Severance (All Registrants)

The Registrants have an ongoing severance plan under which, in general, the longer an employee worked prior to termination the greater the amount of severance benefits. The Registrants record a liability and expense or regulatory asset for severance once terminations are probable of occurrence and the related severance benefits can be reasonably estimated. For severance benefits that are incremental to its ongoing severance plan (“one-time termination benefits”), the Registrants measure the obligation and record the expense at fair value at the communication date if there are no future service requirements, or, if future service is required to receive the termination benefit, ratably over the required service period.

Ongoing Severance Plans

The Registrants provide severance and health and welfare benefits under Exelon’s ongoing severance benefit plans to terminated employees in the normal course of business. These benefits are accrued for when the benefits are considered probable and can be reasonably estimated.

For the three and nine months ended September 30, 2016 and 2015, Exelon, Generation, ComEd and PHI recorded the following severance costs (benefits) associated with these ongoing severance benefits within Operating and maintenance expense in their Consolidated Statements of Operations and Comprehensive Income.



									Successor
	Exelon			Generation^(a)			ComEd^(a)		PHI
Three Months Ended
September 30, 2016	$	8		$	7		$	—	$	1
September 30, 2015	(3		)	(3		)	—		—

Nine Months Ended
September 30, 2016	$	12		$	10		$	1	$	1
September 30, 2015	18			17			1		—

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(a) The amounts above for Generation include less than $1 million for amounts billed by BSC through intercompany allocations for both the three months ended September 30, 2016 and 2015, and $2 million for both the nine months ended September 30, 2016 and 2015. The amounts above for ComEd include $1 million billed by BSC through intercompany allocations for both the nine months ended September 30, 2016 and 2015. The amounts above for PHI include $1 million billed by BSC through intercompany allocations for the three and nine months ended September 30, 2016.

Early Plant Retirement-Related Severance

As a result of the Clinton and Quad Cities plant retirement decision, Exelon and Generation will incur certain employee-related costs, including severance benefit costs. Severance benefits will be provided to impacted union and non-union employees, to the extent that those employees are not redeployed to other locations. The final amount of severance cost will ultimately depend on the specific employees severed.

For the three and nine months ended September 30, 2016, the Registrants recorded the following severance costs (benefits) related to the early plant retirements within Operating and maintenance expense in their Consolidated Statements of Operations and Comprehensive Income, pursuant to the authoritative guidance for ongoing severance plans:




	Exelon			Generation^(a)
Three Months Ended
September 30, 2016	$	(2	)	$	(2	)

Nine Months Ended
September 30, 2016	$	44		$	44

(a) The amounts above for Generation include $2 million for amounts billed by BSC through intercompany allocations for the nine months ended

September 30, 2016.

Cost Management Program-Related Severance

In August 2015, Exelon announced a cost management program focused on cost savings at BSC and Generation, including the elimination of approximately 500 positions. These actions are in response to the continuing economic challenges confronting all parts of Exelon’s business and industry, necessitating continued focus on cost management through enhanced efficiency and productivity. Exelon expects that approximately 250 corporate support positions in BSC and approximately 250 positions located throughout Generation will be eliminated.

Upon Senior Management approval of the cost management targets and initiatives in the first quarter of 2016, Exelon recorded severance benefit costs of $17 million associated with the anticipated position reductions. Additional severance benefit costs recorded in the third quarter were $1 million for Generation and Exelon. The final amount of the charge will ultimately depend on the specific employees severed.

For the nine months ended September 30, 2016, the Registrants recorded the following severance costs related to the cost management program within Operating and maintenance expense in their Consolidated Statements of Operations and Comprehensive Income, pursuant to the authoritative guidance for ongoing severance plans:



	Exelon		Generation		ComEd		PECO		BGE
Nine Months Ended September 30, 2016
Severance benefits^(a)	$	18	$	13	$	3	$	1	$	1

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(a)	The amounts above for Generation, ComEd, PECO and BGE include $7 million, $3 million, $1 million and $1 million, respectively, for amounts billed by BSC through intercompany allocations for the nine months ended September 30, 2016.

Severance Costs Related to the PHI Merger

Upon closing the PHI Merger, Exelon recorded a severance accrual for the anticipated employee position reductions as a result of the post-merger integration. Cash payments under the plan began in May 2016 and will continue through 2020.

For the three months ended September 30, 2016, the PHI merger severance costs were immaterial. For the nine months ended September 30, 2016, the Registrants recorded the following severance costs associated with the identified job reductions within Operating and maintenance expense in their Consolidated Statements of Operations and Comprehensive Income, pursuant to the authoritative guidance for ongoing severance plans:



											Successor
	Exelon		Generation		ComEd		PECO		BGE		PHI		Pepco^(b)		DPL^(c)		ACE
Nine Months Ended September 30, 2016
Severance benefits^(a)	$	55	$	9	$	2	$	1	$	1	$	42	$	20	$	12	$	10

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(a)	The amounts above for Generation, ComEd, PECO, BGE, Pepco, DPL and ACE include amounts billed by BSC and/or PHISCO through intercompany allocations of $8 million, $2 million, $1 million, $1 million, $19 million, $11 million and $10 million for the nine months ended September 30, 2016.


(b)	Pepco established a regulatory asset of $10 million as of September 30, 2016, primarily for severance benefit costs related to the PHI merger.


(c)	DPL established a regulatory asset of $3 million as of September 30, 2016, primarily for severance benefit costs related to the PHI merger.

Severance Liability

Amounts included in the table below represent the severance liability recorded for the severance plans above for employees of each Registrant and exclude amounts included at Exelon and billed through intercompany allocations:



															Successor
Severance Liability	Exelon			Generation			ComEd			PECO		BGE			PHI			Pepco			DPL			ACE
Balance at December 31, 2015	$	35		$	23		$	3		$	—	$	1		$	—		$	—		$	—		$	—
Severance charges^(a)(b)	136			63			1			—		—			53			1			1			—
Payments	(39		)	(7		)	(1		)	—		(1		)	(25		)	(1		)	(1		)	—
Balance at September 30, 2016	$	132		$	79		$	3		$	—	$	—		$	28		$	—		$	—		$	—

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(a)	Includes salary continuance and health and welfare severance benefits. Amounts primarily represent benefits provided for the PHI post-merger integration, the Clinton and Quad Cities early plant retirements and the cost management program.


(b)	Represents activity from March 24, 2016 to September 30, 2016 for PHI, Pepco, DPL and ACE.