14. Corporate Restructuring and Plant Retirements (Exelon, Generation, ComEd and PECO)

The Registrants provide severance and health and welfare benefits to terminated employees primarily based upon each individual employee's years of service and compensation level. The Registrants accrue amounts associated with severance benefits that are considered probable and that can be reasonably estimated.

The following tables present severance benefits expenses, recorded as operating and maintenance expense in relation to the announced job reductions, for the years ended December 31, 2011, 2010 and 2009:

For the Year Ended December 31,		Generation		ComEd		PECO		Other		Exelon
2011 - Plant retirements	$	4	$	¯	$	¯	$	¯	$	4
2010 - Plant retirements		4		¯		¯		¯		4
2009 - Plant retirements		7		¯		¯		¯		7
2009 - Corporate restructuring (a)(b)		11		19		3		1		34

(a) The amounts above include $7 million, $4 million, and $2 million at Generation, ComEd and PECO, respectively, for amounts billed through intercompany allocations for the year ended December 31, 2009.

(b) The severance benefits costs include $1 million of stock compensation expense collectively at Generation and ComEd for which the obligation is recorded in equity for the year ended December 31, 2009. Severance benefits also include $4 million and $2 million at Exelon and ComEd, respectively, of contractual termination benefits expense for which the obligation is recorded in other postretirement benefits.

Corporate restructuring (Exelon, Generation, ComEd and PECO). In June 2009, Exelon announced a restructured senior executive team and major spending cuts, including the elimination of approximately 500 employee positions. Exelon eliminated approximately 400 corporate support positions, mostly located at corporate headquarters, and 100 management level positions at ComEd, the majority of which was completed by September 30, 2009. These actions were in response to the continuing economic challenges confronting all parts of Exelon's business and industry especially in light of the commodity-driven nature of Generation's markets, necessitating continued focus on cost management through enhanced efficiency and productivity.

Exelon recorded a pre-tax charge for estimated salary continuance and health and welfare severance benefits of $40 million in June 2009 as a result of the planned job reductions. Subsequent to June 2009, Exelon recorded a net pre-tax credit of approximately $6 million, which included a $10 million reduction in estimated salary continuance and health and welfare severance benefits, offset by $4 million of expense for contractual termination benefits. Cash payments under the plan began in July 2009 and were completed as of December 31, 2011.

The following table presents the activity of severance obligations for the corporate restructuring from January 1, 2010 through December 31, 2011, excluding obligations recorded in equity:

Severance Benefits Obligation		Generation		ComEd		PECO		Other		Exelon
Balance at January 1, 2010	$	3	$	7	$	1	$	8	$	19

Cash payments		(3)		(7)		(1)		(7)		(18)

Balance at December 31, 2010		¯		¯		¯		1		1

Cash payments		¯		¯		¯		(1)		(1)

Balance at December 31, 2011	$	¯	$	¯	$	¯	$	¯	$	¯

Plant Retirements (Exelon and Generation). On December 8, 2010, in connection with the executed Administrative Consent Order (ACO) with the NJDEP, Exelon announced that Generation will permanently cease generation operations at Oyster Creek by December 31, 2019. See Note 18 for additional information regarding the closure of Oyster Creek.

In 2009, Exelon announced its intention to permanently retire three coal-fired generating units and one oil/gas-fired generating unit, effective May 31, 2011, in response to the economic outlook related to the continued operation of these four units. However, PJM determined that transmission reliability upgrades would be necessary to alleviate reliability impacts and that those upgrades would be completed in a manner that will permit Generation's retirement of two of the units on that date and two of the units subsequent to May 31, 2011. On May 31, 2011, Cromby Generating Station (Cromby) Unit 1 and Eddystone Generating Station (Eddystone) Unit 1 were retired; Cromby Unit 2 retired on December 31, 2011 and Eddystone Unit 2 will retire on May 31, 2012. On May 27, 2011, the FERC approved a settlement providing for a reliability-must-run rate schedule, which defines compensation to be paid to Generation for continuing to operate these units. The monthly fixed-cost recovery during the reliability-must-run period for Eddystone Unit 2 is approximately $6 million. Such revenue is intended to recover total expected operating costs, plus a return on net assets, of the two units during the reliability-must-run period. In addition, Generation is reimbursed for variable costs, including fuel, emissions costs, chemicals, auxiliary power and for project investment costs during the reliability-must-run period. Eddystone Unit 2 and Cromby Unit 2 began operating under the reliability-must-run agreement effective June 1, 2011.

In connection with the retirement of all four units, Exelon is eliminating 253 employee positions, the majority of which are located at the units to be retired. Total expected costs for Generation related to the announced retirements is $37 million, which includes $14 million for estimated salary continuance and health and welfare severance benefits, a $17 million write down of inventory and $6 million of shut down costs. Cash payments under this plan began in January 2010 and will continue through 2013.

Since the announced retirements in December 2009, Generation recorded pre-tax expense of $32 million, which included a $13 million charge for estimated salary continuance and health and welfare severance benefits, $17 million of expense for the write down of inventory and $2 million of shut down costs recorded within operating and maintenance expense in Exelon's and Generation's Consolidated Statements of Operations.

During the year ended December 31, 2011, Generation recorded pre-tax expense of $4 million for estimated salary continuance and health and welfare severance benefits and $2 million of shut down costs. During the year ended December 31, 2010, Generation recorded a net $3 million charge which is primarily due to an increase in estimated salary continuance and health and welfare severance benefits.

The following table presents the activity of severance obligations for the announced Cromby and Eddystone retirements from January 1, 2010 through December 31, 2011:

Severance Benefits Obligation		Exelon and Generation
Balance at January 1, 2010	$	7

Severance charges recorded		4
Cash payments		(1)
Other adjustments		(3)

Balance at December 31, 2010		7

Severance charges recorded		4
Cash payments		(4)

Balance at December 31, 2011	$	7