Retirement Benefits (Exelon, Generation, ComEd and PECO)

9 Months Ended

Sep. 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 anincreaseto 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. The curtailment and associated remeasurement resulted in an increase and a decrease to the pension and other postretirement benefit obligationsof $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.

During the third quarter of 2012, Exelon announced plan design changes for certain other postretirement benefit plans, requiring an interim remeasurement of the benefit obligation and assets for those plans using assumptions as of September 30, 2012, including updated discount rates and asset values. The discount rates used to calculate the other postretirement benefit plan obligations for legacy Exelon and Constellation were 3.93% and 3.72%, respectively, as of September 30, 2012. The remeasurement resulted in an increase to the other postretirement benefit obligation, accumulated other comprehensive loss, and regulatory assets of $212 million, $68 million (after-tax), and $99 million, respectively. Additionally, Exelon recognized a $5 million curtailment gain in the third quarter of 2012 related to these plan design changes, of which Generation and BGE recognized a curtailment gain of $1 million and $3 million, respectively.

The following tables present the components of Exelon's net periodic benefit costs for the threeand nine months ended September 30, 2012 and 2011. The 2012 pension benefit cost for legacy Exelon plans was calculated using an expected long-term rate of return on plan assets of 7.50% and a discount rate of 4.74%.The 2012 pension benefit cost for legacy Constellation plans was calculated using an expected long-term rate of return on plan assets of 7.50% and discount rates of 4.27% and 3.97% for the period post-merger through June 30, 2012 and July 1, 2012 through September 30, 2012, respectively.The 2012other postretirement benefit cost for legacy Exelon plans was calculated using an expected long-term rate of return on plan assets of 6.68% and a discount rate of 4.80%. The 2012 other postretirement benefit cost for legacy Constellation plans was calculated using a discount rate of 4.28% and 3.98%for the period post-merger through June 30, 2012 and July 1, 2012 through September 30, 2012, respectively. Legacy Constellation other postretirement benefit plans are not funded. 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
			September 30,				September 30,
			2012		2011		2012		2011
Service cost		$	76	$	53	$	38	$	36
Interest cost			181		162		53		52
Expected return on assets			(258)		(235)		(28)		(27)
Amortization of:
	Transition obligation		0		0		2		2
	Prior service cost (benefit)		5		4		(3)		(10)
	Actuarial loss		117		83		19		16
Settlement Charges			9		0		0		0
Curtailment gain			0		0		(5)		0
Net periodic benefit cost		$	130	$	67	$	76	$	69
			Pension Benefits				Other Postretirement Benefits
			Nine Months Ended				Nine Months Ended
			September 30,				September 30,
			2012		2011		2012		2011
Service cost		$	211	$	159	$	114	$	107
Interest cost			524		487		157		155
Expected return on assets			(742)		(704)		(86)		(83)
Amortization of:
	Transition obligation		0		0		8		7
	Prior service cost (benefit)		12		11		(10)		(29)
	Actuarial loss		338		248		58		49
Settlement Charges			9		0		0		0
Contractual termination benefit cost (a)			14		0		6		0
Curtailment gain			0		0		(7)		0
Net periodic benefit cost		$	366	$	201	$	240	$	206

(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 nine months ended September 30, 2012 and 2011, for Generation's, ComEd's, PECO's, BGE's and BSC's allocated portion of the pension and postretirement benefit plan costs. These amounts include the recognized contractual termination benefit charges, curtailment gains, and settlement charges.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Pension and Postretirement Benefit Costs	2012		2011		2012		2011
Generation	$	85	$	64	$	259	$	187
ComEd		75		53		212		160
PECO		12		8		38		24
BGE (a)(b)		14		15		46		43
BSC (c)		20		11		63		36

(a)       BGE's pension and postretirement benefit costs for the ninemonths ended September 30, 2012include $12 million 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 and nine months ended September 30, 2011 were $15 million and $43 million, respectively. These amounts are not included in Exelon's net periodic benefit costs for the three and nine months ended September 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 nine months ended September 30, 2012 includes a $3 million contractual termination benefit charge, which was recorded as a regulatory asset as of September 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 September 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.

During the fourth quarter of 2012, Exelon will record an additional settlement charge of approximately $17 million. This charge is triggered by lump sum payments made to executives during the fourth quarter of 2012.

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 $77 million to its qualified pension plans in 2012, of which Generation, ComEd, and PECO will contribute $46 million, $9 million, and $13 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, $14 million, $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, which remain unfunded. Exelon expects to make other postretirement benefit plan contributions, including benefit payments related to unfunded plans, of approximately $318 million in 2012, of which Generation, ComEd, PECO, and BGE expect to contribute $131 million, $116 million, $33 million, and $13 million, 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 plans are 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 nine months ended September 30, 2012 and 2011:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Savings Plan Matching Contributions	2012		2011		2012		2011
Exelon	$	16	$	26	$	49	$	64
Generation		7		13		23		33
ComEd		5		8		14		18
PECO		2		3		5		7
BGE (a)		1		1		5		5
BSC (b)		1		2		3		6

• BGE's matching contributions for the nine months ended September 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 nine months ended September 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.