 133 and SFAS No. 138 on January 1, 2001. The Company is in the
process  of  evaluating  the  impact  of SFAS No.  133 and  SFAS No.  138 on its
financial statements.



YEAR 2000 READINESS DISCLOSURE

         During 1999, the Company successfully addressed,  through its Year 2000
Project (Y2K  Project),  the issue  resulting  from computer  programs using two
digits  rather  than four to define the  applicable  year and other  programming
techniques  that  constrain  date  calculations  or assign  special  meanings to
certain dates.

         The current estimated total cost of the Y2K Project is $61 million, the
majority  of which is  attributable  to  testing.  This  estimate  includes  the
Company's  share of Y2K costs for jointly  owned  facilities.  The total  amount
expended on the Y2K Project  through June 30, 2000 was $58 million.  The Company
is funding the Y2K Project from operating cash flows.

         The Company's  systems  experienced no Y2K difficulties on December 31,
1999 or since  that date.  The  Company's  operations  have not,  to date,  been
adversely  affected by any Y2K difficulties that suppliers or customers may have
experienced.  The Company will continue to monitor its systems for potential Y2K
difficulties through the remainder of 2000.


                                       22
<PAGE>

         For additional  information  regarding the Y2K Readiness Disclosure see
"PART II - ITEM 7. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - Outlook" in the Company's Annual Report on Form 10-K
for the year 1999, as amended by Form 10-K/A filed on April 28, 2000.



FORWARD-LOOKING STATEMENTS

         Except for the historical  information contained herein, certain of the
matters discussed in this Report are forward-looking  statements,  including the
estimated  impact on earnings  per share for 2000 and 2001 from the  issuance of
Series 2000-A  Transition Bonds, the application of the proceeds thereof and the
2001 rate reduction,  and accordingly,  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 notes 7, 8, 9 and 10 of Notes to
Condensed  Consolidated  Financial Statements and other factors discussed in the
Company's  filings  with the  Securities  and Exchange  Commission.  Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of this Report.  The Company  undertakes no obligation
to publicly release any revision to these forward-looking  statements to reflect
events or circumstances after the date of this Report.



















                                       23
<PAGE>


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK


         The Company uses a combination  of fixed rate and variable rate debt to
reduce  interest rate exposure.  Interest rate swaps are used to adjust exposure
when deemed appropriate,  based upon market conditions. These strategies attempt
to provide and maintain the lowest cost of capital.

           In February 2000, the Company entered into forward starting  interest
rate swaps for a notional  amount of $1 billion in  anticipation of the issuance
of the Series 2000-A  Transition  Bonds in the second quarter of 2000. On May 2,
2000, the Company  settled these forward  starting  interest rate swaps and paid
the  counterparties  approximately  $12 million  which was deferred and is being
amortized over the life of the Series 2000-A  Transition Bonds as an increase in
interest expense consistent with the Company's hedge accounting policy.

         At June 30, 2000,  the Company's  interest rate swaps had a fair market
value of $104 million  which was based on the present value  difference  between
the contracted rate and the market rates at June 30, 2000.

         The  aggregate  fair value of the  interest  rate swaps that would have
resulted from a  hypothetical  50 basis point decrease in the spot yield at June
30, 2000 is  estimated to be $68  million.  If the interest  rate swaps had been
terminated at June 30, 2000, this estimated fair value  represents the amount to
be paid by the counterparties to the Company.

         The  aggregate  fair value of the  interest  rate swaps that would have
resulted from a  hypothetical  50 basis point increase in the spot yield at June
30, 2000 is estimated to be $138  million.  If the interest  rate swaps had been
terminated at June 30, 2000, this estimated fair value  represents the amount to
be paid by the counterparties to the Company.

         There were no material changes in the six months ended June 30, 2000 in
the  Company's  quantitative  and  qualitative  disclosures  about  market  risk
associated  with  commodity  risk,  equity  price  risk and  interest  rate risk
associated with variable rate debt from December 31, 1999.

