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Investment in Constellation Energy Nuclear Group, LLC (Exelon and Generation)

6 Months Ended

Jun. 30, 2012

Equity Method Investments and Joint Ventures [Line Items]

Investment in Constellation Energy Nuclear Group, LLC (CENG)

5. Investment in Constellation Energy Nuclear Group, LLC (Exelon and Generation)

As a result of the Constellation merger, Generation owns a 50.01% interest in CENG, a nuclear generation business. Generation's total equity in earnings (losses) on the investment in CENG is as follows:

	Three Months			For the Period March 12,
	Ended June 30,			through June 30,
	2012		2012
CENG	$	4	$	(5)
Amortization of basis difference in CENG		(62)		(74)
Total equity investment income (loss) - CENG	$	(58)	$	(79)

As of March 12, 2012, Generation had an initial basis difference of approximately $198 million between the initial carrying value of its investment in CENG and its underlying equity in CENG. This basis difference resulted from the requirement to record the investment in CENG at fair value under purchase accounting while the underlying assets and liabilities within CENG continue to be accounted for on a historical cost basis. Generation is amortizing this basis difference over the respective useful lives of the assets and liabilities of CENG or as those assets and liabilities impact the earnings of CENG.

In future periods, Generation may be eligible for distributions from CENG in excess of its 50.01% ownership interest based on tax sharing provisions contained in the operating agreement for CENG. Generation would record these distributions, if realized, in earnings in the period earned.

Related Party Transactions (Exelon and Generation)

CENG

Generation has an agreement with CENG under which it is purchasing 85-90% of the output of CENG's nuclear plants that is not sold to third parties under pre-existing firm and unit contingent PPAs through 2014. Beginning on January 1, 2015 and continuing to the end of the life of the respective plants, Generation will purchase on a unit contingent basis 50.01% of the output of CENG's nuclear plants, and EDF will purchase on a unit contingent basis 49.99% of the output.

In addition to the PPA, a subsidiary of Generation has a power services agency agreement (PSAA) with CENG. The PSAA is a five-year agreement under which Generation provides scheduling, asset management and billing services to CENG for a specified monthly fee. The charges for services reflect the cost of the service, with such cost not to exceed approximately $358,000 per month.

In addition to the PSAA, Exelon has an administrative services agreement (ASA) with CENG, which expires in 2017. Under the ASA, BSC provides a variety of support services to CENG. The ASA includes both a consumption-based pricing structure and a fixed-price structure which are subject to change in future years based on the level of service needed. Pursuant to an agreement between Exelon and EDF, the pricing in the ASA is in the process of being amended so that the charges for services reflect actual costs determined on the same basis that BSC charges its affiliates for similar services.

The impact of transactions under these agreements on Exelon's and Generation's Consolidated Financial Statements is summarized below:



	Increase/(Decrease)		Increase/(Decrease)
	in Earnings		in Earnings			Accounts
	Three Months		For the Period		Income	Receivable/
	Ended		March 12 through		Statement	(Accounts Payable)
Agreement	June 30, 2012		June 30, 2012		Classification	At June 30, 2012
PPA	$	(216)	$	(251)	Purchased power and fuel	$	(90)
PSAA (a)		3		4	Operating revenues		-
ASA		12		15	Operating expenses		4

________________

Includes $2 million of amortization related to the intangible contract liability established in purchase accounting.

In May 2011, CENG issued an unsecured revolving promissory note to borrow up to an aggregate principal amount of $62.5 million from a subsidiary of Generation. CENG also issued a promissory note to EDF on substantially identical terms, such that any request for borrowings by CENG must be submitted 50.01% to Generation and 49.99% to EDF.

Interest accrues on the amounts borrowed on a daily basis at a rate of LIBOR, plus 250 basis points. Amounts are due at the earlier of October 31, 2012 or the date upon which the note is accelerated in accordance with the terms of the agreement.

As of June 30, 2012, CENG had borrowed $55 million from Generation.

Exelon Generation Co L L C [Member]

Equity Method Investments and Joint Ventures [Line Items]

Investment in Constellation Energy Nuclear Group, LLC (CENG)

5. Investment in Constellation Energy Nuclear Group, LLC (Exelon and Generation)

	Three Months			For the Period March 12,
	Ended June 30,			through June 30,
	2012		2012
CENG	$	4	$	(5)
Amortization of basis difference in CENG		(62)		(74)
Total equity investment income (loss) - CENG	$	(58)	$	(79)



	Increase/(Decrease)		Increase/(Decrease)
	in Earnings		in Earnings			Accounts
	Three Months		For the Period		Income	Receivable/
	Ended		March 12 through		Statement	(Accounts Payable)
Agreement	June 30, 2012		June 30, 2012		Classification	At June 30, 2012
PPA	$	(216)	$	(251)	Purchased power and fuel	$	(90)
PSAA (a)		3		4	Operating revenues		-
ASA		12		15	Operating expenses		4

- Definition

The entire disclosure for equity investment, or group of investments, for which combined disclosure is appropriate, including: (a) the name of each investee and percentage of ownership of common stock, (b) accounting policies for investments in common stock, (c) difference between the amount at which the investment is carried and the amount of underlying equity in net assets and the accounting treatment of the difference, (d) the total fair value of each identified investment for which a market value is available, (e) summarized information as to assets, liabilities, and results of operations of the investees (for investments in unconsolidated subsidiaries, common stock of joint ventures, or other investments using the equity method), and (f) material effects of possible conversions, exercises, or contingent issuances of the investee. Other disclosures include (a) the names of any investee in which the investor owns 20 percent or more of the voting stock and investment is not accounted for using the equity method, and the reasons why not, and (b) the names of any investee in which the investor owns less than 20 percent of the voting stock and the investment is accounted for using the equity method, and the reasons why it is.

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