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.

In connection with the Master Agreement, Generation and CENG recorded a severance accrual in the fourth quarter of 2013 for the anticipated employee position reductions as a result of the integration. The majority of these positions are corporate and support positions at CENG. On April 1, 2014, the date the NOSA was executed, Generation consolidated the CENG severance liability pursuant to the Master Agreement. Generation adjusts its accrual each quarter to reflect its best estimate of remaining severance costs. The estimated amount of severance payments associated with this plan is expected to be approximately $27 million. As of June 30, 2014, management recorded its best estimate of severance benefits, which could be adjusted through the completion of the integration process if additional employee position reductions are identified or if employees resign prior to their agreed upon service termination date. Estimated costs to be incurred after June 30, 2014 are not material.

Exelon and Generation recorded severance benefit costs associated with the employee reductions of $1 million and $2 million within Operating and maintenance expense for the three and six months ended June 30, 2014, respectively, in their Consolidated Statements of Operations and Comprehensive Income.

Amounts included in the table below represent the severance liability recorded by Exelon and Generation related to the CENG integration:


Six Months Ended June 30, 2014
Severance Liability		Exelon		Generation
Balance at December 31, 2013	$	2	$	2
Integration of CENG^(a)		19		19
Severance charges		2		2
Payments		(3)		(3)
Balance at June 30, 2014	$	20	$	20

Cash payments under the severance plan began in the second quarter of 2014. Substantially all cash payments under the plan are expected to be made by the end of 2014.

Six Months Ended June 30, 2014
Severance Liability		Exelon		Generation		ComEd		PECO		BGE
Balance at December 31, 2013	$	53	$	10	$	0	$	0	$	6
Payments		(20)		(2)		0		0		(3)
Balance at June 30, 2014	$	33	$	8	$	0	$	0	$	3

Substantially all cash payments under the plan are expected to be made by the end of 2016.

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, which are not directly related to the merger with Constellation or with the integration of CENG. These benefits are accrued for when the benefits are considered probable and can be reasonably estimated.

For the three and six months ended June 30, 2014 and 2013, the Registrants recorded the following severance costs associated with these ongoing severance benefits within Operating and maintenance expense in their Consolidated Statements of Operations and Comprehensive Income:

			Exelon		Generation		ComEd		PECO		BGE

Three Months Ending
	June 30, 2014	$	4	$	2	$	0	$	0	$	0
	June 30, 2013	$	1	$	1	$	0	$	0	$	0

Six Months Ending
	June 30, 2014	$	6	$	4	$	0	$	0	$	0
	June 30, 2013	$	2	$	1	$	1	$	0	$	0

For the three and six months ended June 30, 2013, the Registrants recorded the following severance costs associated with these ongoing severance benefits within operating and maintenance expense in their Consolidated Statements of Operations and Comprehensive Income: