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 September 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           19101
              (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  170,478,507  shares of common  stock  outstanding  on
         October 20, 2000.  At the close of business on October 20,  2000,  each
         share of common  stock of the  Company was  exchanged  for one share of
         common stock of Exelon  Corporation  pursuant to the Agreement and Plan
         of Exchange and Merger among the Company, Exelon Corporation and Unicom
         Corporation.


<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 September 30,      Nine Months Ended September 30,
                                                               --------------------------------      -------------------------------
                                                                     2000            1999              2000             1999
                                                                   -------          -------          -------          -------
OPERATING REVENUES
<S>                                                                <C>              <C>              <C>              <C>
     Electric                                                      $ 1,370          $ 1,674          $ 3,540          $ 3,825
     Gas                                                                79               50              379              363
     Infrastructure Services and Other                                 180                5              447               21
                                                                   -------          -------          -------          -------
TOTAL OPERATING REVENUES                                             1,629            1,729            4,366            4,209
                                                                   -------          -------          -------          -------

OPERATING EXPENSES
     Fuel and Energy Interchange                                       576              786            1,515            1,746
     Operating and Maintenance                                         454              339            1,305            1,015
     Depreciation and Amortization                                      83               57              244              171
     Taxes Other Than Income Taxes                                      67               76              197              196
                                                                   -------          -------          -------          -------
TOTAL OPERATING EXPENSES                                             1,180            1,258            3,261            3,128
                                                                   -------          -------          -------          -------

OPERATING INCOME                                                       449              471            1,105            1,081
                                                                   -------          -------          -------          -------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                 (113)            (108)            (333)            (296)
     Company Obligated Mandatorily Redeemable
       Preferred Securities of a Partnership                            (2)              (4)              (7)             (19)
     Allowance for Funds Used During Construction                        1             --                  2                2
     Equity in Earnings (Losses) of Unconsolidated Affiliates           23               (5)              26              (28)
     Other, Net                                                         22               14               50               31
                                                                   -------          -------          -------          -------

TOTAL OTHER INCOME AND DEDUCTIONS                                      (69)            (103)            (262)            (310)
                                                                   -------          -------          -------          -------

INCOME BEFORE INCOME TAXES AND
     EXTRAORDINARY ITEM                                                380              368              843              771

INCOME TAXES                                                           142              137              316              287
                                                                   -------          -------          -------          -------

INCOME BEFORE EXTRAORDINARY ITEM                                       238              231              527              484

EXTRAORDINARY ITEM - NET OF INCOME TAXES                                (1)            --                 (4)             (27)
                                                                   -------          -------          -------          -------

NET INCOME                                                             237              231              523              457

PREFERRED STOCK DIVIDENDS                                                3                3                8                9
                                                                   -------          -------          -------          -------

EARNINGS APPLICABLE TO COMMON STOCK                                $   234          $   228          $   515          $   448
                                                                   =======          =======          =======          =======

AVERAGE SHARES OF COMMON STOCK OUTSTANDING                             170              187              175              201
                                                                   =======          =======          =======          =======

EARNINGS PER AVERAGE COMMON SHARE:
    BASIC:
       Income Before Extraordinary Item                            $  1.38          $  1.22          $  2.96          $  2.36
       Extraordinary Item                                             --               --              (0.02)           (0.13)
                                                                   -------          -------          -------          -------
       Net Income                                                  $  1.38          $  1.22          $  2.94          $  2.23
                                                                   =======          =======          =======          =======
    DILUTED:
       Income Before Extraordinary Item                            $  1.36          $  1.21          $  2.94          $  2.34
       Extraordinary Income                                           --               --              (0.02)           (0.13)
                                                                   -------          -------          -------          -------
       Net Income                                                  $  1.36          $  1.21          $  2.92          $  2.21
                                                                   =======          =======          =======          =======

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

                                     See Notes to Condensed Consolidated Financial Statements
</TABLE>

                                                                 2
<PAGE>



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

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

CURRENT ASSETS
<S>                                                             <C>             <C>
     Cash and Cash Equivalents                                  $   169         $   228
     Accounts Receivable, Net                                       776             704
     Inventories, at average cost                                   232             206
     Other                                                          180              87
                                                                -------         -------

         Total Current Assets                                     1,357           1,225
                                                                -------         -------


PROPERTY, PLANT AND EQUIPMENT, NET                                5,196           5,049

DEFERRED DEBITS AND OTHER ASSETS
     Competitive Transition Charge                                5,232           5,275
     Recoverable Deferred Income Taxes                              638             638
     Deferred Non-Pension Postretirement Benefits Costs              80              84
     Investments                                                    722             538
     Loss on Reacquired Debt                                         66              71
     Goodwill                                                       192             121
     Other                                                          184             131
                                                                -------         -------

         Total Deferred Debits and Other Assets                   7,114           6,858
                                                                -------         -------

