Basis of Presenation (Exelon, Generation, Comed and PECO)

9 Months Ended

Sep. 30, 2012

Accounting Policies [Abstract]

Basis of Presentation (Exelon, Generation, ComEd and PECO)

1. Basis of Presentation (Exelon, Generation, ComEd, PECO and BGE)

Exelon is a utility services holding company engaged through its principal subsidiaries in the energy generation and energy distribution businesses.Prior to March 12, 2012,Exelon's principal, wholly owned subsidiaries included ComEd, PECO and Generation. On March 12, 2012, Constellation merged into Exelon with Exelon continuing as the surviving corporation pursuant to the transactions contemplated by the Agreement and Plan of Merger (the “Merger Agreement”). As a result of the merger transaction, Generation includes the former Constellationcustomer supply and generation businesses. BGE, formerly Constellation's regulated utility subsidiary, is now a subsidiary of Exelon. Refer to Note 3 - Merger and Acquisitionsfor further information regarding the merger transaction.

The energy generation business includes:

• Generation: The business consists of owned, contracted and investments in electric generating facilities and wholesale and retail customer supply of electric and natural gas products and services, including renewable energy products, risk management services and natural gas exploration and production activities. 

  The energy delivery businesses include:

• ComEd: Purchase and regulated retail sale of electricity and the provision of distribution and transmission services in northern Illinois, including the City of Chicago.
• PECO:Purchase and regulated retail sale of electricity and the provision of distribution and transmission services in southeastern Pennsylvania, including the City of Philadelphia, and the purchase and regulated retail sale of natural gas and the provision of distribution services in the Pennsylvania counties surrounding the City of Philadelphia.
• BGE:Purchase and regulated retail sale of electricity and the provision of distribution and transmission services in central Maryland, including the City of Baltimore, and the purchase and regulated retail sale of natural gas and the provision of distribution services in central Maryland, including the City of Baltimore.

For financial statement purposes, beginning on March 12, 2012, disclosures that solely relate to Constellation or BGE activities now also apply to Exelon, unless otherwise noted. When appropriate, Exelon, Generation, ComEd, PECOand BGE are named specifically for their related activities and disclosures.

BGE was acquired through a transaction under common control(RF HoldCo LLC) and Exelon did not apply push-down accounting to BGE. As a result, BGEcontinues to maintain its reporting requirements as an SEC registrant. The information disclosed for BGE represents the activity of the standalone entity for the three and nine months ended September 30, 2012 and 2011 and the financial position as of September 30, 2012 and December 31, 2011.However, for Exelon's financial reporting, Exelon is reporting BGE activity from March 12, 2012 through September 30, 2012.

Each of Generation's, ComEd's, PECO's and BGE's Consolidated Financial Statements includes the accounts of its subsidiaries. All intercompany transactions have been eliminated.

The accompanying consolidated financial statements as of September 30, 2012 and 2011 and for the three and ninemonths then ended are unaudited but, in the opinion of the management of each Registrant include all adjustments that are considered necessary for a fair statement of the Registrants' respective financial statements in accordance with GAAP. All adjustments are of a normal, recurring nature, except as otherwise disclosed. The December 31, 2011 Consolidated Balance Sheets were taken from audited financial statements. Certain prior year amounts in BGE's Consolidated Statements of Cash Flows, Exelon's, Generation'sand BGE's Consolidated Statements of Operationsand Comprehensive Income and in Exelon's, Generation's, ComEd's, PECO's and BGE's Consolidated Balance Sheets have been reclassified between line items for comparative purposes. The reclassifications did not affect any of the Registrants' net income or cash flows from operating activities. These Combined Notes to Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the SEC for Quarterly Reports on Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These notes should be read in conjunction with the Notes to Combined Consolidated Financial Statements of all Registrants included in ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAof their respective 2011 Form 10-K.

Variable Interest Entities (Exelon, Generation and BGE)

Consolidated Variable Interest Entities

The Registrants' consolidated VIEs consist of:

• BondCo, a special purpose bankruptcy remote limited liability company formed by BGE to acquire, hold, and issue and service bonds secured by rate stabilization property;
• a retail gas group formed to enter into a collateralized gas supply agreement with a third-party gas supplier;
• a retail power supply company;
• a group of solar project limited liability companies formed to build, own, and operate solar power facilities,the largest of which is a 230-MW solar project under development in northern Los Angeles County, California. As of September 30, 2012, this project consisted primarily of Current Assets of $69 million, Noncurrent Assets of approximately $516 million, Current Liabilities of $230 million, and Noncurrent Liabilities of $159 million. See Note 3 – Other Acquisitions and Note 9 – Debt and Credit Agreements for additional information; and
• several wind projects designed to develop, construct and operate wind generation facilities.

