Retirement Benefits (Exelon, Generation, ComEd and PECO)

6 Months Ended

Jun. 30, 2012

Retirement Benefits [Abstract]

Retirement Benefits (Exelon, Generation, ComEd and PECO)

12. Retirement Benefits (Exelon, Generation, ComEd, PECO and BGE)

Exelon sponsors defined benefit pension plansand other postretirement benefit plans for essentially all Generation, ComEd, PECO, BGE and BSC employees. Effective March 12, 2012, Exelon became the sponsor of all of Constellation's defined benefit pension and other postretirement benefit plans and defined contribution savings plans. As of that date, the legacy Constellation pension and other postretirement benefit plans were remeasured using current assumptions including the discount rate.

Defined Benefit Pension and Other Postretirement Benefits

During the first quarter of 2012, Exelon received an updated valuation of itslegacy pension and other postretirement benefit obligations to reflect actual census data as of January 1, 2012. This valuation resulted in anincrease to the pension and other postretirement benefit obligations of $86 million and $25 million, respectively. Additionally, accumulated other comprehensive loss increased by approximately $8 million (after tax) and regulatory assets increased by $98 million.

During the second quarter of 2012, Exelon received an updated valuation of legacy Constellation's pension and postretirement benefit obligations to reflect actual census data as of the merger date. This valuation resulted in an increase and a decrease to the pension and other postretirement benefit obligations of $1 million and $19 million, respectively. Additionally, accumulated other comprehensive loss decreased by approximately $3 million (after-tax) and regulatory assets decreased by approximately $13 million.

As a result of employee severances related to the merger, a curtailment was triggered for certain legacy Constellation pension and other postretirement benefit plans in the second quarter of 2012. Accordingly, the benefit obligation and plan assets for those plans were remeasured using assumptions as of June 30, 2012, including updated discount rates, asset values, and planned changes to the method of obtaining prescription drug subsidies. The discount rates used to calculate the curtailed pension and other postretirement benefit plan obligationsas of June 30, 2012were 3.97% and 3.98%, respectively. These discount rates were used to calculate the remainder of year costs for the curtailed plans. The curtailment and associated remeasurement resulted in an increase and a decrease to the unfunded status of the pension and other postretirement benefit plans of $84 million and $32 million, respectively.Additionally, accumulated other comprehensive loss increased by approximately $6 million (after-tax) and regulatory assets increased by approximately $44 million.Exelon also recognized a $2 million curtailment gain for legacy Constellation's other postretirement benefit plans in the second quarter of 2012, of which Generation recognized a $1 million curtailment gain.

Under Exelon's and Constellation's severance plans, certain severed employees were offered additional pension and other postretirement benefits. As a result, Exelon recorded contractual termination benefit charges of $20 million in the second quarter of 2012, of which Generation and BGE recorded $9 million and $3 million, respectively. BGE recorded its portion of the contractual termination benefit charge of $3 million along with $1 million that was billed to it by BSC as a regulatory asset, consistent with prior MDPSC precedent. ComEd recorded the $1 million of contractual termination benefit charge that was billed to it by BSC as a regulatory asset pursuant to EIMA.

The following tables present the components of Exelon's net periodic benefit costs for the threeand six months ended June 30, 2012 and 2011. The 2012 pension benefit cost is calculated using an expected long-term rate of return on plan assets of 7.50%for all plans and discount rates of 4.74% and 4.27% for legacy Exelon and Constellation plans, respectively. The 2012 other postretirement benefit cost is calculated using an expected long-term rate of return on plan assets of 6.68% for funded plans, and discount rates of 4.80%and 4.28% for legacy Exelon and Constellation plans, respectively. Legacy Constellation other postretirement plans are not funded. As discussed above, discount rates of 3.97% and 3.98% will be used to calculate net periodic benefit cost beginning July 1, 2012for the legacy Constellation pension and other postretirement benefit plans that were curtailed in the second quarter of 2012. A portion of the net periodic benefit cost is capitalized within the Consolidated Balance Sheets.

			Pension Benefits				Other Postretirement Benefits
			Three Months Ended				Three Months Ended
			June 30,				June 30,
			2012		2011		2012		2011
Service cost		$	74	$	53	$	39	$	35
Interest cost			179		163		54		51
Expected return on assets			(253)		(234)		(29)		(28)
Amortization of:
	Transition obligation		0		0		2		3
	Prior service cost (benefit)		3		3		(3)		(10)
	Actuarial loss		115		82		19		17
Contractual termination benefit cost (a)			14		0		6		0
Curtailment gain			0		0		(2)		0
Net periodic benefit cost		$	132	$	67	$	86	$	68
			Pension Benefits				Other Postretirement Benefits
			Six Months Ended				Six Months Ended
			June 30,				June 30,
			2012		2011		2012		2011
Service cost		$	135	$	106	$	76	$	71
Interest cost			343		325		104		103
Expected return on assets			(484)		(469)		(58)		(56)
Amortization of:
	Transition obligation		0		0		6		5
	Prior service cost (benefit)		7		7		(6)		(19)
	Actuarial loss		221		165		38		33
Contractual termination benefit cost (a)			14		0		6		0
Curtailment gain			0		0		(2)		0
Net periodic benefit cost		$	236	$	134	$	164	$	137

(a)       As discussed above, ComEd and BGE established regulatory assets of $1 millionand $4 million, respectively, for their portion of the second quarter 2012 contractual termination benefit charge.

The amounts below were included in capital additions and operating and maintenance expense during the threeand six months ended June 30, 2012 and 2011, for Generation's, ComEd's, PECO's, BGE's and BSC's allocated portion of the pension and postretirement benefit plans. These amounts include the contractual termination benefit charges and curtailment gain recognized in the second quarter of 2012.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
Pension and Postretirement Benefit Costs	2012		2011		2012		2011
Generation	$	94	$	61	$	175	$	123
ComEd		68		54		137		108
PECO		13		8		26		16
BGE (a)(b)		18		14		32		28
BSC (c)		25		12		42		24

(a)       BGE's pension and postretirement benefit costs for the six months ended June 30, 2012 and 2011 include $12 million and $28 million, respectively, of costs incurred prior to the closing of Exelon's merger with Constellation on March 12, 2012. BGE's pension and postretirement benefit costs for the three months ended June 30, 2011 include $14 million of costs incurred prior to the closing of Exelon's merger with Constellation on March 12, 2012. These amounts are not included in Exelon's net periodic benefit costs for the three and six months ended June 30, 2012and 2011 shown in the first table of the Defined Benefit Pension and Other Postretirement Benefits section above.

(b)       BGE's pension and other postretirement benefit costs for the three and six months ended June 30, 2012 includes a $3 million contractual termination benefit charge, which was recorded as a regulatory asset as of June 30, 2012.

(c)       These amounts primarily represent amounts billed to Exelon's subsidiaries through intercompany allocations. These amounts are not included in the Generation, ComEd, PECO or BGE amounts above.As of June 30, 2012, ComEd and BGE each recorded a regulatory asset of $1 million related to their BSC-billed portion of the second quarter 2012 contractual termination benefit charge.

Management considers various factors when making pension funding decisions, including actuarially determined minimum contribution requirements under ERISA, contributions required to avoid benefit restrictions and at-risk status as defined by the Pension Protection Act of 2006, management of the pension obligation and regulatory implications. Exelon expects to contribute $83 million to its qualified pension plans in 2012, of which Generation, ComEd and PECO will contribute $51 million, $9million, and $12 million,respectively. Legacy Constellation's 2011 pension contributions included an acceleration of estimated calendar year 2012 contributions. Therefore, BGE does not anticipate any qualified pension contributions in 2012. Unlike the qualified pension plans, Exelon's non-qualified pension plans are not funded. Exelon expects to make non-qualified pension plan benefit payments of $67 million in 2012, of which Generation, ComEd, PECO and BGE will make payments of $9 million, $14million, $1 million and $1 million, respectively.

Unlike qualified pension plans, other postretirement plans are not subject to regulatory minimum contribution requirements. Exelon's management has historically considered several factors in determining the level of contributions to its other postretirement benefit plans, including levels of benefit claims paid and regulatory implications (amounts deemed prudent to meet regulator expectations and best assure continued recovery). In 2012, Exelon anticipates funding its other postretirement benefit plans based on the funding considerations discussed above, with the exception of those plans previously sponsored by Constellation and AmerGen, whichremain unfunded. Exelon expects to make other postretirement benefit plan contributions, including benefit payments related to unfunded plans, of approximately $318million in 2012, of which Generation, ComEd, PECO and BGE expect to contribute $132 million, $116 million, $34 million and $14million, respectively. This total excludes $4 million in 2012 other postretirement benefit plan contributions by BGE prior to the closing of Exelon's merger with Constellation on March 12, 2012.

Plan Assets

Investment Strategy. On a regular basis, Exelon evaluates its investment strategy to ensure that plan assets will be sufficient to pay plan benefits when due. As part of this ongoing evaluation, Exelon may make changes to its targeted asset allocation and investment strategy.

Exelon has developed and implemented an investment strategy for its qualified pension plans that has reduced the volatility of its pension assets relative to its pension liabilities. Exelon is likely to continue to gradually increase the liability hedging portfolio as the funded status of its plans improves. The overall objective is to achieve attractive risk-adjusted returns that will balance the liquidity requirements of the plans' liabilities while striving to minimize the risk of significant losses. This investment strategy would tend to result in a lower expected rate of return on plan assets in future years. Trust assets for Exelon's other postretirement plansare managed in a diversified investment strategy that prioritizes maximizing liquidity and returns while minimizing asset volatility.

Defined Contribution Savings Plans

The Registrants participate in various401(k) defined contribution savings plansthat are sponsored by Exelon. The plans are qualified under applicable sections of the IRC and allow employees to contribute a portion of their pre-tax income in accordance with specified guidelines. All Registrants match a percentage of the employee contributions up to certain limits. The following table presents thematching contributions to the savings plans during the threeand six months ended June 30, 2012 and 2011:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
Savings Plan Matching Contributions	2012		2011		2012		2011
Exelon	$	17	$	15	$	33	$	34
Generation		8		8		15		18
ComEd		5		4		9		10
PECO		2		2		4		4
BGE (a)		2		2		4		4
BSC (b)		1		1		2		2

• BGE's matching contributions for the six months ended June 30, 2012 include $1 million of costs incurred prior to the closing of Exelon's merger with Constellation on March 12, 2012, which is not included in Exelon's matching contributions for the six months ended June 30, 2012.
• These amounts primarily represent amounts billed to Exelon's subsidiaries through intercompany allocations. These costs are not included in the Generation, ComEd, PECO or BGE amounts above.