TOTAL ASSETS                                                    $13,667         $13,132
                                                                =======         =======
</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>
                                                                  September 30,          December 31,
                                                                      2000                  1999
                                                                   --------               --------
                                                                  (Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
<S>                                                                <C>                    <C>
     Notes Payable, Bank                                           $    284               $    163
     Long-Term Debt Due Within One Year                                 306                    128
     Accounts Payable                                                   308                    270
     Accrued Expenses                                                   489                    616
     Deferred Income Taxes                                               22                     15
     Other                                                              121                     94
                                                                   --------               --------

         Total Current Liabilities                                    1,530                  1,286
                                                                   --------               --------

LONG-TERM DEBT                                                        6,252                  5,969

DEFERRED CREDITS AND OTHER LIABILITIES
     Deferred Income Taxes                                            2,444                  2,411
     Unamortized Investment Tax Credits                                 275                    286
     Pension Obligation                                                 213                    213
     Non-Pension Postretirement Benefits Obligation                     457                    443
     Other                                                              467                    430
                                                                   --------               --------

         Total Deferred Credits and Other Liabilities                 3,856                  3,783
                                                                   --------               --------

COMPANY OBLIGATED MANDATORILY REDEEMABLE
     PREFERRED SECURITIES OF A PARTNERSHIP                              128                    128
MANDATORILY REDEEMABLE PREFERRED STOCK                                   37                     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)                            301                   (103)
     Treasury Stock, at cost                                         (2,179)                (1,705)
     Accumulated Other Comprehensive Income                              26                      4
                                                                   --------               --------

         Total Shareholders' Equity                                   1,864                  1,910
                                                                   --------               --------


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                         $ 13,667               $ 13,132
                                                                   ========               ========
</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>
                                                                                    Nine Months Ended September 30,
                                                                             --------------------------------------------
                                                                                      2000                  1999
                                                                                    -------               -------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                 <C>                   <C>
     Net Income                                                                     $   523               $   457
     Adjustments to Reconcile Net Income to Net Cash
         Provided by Operating Activities:
     Depreciation and Amortization                                                      335                   246
     Provision for Uncollectible Accounts                                                43                    40
     Extraordinary Item (net of income taxes)                                             4                    27
     Deferred Income Taxes                                                               19                   (15)
     Amortization of Investment Tax Credits                                             (11)                  (11)
     Deferred Energy Costs                                                                6                    43
     Equity in Earnings (Losses) of Unconsolidated Affiliates                           (26)                   28
     Other Items Affecting Operations                                                   (28)                   86
     Changes in Working Capital:
         Accounts Receivable                                                            (20)                 (186)
         Repurchase of Accounts Receivable                                              (50)                 (150)
         Inventories                                                                    (26)                   (6)
         Accounts Payable                                                                19                    15
         Accrued Expenses                                                               (90)                  156
         Other Current Assets and Liabilities                                           (93)                  (70)
                                                                                    -------               -------

CASH FLOWS PROVIDED BY OPERATING ACTIVITIES                                             605                   660
                                                                                    -------               -------


CASH FLOWS FROM INVESTING ACTIVITIES
     Investment in Plant                                                               (435)                 (362)
     Exelon Infrastructure Services Acquisitions, net of cash acquired                  (91)                   --
     Investments in and Advances to Joint Ventures                                       --                   (60)
     Increase in Other Investments                                                      (67)                  (68)
                                                                                    -------               -------

NET CASH FLOWS USED IN INVESTING ACTIVITIES                                            (593)                 (490)
                                                                                    -------               -------


CASH FLOWS FROM FINANCING ACTIVITIES
     Issuance of Long-Term Debt                                                       1,017                 3,997
     Retirement of Long-Term Debt                                                      (545)               (1,068)
     Common Stock Repurchase                                                           (496)               (1,507)
     Change in Short-Term Debt                                                          118                  (403)
     Dividends on Preferred and Common Stock                                           (139)                 (160)
     Retirement of Mandatorily Redeemable Preferred Stock                               (19)                  (37)
     Proceeds from Exercise of Stock Options                                             17                    14
     Retirement of Company Obligated Mandatorily Redeemable
         Preferred Securities of a Partnership                                           --                  (221)
     Repayment of Capital Lease Obligations                                              --                  (139)
     Other Items Affecting Financing                                                    (24)                  (30)
                                                                                    -------               -------

NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES                               (71)                  446
                                                                                    -------               -------


INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                        (59)                  616
                                                                                    -------               -------


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


CASH AND CASH EQUIVALENTS AT END OF PERIOD                                          $   169               $   664
                                                                                    =======               =======
</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
September  30, 2000 and for the three and nine 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 October 10, 2000,  the  Agreement and Plan of Exchange and Merger
was amended and restated (Merger Agreement). On October 20, 2000, the merger was
completed  and all of the shares of the Company were  exchanged on a one-for-one
basis in  accordance  with the  Merger  Agreement.  As a  result  of this  share
exchange,  the Company became a wholly owned  subsidiary of Exelon  Corporation.
The  transaction  is being  accounted  for as a  purchase  with the  Company  as
acquiror.

          Under a comprehensive settlement agreement entered into by the Company
in connection with the approval by the  Pennsylvania  Public Utility  Commission
(PUC) of the merger,  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.



                                       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  cost  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>                        <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 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 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.

           The Company incurred  extraordinary  charges  aggregating $4 million,
net of tax,  consisting of prepayment  premiums and the write-off of unamortized
deferred financing costs associated with the early retirement of debt during the
nine months ended September 30, 2000.

           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 nine
months  ended  September  30, 2000 as compared to the same periods in 1999 is as
follows (in millions):

<TABLE>
<CAPTION>
<S>                          <C>             <C>            <C>            <C>          <C>             <C>
Quarter Ended September 30, 2000 as compared to the Quarter Ended September 30, 1999
------------------------------------------------------------------------------------

                                                                                         Intersegment
                              Distribution     Generation      Ventures     Corporate       Revenues      Consolidated
                              ------------    -----------    ----------     ----------   ------------    -------------
Revenues:
    2000                      $    877        $   901        $    193       $     -      $  (342)        $ 1,629
    1999                      $    882        $ 1,089        $      7       $     -      $  (249)        $ 1,729
EBIT (a):
    2000                      $    277        $   267        $     (9)      $   (41)                     $   494
    1999                      $    390        $   140        $     (9)      $   (41)                     $   480


Nine Months Ended September 30, 2000 as compared to Nine Months Ended September 30, 1999
----------------------------------------------------------------------------------------


Revenues:
    2000                      $  2,496        $2,125         $    469        $    -      $  (724)        $ 4,366
    1999                      $  2,535        $2,285         $     16        $    -      $  (627)        $ 4,209
EBIT (a):
    2000                      $    928        $  412         $    (21)       $ (138)                     $ 1,181
    1999                      $  1,055        $  197         $    (46)       $ (122)                     $ 1,084
Total Assets:
   September 30, 2000         $ 10,629        $1,837         $    781        $  420                      $13,667
   December 31, 1999          $ 10,294        $1,779         $    640        $  419                      $13,132

<FN>
(a) EBIT - Earnings Before Interest and Income Taxes.
</FN>
</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           Nine Months Ended
                                           September 30,               September 30,
                                           -------------               -------------
                                        2000           1999         2000         1999
                                        ----           ----         ----         ----
<S>                                      <C>            <C>          <C>           <C>
Average Common Shares Outstanding        170            187          175           201

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

Potential Average Dilutive
  Common Shares Outstanding              172            188          176           202
                                     =======        =======      =======       =======
</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 designated  accounts  receivable  until November 2000. 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 from
$275 million to $225 million.

         At September 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  maintenance  of a minimum  level of
eligible accounts  receivable which, if not met, requires the Company to deposit
cash with the financial  institution.  At September 30, 2000, these requirements
were met.



                                       9
<PAGE>

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.

         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 Peach Bottom Atomic Power Station (Peach Bottom).  The Company's  portion of
the reimbursement is approximately $16 million. The agreement allows the Company
to reduce the charges paid to the Nuclear Waste Fund to reflect costs reasonably
incurred by the Company due to the DOE's delay.  In accordance  with the Nuclear
Waste  Policy Act of 1982  (NWPA),  the Company pays the DOE one mil ($.001) per
kilowatthour  of net nuclear  generation  for the cost of nuclear fuel disposal.
Past and future costs 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 other nuclear 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
September 30, 2000, the Company's  accrual for  environmental  investigation and
remediation  costs was $55 million,  including $30 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  September  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        $ 27           7       $ 207
2001                  19         195          16         627
2002                  27         131          10         460
2003                  28         138           6         233
2004                  27         116           3         107
Thereafter           135          82           5         167
                              ------                 -------
Total                          $ 689                 $ 1,801
                              ======                 =======

                                                    Transmission
                             Capacity    Capacity     Rights
                            Purchases     Sales     Purchases
                            in Dollars  in Dollars  in Dollars
                           -----------  ----------  ----------
2000                            $ 10         $ 5        $ 24
2001                              83          32          60
2002                             149          21          63
2003                             176          16          22
2004                             167           3          21
Thereafter                     1,833          10          79
                            --------      ------      ------
Total                        $ 2,418        $ 87       $ 269
                            ========      ======      ======


         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.




                                       11
<PAGE>

8. NEW ACCOUNTING PRONOUNCEMENTS
         In June 1998, the Financial  Accounting  Standards  Board (FASB) issued
Statement of Financial  Accounting  Standards  (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. The Company  expects to adopt SFAS No. 133
and SFAS No.  138 on  January  1,  2001.  The  Company  initiated  a process  to
implement SFAS No. 133 and SFAS No. 138 by evaluating all of the  derivatives of
the  Company  for SFAS No.  133 and SFAS No.  138  implications.  This  phase of
implementation  has  been  completed  and  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  $91 million,  net of cash acquired,  including  stock of EIS. The
acquisitions  were accounted for using the purchase  method of  accounting.  The
initial  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. SITHE ENERGIES ACQUISITION
         On August 14,  2000,  the  Company  signed a  definitive  agreement  to
purchase 49.9% of Sithe  Energies North  America's  (Sithe)  outstanding  common
stock for $682 million,  with an option to purchase the  remaining  common stock
outstanding exercisable between two and five years after the date of closing, at
a price to be determined based on prevailing market conditions.

         Sithe is an  independent  power  generator in North  America  utilizing
primarily  fossil and hydro  generation.  The  purchase  involves  approximately
10,000 megawatts (MW) of generation  consisting of 3,800 MW of existing merchant
generation,  2,500 MW under construction,  and another 3,700 MW of generation in
various  stages  of  development,  as well as  Sithe's  domestic  marketing  and
development   businesses.   The  generation  assets  are  located  primarily  in
Massachusetts and New York, but also include plants in Pennsylvania, California,
Colorado and Idaho, as well as Canada and Mexico.



                                       12
<PAGE>


11. 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 (Oyster Creek) from GPU, Inc. (GPU) for
$10 million.  Under the terms of the purchase agreement,  GPU has agreed to 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.  In addition,
AmerGen assumed 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 is purchasing  the  electricity  generated by Oyster
Creek pursuant to a power purchase agreement.
















                                       13
<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 October 10, 2000,  the  Agreement and Plan of Exchange and Merger
was amended and restated (Merger  Agreement).  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 October  20,
2000,  the  merger  was  completed  and all of the  shares of the  Company  were
exchanged on a one-for-one basis in accordance with the Merger  Agreement.  As a
result of this share exchange,  the Company became a wholly owned  subsidiary of
Exelon  Corporation  (Exelon).  The  transaction  is  being  accounted  for as a
purchase  with the  Company  as  acquiror.  In the fourth  quarter of 2000,  the
Company  expects to incur certain  charges,  including  severance  costs,  stock
compensation costs and settlement charges related to the merger. As of September
30, 2000,  the Company is unable to estimate the aggregate  financial  statement
impact of these charges.

         Under a comprehensive  settlement agreement entered into by the Company
in connection with the approval by the  Pennsylvania  Public Utility  Commission
(PUC) of the merger,  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.

         In  connection  with the  regulatory  approvals  of the merger,  Exelon
received  authorization to restructure the operations of the Company and Unicom.
Exelon is currently  contemplating  restructuring  the Company's  generation and
ventures  business  units  into  newly  formed  subsidiaries  of Exelon in 2001.
Accordingly,  the operations of the Company after the contemplated restructuring
would essentially represent the Company's distribution business unit.

         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 September 30, 2000,  approximately 17% of
the  Company's  residential  load,  46% of its  commercial  load  and 41% 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
99,000 business and residential customers located throughout Pennsylvania.



                                       14
<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.  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
acquisitions  combined  with EIS'  acquisitions  in the  fourth  quarter of 1999
contributed to the growth in revenue,  operating and maintenance  (O&M) expenses
and depreciation  and amortization  expenses in the three and nine month periods
ended September 30, 2000 as compared to the same prior year periods.

         In the third quarter of 2000, the Company  reclassified  the results of
operations  for  its  non-utility   businesses  in  its  Condensed  Consolidated
Statements of Income from other income and deductions to revenue and O&M expense
for the three and nine month periods ended September 30, 2000 and 1999.





























                                       15
<PAGE>

RESULTS OF OPERATIONS

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

       Quarter          Nine Months                                                 Quarter       Nine Months
        Ended             Ended                                                      Ended          Ended
     September 30,    September 30,                                               September 30,   September 30,
     -------------    -------------                                               -------------   -------------
     2000     1999    2000     1999
     ----     ----    ----     ----
<S>    <C>     <C>      <C>      <C>      <C>                                      <C>                <C>
       84%     97%      81%      91%       Electric                                  (18%)             (7%)
        5%      3%       9%       8%       Gas                                        58%               4%
       11%      --      10%       1%       Infrastructure Services and Other       3,500%           2,029%
    ------ -------   ------  -------

      100%    100%     100%     100%       Total Operating Revenues                   (6%)              4%
    ------ -------   ------  -------

       35%     46%      35%      41%       Fuel and Energy Interchange               (27%)            (13%)
       28%     20%      30%      24%       Operating and Maintenance                  34%              29%
        5%      3%       6%       4%       Depreciation and Amortization              46%              43%
        4%      4%       4%       5%       Taxes Other Than Income                   (12%)              1%
    ------ -------   ------  -------
       72%     73%      75%      74%       Total Operating Expenses                   (6%)              4%
    ------ -------   ------  -------

       28%     27%      25%      26%       Operating Income                           (5%)              2%
    ------ -------   ------  -------

       (7%)    (7%)     (8%)     (8%)      Interest Charges                            2%               8%
                                           Equity in Earnings (Losses) of
        1%      --       1%      (1%)        Unconsolidated Affiliates               560%             193%
        1%      1%       1%       1%       Other, Net                                 57%              61%
    ------ -------   ------  -------

                                           Income Before Income Taxes and
       23%     21%      19%      18%         Extraordinary Item                        3%               9%
        9%      8%       7%       6%       Income Taxes                                4%              10%
    ------ -------   ------  -------
       14%     13%      12%      12%       Income Before Extraordinary Item            3%               9%
       --      --       --       (1%)      Extraordinary Items                      (100%)            (85%)
    ------ -------   ------  -------

      14%      13%      12%      11%       Net Income                                  3%              14%
    ====== =======   ======  =======
</TABLE>


Third Quarter 2000 Compared To Third Quarter 1999
Operating Revenues
         Electric revenues decreased $304 million, or 18%, to $1,370 million for
the quarter  ended  September  30, 2000  compared to the same 1999  period.  The
decrease was attributable to lower revenues from the generation business unit of
$280  million and lower  revenues  from the  distribution  business  unit of $24
million.

         The decrease in electric revenues from the generation business unit was
primarily  attributable to lower wholesale  revenues of $166 million as a result
of $128 million  associated  with lower volume and $38 million  associated  with
lower prices. The decrease was also attributable to reduced sales of competitive
electric  generation services by Exelon Energy of $65



                                       16
<PAGE>

million as a result of $74 million from decreased  volume partially offset by $9
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 $49 million.  As a result of the acquisition by AmerGen Energy
Company,  LLC (AmerGen) 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.  The  decrease  from the  distribution
business  unit was primarily  attributable  to $103 million as a result of lower
volume from the effects of weather conditions partially offset by an increase of
$79 million  attributable to customers selecting the distribution  business unit
as their electric generation supplier and rate adjustments.

         Gas  revenues  increased  $29  million,  or 58%, to $79 million for the
quarter ended September 30, 2000 compared to the same 1999 period.  The increase
in gas  revenues  was  primarily  attributable  to $11  million  resulting  from
increased volume, $11 million from wholesale sales of natural gas and $7 million
as a result of higher prices.

         Infrastructure  services and other revenues increased $175 million,  to
$180 million primarily as a result of the EIS acquisitions in the fourth quarter
of 1999 and the second quarter of 2000.

Fuel and Energy Interchange Expense
         Fuel and energy interchange  expense decreased $210 million, or 27%, to
$576 million for the quarter ended  September 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 $228 million partially
offset  by an  increase  in  energy  interchange  expenses  in the  distribution
business  unit of $18  million.  As a  percentage  of  revenue,  fuel and energy
interchange  expenses were 35% as compared to 46% in the  comparable  prior year
period.

         The decrease in fuel and energy interchange expense from the generation
business  unit was  primarily  attributable  to $153 million from Exelon  Energy
sales  principally  related  to $162  million  as a result of  decreased  volume
partially offset by $9 million as a result of increased prices. The decrease was
also attributable to $101 million from wholesale operations  principally related
to $73  million as a result of  decreased  volume and $28 million as a result of
decreased  prices.  These decreases were partially  offset by an increase of $32
million for the cost to supply the  distribution  business  unit. 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 and energy interchange  expense of the generation business
unit.   The  increase  from  the   distribution   business  unit  was  primarily
attributable to $8 million principally related to wholesale sales of natural gas
and $7 million in PJM Interconnection, LLC (PJM) ancillary charges.






                                       17
<PAGE>

Operating and Maintenance Expense
         O&M expense  increased  $115  million,  or 34%, to $454 million for the
quarter  ended  September  30,  2000  compared  to the same  1999  period.  As a
percentage of revenue, O&M expenses were 28% as compared to 20% in the same 1999
period. The ventures business unit's O&M expenses increased $158 million related
to the infrastructure services business as a result of the EIS acquisitions. The
generation  business  unit's O&M expenses  decreased $30 million  primarily as a
result of O&M expenses  related to the  operating  agreement  for Clinton of $19
million in 1999, $8 million related to the abandonment of an information  system
implementation in 1999, lower joint-owner  expenses of $7 million and $5 million
of lower  administrative  and general expenses related to the unregulated retail
sales  of  electricity.   These  decreases  were  partially   offset  by  higher
compensation expense of $6 million and higher non-utility  operations expense of
$3 million.  The distribution  business unit's O&M expenses decreased $3 million
primarily  as a  result  of $11  million  of  expenses  related  to  restoration
activities as a result of Hurricane Floyd in 1999 partially  offset by increases
in miscellaneous O&M expenses.  In addition,  the Company experienced a decrease
in general  corporate  expenses  consisting  of $12 million  from lower  pension
expense  as a result of the  performance  of the  investments  in the  Company's
pension plan and $5 million of lower Year 2000 (Y2K) remediation expenditures in
1999  partially  offset by an  increase  of $7  million  in  incremental  merger
expenses.

Depreciation and Amortization Expense
         Depreciation and amortization expense increased $26 million, or 46%, to
$83 million for the quarter  ended  September 30, 2000 compared to the same 1999
period. As a percentage of revenue, depreciation and amortization expense was 5%
as  compared  to 3% in the  comparable  prior  year  period.  The  increase  was
primarily  attributable to $16 million  associated with the  commencement of the
amortization  of $5.26 billion of  Competitive  Transition  Charges in 2000. The
increase also included $9 million related to EIS  depreciation  and amortization
expense and $1 million related to increased plant in service.

Taxes Other Than Income
         Taxes other than income  decreased  $9 million,  or 12%, to $67 million
for the quarter ended  September 30, 2000 compared to the same 1999 period.  The
decrease  was  primarily  attributable  to lower real estate taxes of $3 million
relating to a change in tax laws for utility  property  in  Pennsylvania  and $3
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
increased $2 million, or 2%, to $114 million for the quarter ended September 30,
2000 compared to the same 1999 period.  The increase was primarily  attributable
to  interest on the Series  2000-A  Transition  Bonds of $18  million  partially
offset  by the  Company's  reduction  of  long-term  debt with the  proceeds  of
transition bonds which reduced interest charges by $15 million.



                                       18
<PAGE>

Equity in Earnings (Losses) of Unconsolidated Affiliates
         Equity in earnings (losses) of unconsolidated  affiliates increased $28
million to earnings of $23 million for the quarter  ended  September 30, 2000 as
compared  to losses of $5  million in the same 1999  period.  The  increase  was
primarily  attributable  to $42 million of earnings  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 partially
offset by $12 million of increased losses from the Company's  telecommunications
equity  investments  principally as a result of costs  associated  with customer
base growth.

Other Income and Deductions
         Other income and deductions  excluding  interest  charges and equity in
earnings (losses) of unconsolidated affiliates increased $8 million to income of
$22 million for the quarter ended  September 30, 2000 as compared to $14 million
in the same 1999  period.  The  increase  in other  income  and  deductions  was
primarily  attributable to gains on sales of investments of $9 million partially
offset by a decrease in interest income of $2 million.

Income Taxes
         The effective  tax rate was 37.4% for the quarter  ended  September 30,
2000 as compared to 37.2% in the same 1999 period.

Extraordinary Items
         During the third quarter of 2000, the Company incurred an extraordinary
charge of $1 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.

Preferred Stock Dividends
         Preferred stock dividends for the quarter ended September 30, 2000 were
consistent with the comparable  prior year. In August 2000, the Company redeemed
$19 million of Mandatorily Redeemable Preferred Stock.

Earnings
         Earnings  applicable  to common stock  increased $6 million,  or 3%, to
$234 million in the third quarter of 2000.  Earnings per average common share on
a fully  diluted basis  increased  $0.15 per share or 12%, to $1.36 per share in
the third 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.


                                       19
<PAGE>



Nine Months Ended September 30, 2000 Compared To Nine Months Ended September 30,
1999
Operating Revenues
         Electric revenues decreased $285 million,  or 7%, to $3,540 million for
the nine months ended  September 30, 2000 compared to the same 1999 period.  The
decrease was attributable to lower revenues from the generation business unit of
$240  million and lower  revenues  from the  distribution  business  unit of $45
million.

         The decrease in electric revenues from the generation business unit was
primarily attributable to $100 million from lower wholesale revenues as a result
of $150 million  associated  with lower volume  partially  offset by $50 million
associated  with higher prices.  In addition,  the sale of competitive  electric
generation  services by Exelon Energy  decreased $72 million which was primarily
attributable to $97 million as a result of decreased  volume partially offset by
$25 million from increased prices. In addition, the termination of the operating
agreement for Clinton  resulted in lower  revenues of $62 million.  The decrease
from the distribution business unit was primarily  attributable to a decrease of
$83 million as a result of lower  volume from the effects of weather  conditions
partially  offset  by an  increase  of $38  million  attributable  to  customers
selecting the distribution  business unit as their electric  generation supplier
and rate adjustments.

         Gas revenues increased $16 million, or 4%, to $379 million for the nine
months ended  September 30, 2000 compared to the same 1999 period.  The increase
in gas  revenues  was  primarily  attributable  to $22  million  resulting  from
increased  volume from new and existing  customers,  $11 million from  wholesale
sales of natural gas and $4 million  resulting from increased  volume related to
weather  conditions.  These increases were partially  offset by $15 million from
the elimination of the gross receipts tax in connection  with gas  restructuring
in Pennsylvania and $9 million as a result of lower prices.

         Infrastructure  services and other  revenues  increased $426 million to
$447 million primarily as a result of the EIS acquisitions in the fourth quarter
of 1999 and the second quarter of 2000.

Fuel and Energy Interchange Expense
         Fuel and energy interchange  expense decreased $231 million, or 13%, to
$1,515 million for the nine months ended September 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 $227 million and the
distribution  business unit of $4 million. As a percentage of revenue,  fuel and
energy interchange  expenses were 35% as compared to 41% in the comparable prior
year period.

         The decrease in fuel and energy interchange expense from the generation
business  unit was  primarily  attributable  to $207 million from Exelon  Energy
sales  principally  related  to $240  million  as a result of  decreased  volume
partially  offset by $33 million as a result of increased  prices.  The decrease
was also  attributable  to $93 million  from  wholesale  operations  principally
related  to $92  million  as a result of  decreased  volume  and $1 million as a
result of decreased prices. These decreases were partially offset by an increase
of $70 in the cost to supply the


                                       20
<PAGE>

distribution business unit. The decrease from the distribution business unit was
primarily  attributable to $24 million in lower PJM  Interconnection,  LLC (PJM)
ancillary  charges  partially  offset by an increase of $15 million  principally
related to wholesale sales of natural gas.