         In June 2000, the Company entered into a  fixed-for-floating  financial
swap in order to hedge the physical gas price risk for August and September 2000
associated with one of its tolling agreements. Pursuant to the swap transaction,
the  Company  will  obtain a fixed  price for natural gas based on a natural gas
index plus a premium. If the market price is above or below the fixed price, the
Company would either receive or pay the counterparty the difference  between the
fixed price and the market  price,  pursuant to the Company's  hedge  accounting
policy.  As of June 30, 2000,  no hedging  gains or losses have been deferred or
recognized.

         For information on Commodity Risk,  Interest Rate Risk and Equity Price
Risk, see "PART II, ITEM 7A. - QUANTITATIVE  AND QUALITATIVE  DISCLOSURES  ABOUT


                                       24
<PAGE>

MARKET  RISK," in the  Company's  1999 Annual  Report on Form 10-K as amended by
Form 10-K/A filed on April 28, 2000.



























                                       25
<PAGE>


PART II - OTHER INFORMATION

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

         On June  27,  2000,  the  Company  held  its  2000  Annual  Meeting  of
Shareholders.

         The Company's common  shareholders  voted to adopt the Merger Agreement
with  122,220,642  common shares (67.4% common shares  outstanding)  voting for;
3,100,290  common  shares  (1.7%  common  shares  outstanding)  voting  against;
1,484,988  common  shares  (0.8%  common  shares  outstanding)  abstaining;  and
25,969,869 common shares (14.3% common shares outstanding) broker non-voting.

         The  following  Class I directors  of the Company were  re-elected  for
terms expiring in 2003:
                               Votes For                  Votes Withheld
                               ---------                  --------------
Richard H. Glanton             149,827,925                2,947,864
Rosemarie B. Greco             149,879,958                2,895,831
Corbin A. McNeill, Jr.         150,148,603                2,627,186
Robert Subin                   149,930,883                2,844,906

         The incumbent  Class II  directors,  with terms  expiring in 2001,  are
Susan W. Catherwood,  G. Fred DiBona,  Jr., R. Keith Elliott,  John M. Palms and
Joseph F. Paquette, Jr. The incumbent Class III directors with terms expiring in
2002, are Daniel L. Cooper, M. Walter D'Alessio and Ronald Rubin.

         Other items voted on by holders of common  stock at the Annual  Meeting
were as follows:
         The  appointment of the firm  PricewaterhouseCoopers  LLP,  independent
certified public accountants,  as auditors of the Company for 2000, was approved
with 150,596,449 common shares (83.0% of common shares  outstanding) voting for;
722,268 common shares (0.4% of common shares  outstanding)  voting against;  and
1,456,972 common shares (0.8% of common shares outstanding) abstaining.

         The  proposal  to  postpone  or  adjourn  the  annual  meeting  was not
submitted to shareholders for a vote.




                                       26
<PAGE>

ITEM 5. OTHER INFORMATION

         On August 3, 2000,  the  Nuclear  Regulatory  Commission  approved  the
request of the Company and Commonwealth  Edison Company, a subsidiary of Unicom,
to transfer the licenses for both companies' nuclear plants to Exelon Generation
Company  which will be the  generating  subsidiary  of Exelon  Corporation,  the
corporation formed for the pending merger of the Company and Unicom.

         As  previously  reported in the 1999 Form 10-K/A,  on December 1, 1999,
the Company filed with the PUC a restructuring  plan for the  implementation  of
gas  deregulation  and customer  choice of gas service  suppliers in its service
territory  effective  July 1,  2000.  On June  29,  2000,  the  PUC  approved  a
Comprehensive Settlement of the Company's restructuring plan.

         Low-level  radioactive  waste  (LLRW)  generated  at  Salem  Generating
Station (Salem),  Limerick Generating Station (Limerick),  Peach Bottom, TMI and
Clinton is shipped to a disposal site located in Barnwell,  South  Carolina.  On
July 1, 2000, New Jersey,  Connecticut  and South  Carolina  formed the Atlantic
Compact.  The formation of the Atlantic  Compact will ensure continued access to
the Barnwell LLRW disposal facility and adequate  radioactive waste disposal for
Salem for the foreseeable future.  Nuclear plants located in states that are not
members of the Atlantic  Compact,  including  Peach  Bottom,  Limerick,  TMI and
Clinton will have their access to Barnwell phased out over an eight-year period.