See Note 1 and Note 4 of the 2011 Form 10-K for Constellation and BGE for further information regarding investments in VIEs.

For each of the consolidated VIEs:

• The assets of the VIEs are restricted and can only be used to settle obligations of the respective VIE. In the case of BondCo, BGE is required to remit all payments it receives from all residential customers for non-bypassable,rate stabilization charges to BondCo. During the three and ninemonths ended September 30, 2012, BGE remitted $27 million and $62 million, respectively, to BondCo. During the three and nine months ended September 30, 2011, BGE remitted $27 million and $65 million, respectively, to BondCo.
• Except for providing capital funding to the solar entities for ongoing construction of the solar power facilities and a $75 million parental guarantee to the third-party gas supplier in support of the retail gas group, during thethreeand nine months ended September 30, 2012:

• Exelon, Generation and BGE did not provide any additional financial support to the VIEs;
• Exelon, Generation and BGE did not have any contractual commitments or obligations to provide financial support to the VIEs; and
• the creditors of the VIEs did not have recourse to Exelon's, Generation'sor BGE's general credit.

At September 30, 2012,Exelon's, Generation's and BGE's consolidated financial statements include the following balances forthe consolidated VIEsthat were acquired as part of the merger:

		September 30, 2012
		Exelon		Generation		BGE
Current assets		$	398	$	348	$	49
Noncurrent assets			471		432		-
	Total assets	$	869	$	780	$	49
Current liabilities		$	269	$	193	$	75
Noncurrent liabilities			573		235		299
	Total liabilities	$	842	$	428	$	374

Unconsolidated Variable Interest Entities

Exelon's and Generation's variable interests in unconsolidated VIEs generally include three categories: (1) equity method investments, (2) energy purchase and sale contracts, and (3) fuel purchase commitments. As of the balance sheet date, the carrying amount of assets and liabilities in Exelon's and Generation's Consolidated Balance Sheets that relate to their involvement with the majority of the energy contracts and fuel purchase contracts with VIEs are predominately related to working capital accounts and generally represent the amounts owed by Exelon and Generation for the deliveries associated with the current billing cycles under the contracts. Further, Exelon and Generation have not provided or guaranteed the debt or equity support, or liquidity arrangements, performance guarantees or other commitments associated with these contracts, so there is no significant potential exposure to loss as a result of the involvement with these VIEs.

As of September 30, 2012, Exelon and Generation did haveexposure to loss associated with six VIEs for which they were not the primary beneficiary; including certain equity method investments and certain energy contracts. The following table presents summary information about the unconsolidated VIE entities for which Exelon and Generation have exposure to loss, which were added as a result of the merger:

				Equity
		Energy		Method
		Contract		Investment
September 30, 2012		VIEs		VIEs		Total
Total assets (a)		$	280	$	342	$	622
Total liabilities (a)			217		95		312
Registrants' ownership interest (a)			0		98		98
Other ownership interests (a)			63		149		212
Registrants' maximum exposure to loss:
	Letters of credit		8		0		8
	Carrying amount of equity method investments		0		78		78
	Debt and payment guarantees		0		5		5

_________________

• These items represent amounts on the unconsolidated VIE balance sheets, not on Exelon's or Generation's ConsolidatedBalance Sheets. These items are included to provide information regarding the relative size of the unconsolidated VIEs.

During the nine months ended September 30, 2012, ComEd, PECO, BGE and Generation assessed their contracts and determined that, other than the items discussed in this note there were no changes in their variable interests, primary beneficiary determinations or conclusions regarding consolidation of VIEs from December 31, 2011. See Note 1 of the Exelon 2011 Form 10-K and Note 1 and Note 4 of the 2011 10-K for BGE for further information regarding the Registrants' VIEs.

RF HoldCo LLC, a bankruptcy-remote special purpose subsidiary, holds all of Exelon's common equity interests in BGE. This subsidiary is not a VIE. However, due to Exelon's ownership of 100% of the voting interests of RF HoldCo LLC, Exelon consolidates this subsidiary as a voting interest entity.

BGE and RF HoldCo are separate legal entities and are not liable for the debts of Exelon. Accordingly, creditors of Exelon may not satisfy their debts from the assets of BGE and RF HoldCo LLC except as required by applicable law or regulation. Similarly, Exelon is not liable for the debts of BGE or RF HoldCo LLC. Accordingly, creditors of BGE and RF HoldCo LLC may not satisfy their debts from the assets of Exelon except as required by applicable law or regulation.