Operating and Maintenance Expense
         O&M expense  increased $290 million,  or 29%, to $1,305 million for the
nine months ended  September  30, 2000  compared to the same 1999  period.  As a
percentage of revenue, O&M expenses were 30% as compared to 24% in the same 1999
period. The ventures business unit's O&M expenses increased $416 million related
to the infrastructure services business as a result of the EIS acquisitions. The
generation  business  unit's O&M expenses  decreased $94 million  primarily as a
result of O&M expenses  related to the  operating  agreement  for Clinton of $44
million  in 1999,  lower  non-utility  operations  expense of $21  million,  $15
million related to the abandonment of two information systems implementations in
1999, $14 million related to lower  administrative  and general expenses related
to the  unregulated  retail sales of  electricity,  $11 million related to lower
joint-owner  expenses and $8 million associated with the write-off of excess and
obsolete  inventory in 1999.  These  decreases were  partially  offset by higher
compensation  expense of $19 million in the  comparable  prior year period.  The
distribution  business unit's O&M expenses  increased $1 million  primarily as a
result of $7 million higher compensation expense partially offset by $11 million
of  additional  expenses  related  to  restoration  activities  as a  result  of
Hurricane  Floyd in 1999.  In addition,  the Company  experienced  a decrease in
general corporate expenses of $35 million from lower pension expense as a result
of the  performance  of the  investments  in the Company's  pension plan and $23
million of lower Y2K  remediation  expenditures.  These decreases were partially
offset by an increase of $28 million in incremental merger expenses.

Depreciation and Amortization Expense
         Depreciation and amortization expense increased $73 million, or 43%, to
$244 million for the nine months ended  September  30, 2000 compared to the same
1999 period. As a percentage of revenue,  depreciation and amortization  expense
was 6% as compared to 4% in the comparable  prior year period.  The increase was
primarily  attributable to $43 million  associated with the  commencement of the
amortization  of $5.26 billion of  Competitive  Transition  Charges in 2000. The
increase also included $23 million related to EIS  depreciation and amortization
expense and $7 million related to increased plant in service.



                                       21
<PAGE>

Taxes Other Than Income
         Taxes other than income  increased  $1 million,  or 1%, to $197 million
for the nine months ended  September  30, 2000 compared to the same 1999 period.
As a percentage of revenue, taxes other than income were 4% as compared to 5% in
the comparable prior year period.  The increase was primarily  attributable to a
$22 million capital stock tax credit in 1999 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 $10 million
relating to a change in tax laws for utility  property  in  Pennsylvania  and $7
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 increased $25 million,  or 8%, to $338 million for the
nine months  ended  September  30, 2000  compared to the same 1999  period.  The
increase was primarily  attributable to interest on the transition  bonds of $86
million  partially offset by the Company's  reduction of long-term debt with the
proceeds of transition bonds, which reduced interest charges by $65 million.

Equity in Earnings (Losses) of Unconsolidated Affiliates
         Equity in earnings (losses) of unconsolidated  affiliates increased $54
million to earnings of $26 million for the nine months ended  September 30, 2000
as compared to losses of $28 million in the same 1999  period.  The increase was
primarily  attributable  to $61 million of earnings  from the  Company's  equity
investment  in AmerGen  as a result of the  acquisitions  of TMI and  Clinton in
December  1999  partially  offset by $7 million  of  increased  losses  from the
Company's telecommunications equity investments principally as a result of costs
associated with customer base growth.

Other Income and Deductions
         Other income and deductions  excluding  interest  charges and equity in
earnings (losses) of unconsolidated  affiliates  increased $19 million to income
of $50 million for the nine months ended  September  30, 2000 as compared to $31
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,  gains on sales of investments of $8 million and $6 million from the
favorable  settlement of litigation.  These increases were partially offset by a
decrease in interest income of $9 million.

Income Taxes
         The effective tax rate was 37.5% as compared to 37.2% in the comparable
prior year period.


                                       22
<PAGE>

Extraordinary Items
         The Company incurred  extraordinary charges aggregating $4 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 nine months ended September 30, 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 nine months ended September 30, 2000
decreased $1 million, or 11%, to $8 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. In addition,  the Company redeemed $19 million
of Mandatorily Redeemable Preferred Stock in August 2000.

Earnings
         Earnings  applicable to common stock increased $67 million,  or 15%, to
$515 million for the nine months ended September 30, 2000.  Earnings per average
common share on a fully diluted basis increased $0.71 per share or 32%, to $2.92
per share for the nine months ended September 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  decreased $55 million to
$605  million for the nine months ended  September  30, 2000 as compared to $660
million in the same 1999 period.  The decrease was primarily  attributable  to a
net  decrease  in  changes  in  working  capital  of $19  million  and less cash
generated  by  operations  of $36  million.  The  decrease in changes in working
capital was  principally  related to improvement  in cash  collections of Exelon
Energy  accounts  receivable and lower  repurchases of accounts  receivable with
transition  bond  proceeds  partially  offset by the timing of cash payments for
accrued expenses.

         Cash flows used by investing  activities were $593 million for the nine
months  ended  September  30, 2000 as compared to $490  million in the same 1999
period.  The  increase was  attributable  to capital  expenditures  and ventures
business  unit   investments,   including  the   acquisition   by  EIS  of  four
infrastructure  services  companies  partially  offset  by  investments  in  and
advances to joint ventures in 1999.