         As  previously  reported  in the 1999 Form  10-K/A,  the  Company has a
20.99% ownership interest in Keystone Station and a 20.72% ownership interest in
Conemaugh  Station,   coal-fired   mine-mouth  generating  stations  in  western
Pennsylvania  operated  by  Sithe  Energy,  Inc.  In May  2000,  Reliant  Energy
purchased Sithe Energy's interest in those plants and now is the operator.

         As  previously  reported in the Company's  1999 Form 10-K/A,  under the
Nuclear Waste Policy Act of 1982 (NWPA),  the United States Department of Energy
(DOE) is required to begin taking possession of all spent nuclear fuel generated
by the  Company's  nuclear  units for  disposal by no later than 1998.  Based on
recent public  pronouncements,  it is not likely that a permanent  disposal site
will be available for the industry  before 2010, at the earliest.  In July 2000,
the Company  signed an  agreement  with the DOE under which the Company  will be
reimbursed for costs  resulting from the DOE's delay in accepting  spent nuclear
fuel.  The  agreement  applies only to Peach Bottom.  The  agreement  allows the
Company to reduce the charges  paid to the Nuclear  Waste Fund to reflect  costs
reasonably  incurred by the Company due to the DOE's delay.  In accordance  with
the NWPA,  the  Company  pays the DOE one mil ($.001)  per  kilowatthour  of net
nuclear  generation  for the cost of  nuclear  fuel  disposal.  Past and  future
expenditures  associated  with Peach  Bottom's  recently  completed  on-site dry
storage   facility  are  eligible  for  this   reduction  in  future  DOE  fees.
Negotiations of settlements  relating to the Company's  plants will be conducted
on a plant-by-plant basis.




                                       27
<PAGE>


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

         27       -        Financial Data Schedule.

(b)  During the quarter  ended June 30, 2000,  the Company  filed the  following
     Current Reports on Form 8-K:

         Date of earliest event reported:
                  May 2, 2000 reporting information under "ITEM 5. OTHER EVENTS"
                  regarding  the  completion  of the  sale of an  additional  $1
                  billion  in  transition  bonds  securitizing  a portion of the
                  Company's stranded cost recovery.

         Date of earliest event reported:
                  June 8,  2000  reporting  information  under  "ITEM  5.  OTHER
                  EVENTS"   regarding  the   acquisition  of  four   contracting
                  companies by EIS.

         Date of earliest event reported:
                  June 22,  2000  reporting  information  under  "ITEM 5.  OTHER
                  EVENTS"  regarding the approval of the  Company's  merger with
                  Unicom by the PUC.

         Date of earliest event reported:
                  June 27,  2000  reporting  information  under  "ITEM 5.  OTHER
                  EVENTS"  regarding  the  approval of the merger of the Company
                  with Unicom by the shareholders of the Company.


     Subsequent to June 30, 2000 the Company filed the following Current Reports
     on Form 8-K:

         Date of earliest event reported:
                  August 8, 2000  reporting  information  under  "ITEM 5.  OTHER
                  EVENTS" regarding the sale of GPU, Inc.'s Oyster Creek Nuclear
                  Generating Facility to AmerGen for $10 million.

         Date of earliest event reported:
                  August 14, 2000,  reporting  information  under "ITEM 5. OTHER
                  EVENTS"  regarding a definitive  agreement  for the Company to
                  purchase  49.9  percent  of  Sithe  Energies  North  America's
                  outstanding common stock.


                                       28
<PAGE>




                                   Signatures

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




                              PECO ENERGY COMPANY

                               /s/ Michael J. Egan
                               --------------------------------
                                    MICHAEL J. EGAN
                                    Senior Vice President and
                                    Chief Financial Officer
                                    (Chief Accounting Officer)

Date:  August 14, 2000











                                       29