(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 years ended December 31, 2016 and 2015, the Registrants recorded the following severance costs associated with ongoing severance benefits within Operating and maintenance expense in their Consolidated Statements of Operations and Comprehensive Income:




	Exelon		Generation^(a)		ComEd^(a)		PECO^(a)		BGE^(a)
Year ended December 31,
2016	$	19	$	13	$	3	$	1	$	1
2015	18		15		2		—		1



	Successor		Predecessor
	March 24, 2016 to December 31, 2016		January 1, 2016 to March 23, 2016		For the Year Ended December 31, 2015
PHI^(a)
Severance Benefits	$	1	$	—	$	—

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(a)	The amounts above for Generation, ComEd, PECO, BGE and PHI include immaterial amounts billed by BSC for the years ended December 31, 2016 and 2015.

Early Plant Retirement-Related Severance

On December 7, 2016 the Future Energy Jobs Bill was signed into law by the Governor of Illinois and included a ZES. With the passage of the IL ZES, Generation reversed its decision to permanently cease generation operations at the Clinton and Quad Cities nuclear generating plants and expects the plants to continue operation for at least another 10 years. As a result, Exelon and Generation reversed the associated severance benefit costs of $44 million in December 2016 which were previously recorded for expected employee severances.

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. The final amount of the severance charges related to the cost management program will ultimately depend on the specific employees severed.

For the year ended December 31, 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
Severance benefits^(a)	$	23	$	18	$	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 year ended December 31, 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 year ended December 31, 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
Severance benefits^(a)	$	57	$	9	$	2	$	1	$	1	$	44	$	21	$	13	$	10

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(a)	The amounts above for Generation, ComEd, PECO, BGE, Pepco, DPL and ACE include $8 million, $2 million, $1 million, $1 million, $20 million, $12 million and $10 million, respectively, for amounts billed by BSC and/or PHISCO through intercompany allocations for the year ended December 31, 2016.


(b)	Pepco established a regulatory asset of $11 million as of December 31, 2016, primarily for severance benefit costs related to the PHI merger.


(c)	DPL established a regulatory asset of $4 million as of December 31, 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 employees of each Registrant and exclude amounts included at Exelon and billed through intercompany allocations:



															Successor
Severance Liability	Exelon			Generation			ComEd			PECO		BGE			PHI^(b)			Pepco			DPL			ACE
Balance at December 31, 2014	$	50		$	34		$	2		$	—	$	2		$	—		$	1		$	—		$	—
Severance charges	16			10			2			—		—			—			—			—			—
Payments	(31		)	(21		)	(1		)	—		(1		)	—			(1		)	—			—
Balance at December 31, 2015	$	35		$	23		$	3		$	—	$	1		$	—		$	—		$	—		$	—
Severance charges^(a)	99			22			2			—		—			56			1			1			—
Payments	(46		)	(9		)	(2		)	—		(1		)	(27		)	(1		)	(1		)	—
Balance at December 31, 2016	$	88		$	36		$	3		$	—	$	—		$	29		$	—		$	—		$	—



	Predecessor
Severance Liability	PHI^(b)
Balance at December 31, 2014	$	3
Severance charges	—
Payments	(3		)
Balance at December 31, 2015	$	—

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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 and the cost management program.


(b)	For PHI, the successor period includes activity for the period from March 24, 2016 through December 31, 2016. The PHI predecessor periods include activity for the year ended December 31, 2015 and the period January 1, 2016 through March 23, 2016. There was no activity in the 2016 PHI predecessor period.