         Cash flows used in financing  activities  were $71 million for the nine
months ended September 30, 2000, as compared to cash flows provided by financing
activities  of $446 million


                                       23
<PAGE>

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 a portion of the related proceeds  partially offset by the  securitization of
$1  billion  of  stranded  cost  recovery  in May  2000  and the use of  related
proceeds.

         At September  30,  2000,  the Company had  outstanding  $284 million of
notes payable which included $282 million of commercial  paper and $2 million of
lines of credit.  At September 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  September  30,  2000,  the  Company  had $2 million in  short-term
investments.

         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,  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  securitizations  to reduce the  Company's  stranded  costs and related
capitalization.  The proceeds of the Series 2000-A Transition Bonds were used to
repurchase 12 million share of common  stock,  to retire $422 million  principal
amount of debt,  to  repurchase  $50 million of accounts  receivable  and to pay
transaction  expenses.  In connection with the PUC's approval of the issuance of
the Series  2000-A  Transition  Bonds,  the  Company,  through its  distribution
business unit,  agreed to 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.

         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. The Company  expects to adopt SFAS No. 133
and SFAS No.  138 on  January  1,  2001.  The  Company  initiated  a process  to
implement SFAS No. 133 and SFAS No. 138 by evaluating all of the  derivatives of
the  Company  for SFAS No.  133 and SFAS No.  138  implications.  This  phase of
implementation  has  been  completed  and  the  Company  is in  the  process  of
evaluating  the  impact  of SFAS  No.  133 and  SFAS  No.  138 on its  financial
statements.


                                       24
<PAGE>

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  September  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.

         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
application of the proceeds of the Series 2000-A  Transition  Bonds 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 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.


                                       25
<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 September  30, 2000,  the  Company's  interest rate swaps had a fair
market  value of $78  million  which was based on the present  value  difference
beween the contracted rate and the market rates at September 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
September  30, 2000 is estimated to be $43 million.  If the interest  rate swaps
had been terminated at September 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
September 30, 2000 is estimated to be $112  million.  If the interest rate swaps
had been terminated at September 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 nine months ended  September 30,
2000 in the Company's quantitative and qualitative disclosures about market risk
associated with commodity  price risk,  equity price risk and interest rate risk
associated with variable rate debt from December 31, 1999.

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


                                       26
<PAGE>


PART II - OTHER INFORMATION

ITEM 5. OTHER INFORMATION

         On October 18, 2000,  the Company filed a Competitive  Default  Service
(CDS)  Coordination  Agreement with the PUC,  pursuant to which the Company will
assign to NewPower Company  (NewPower),  299,300 randomly  selected  residential
non-shopping  customers.  Customers  who have  been  assigned  may  chose not to
participate in CDS or may,  without  charge or penalty,  return to the Company's
provider  of last  resort  service  or switch  to  another  electric  generation
supplier (EGS). The Company and NewPower have filed a joint petition  requesting
PUC  approval  by  November  1,  2000.  The joint  petition  also  requests  PUC
confirmation  that all  299,300  customers  assigned to CDS would be included in
calculating  the  35%  market  share  threshold  requirement  contained  in  the
Company's  Final   Restructuring   Order.   Under  the  market  share  threshold
requirement,  if less  than  35% of the  Company's  residential  and  commercial
customers  have  chosen an EGS by  January  1,  2001,  the  number of  customers
sufficient to meet the required  threshold  level will be randomly  selected and
assigned to an EGS through a PUC-determined process. The Company does not expect
that the CDS  Coordination  Agreement will have a material adverse effect on the
Company's operations or financial condition.














                                       27
<PAGE>


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

          2-1  -    Amended and Restated  Agreement  and Plan of Merger dated as
                    of October  10,  2000,  among PECO  Energy  Company,  Exelon
                    Corporation and Unicom Corporation.

          10-1 -    Stock Purchase  Agreement  among Exelon  (Fossil)  Holdings,
                    Inc.,  as Buyer,  and The  Stockholders  of Sithe  Energies,
                    Inc., as Sellers, and Sithe Energies, Inc.

          27   -    Financial Data Schedule.

(b)      During the quarter  ended  September  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.

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

         Date of earliest event reported:
                  August 15,  2000  reporting  information  under "ITEM 5. OTHER
                  EVENTS" regarding  presentation/webcast  to financial analysts
                  and other interested parties on the Sithe Energies Investment.

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

         Date of earliest event reported:
                  October 19, 2000  reporting  information  under "ITEM 5. OTHER
                  EVENTS"  regarding the approval by the Securities and Exchange
                  Commission  of the merger  between the Company and Unicom into
                  Exelon Corporation.

         Date of earliest event reported:
                  October 20, 2000  reporting  information  under "ITEM 5. OTHER
                  EVENTS"  regarding the  completion  of the merger  between the
                  Company and Unicom into Exelon Corporation.

         Date of earliest event reported:
                  October 24, 2000  reporting  information  under "ITEM 5. OTHER
                  EVENTS" regarding the Company's earnings release for the third
                  quarter of 2000.








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

Date:  November 3, 2000





















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