Debt and Credit Agreements (Exelon, Generation, ComEd, PECO and BGE)

Short-Term Borrowings

Exelon, ComEd and BGE meet their short-term liquidity requirements primarily through the issuance of commercial paper. Generation and PECO meet their short-term liquidity requirements primarily through the issuance of commercial paper and borrowings from the intercompany money pool.

The Registrants had the following amounts of commercial paper borrowings outstanding as of September 30, 2014 and December 31, 2013:



Commercial Paper Borrowings	September 30, 2014		December 31, 2013
Exelon Corporate	$	—	$	—
Generation	—		—
ComEd	528		184
PECO	—		—
BGE	20		135

Credit Facilities

Exelon had bank lines of credit under committed credit facilities at September 30, 2014 for short-term financial needs, as follows:



Type of Credit Facility	Amount^(a)		Expiration Dates	Capacity Type
	(In billions)
Exelon Corporate
Syndicated Revolver^(b)	$	0.5	May 2019	Letters of credit and cash
Generation
Syndicated Revolver	5.1		May 2019	Letters of credit and cash
Syndicated Revolver	0.2		August 2018	Letters of credit and cash
Bilateral	0.3		December 2015 and March 2016	Letters of credit and cash
Bilateral	0.1		January 2015	Letters of credit
Bilateral	0.1		October 2014	Letters of credit and cash
ComEd
Syndicated Revolver	1.0		March 2019	Letters of credit and cash
PECO
Syndicated Revolver^(b)	0.6		May 2019	Letters of credit and cash
BGE
Syndicated Revolver^(b)	0.6		May 2019	Letters of credit and cash
Total	$	8.5

(a)

Excludes additional credit facility agreements for Generation, ComEd, PECO and BGE with aggregate commitments of $50 million, $34 million, $34 million and $5 million, respectively, arranged with minority and community banks located primarily within ComEd’s, PECO’s and BGE’s service territories. These facilities expired on October 17, 2014 and were renewed at the same amount through October 16, 2015. These facilities are solely utilized to issue letters of credit. As of September 30, 2014, letters of credit issued under these agreements for Generation, ComEd, PECO and BGE totaled $9 million, $18 million, $21 million and $1 million, respectively. Also, excludes the unsecured bridge credit facility of $3.9 billion to support the PHI transaction discussed below, as well as, applicable asset divestitures.


(b)	Includes credit facilities for Exelon Corporate, PECO and BGE with aggregate commitments of $22 million, $27 million and $27 million, respectively, that expire in August 2018.

As of September 30, 2014, there were no borrowings under the Registrants’ credit facilities.

On March 28, 2014, ComEd extended for an additional year the expiration date of its unsecured revolving credit facility with aggregate bank commitments of $1.0 billion. Under this facility, ComEd may issue letters of credit in the aggregate amount of up to $500 million. The credit agreement expires on March 28, 2019. The credit facility also allows ComEd to request increases in the aggregate commitments of up to an additional $500 million. Any increases are subject to the approval of the lenders party to the credit agreement in their sole discretion. Costs incurred to extend the facility for ComEd were not material.

On October 24, 2014, a $100 million bilateral CENG credit facility was amended and extended for an additional year. This facility has been utilized by CENG to fund working capital and capital projects and obtain letters of credit.

On May 30, 2014, each of Exelon Corporate, Generation, PECO and BGE extended the expiration date of its unsecured revolving credit facility with aggregate bank commitments of $500 million, $5.3 billion, $600 million, $600 million, respectively into May 2019, with the exception of a cumulative amount of $315 million in commitments, which expire in August 2018. Costs incurred to extend the facilities were not material.

Borrowings under Exelon Corporate’s, Generation’s, ComEd’s, PECO’s and BGE’s credit agreements bear interest at a rate based upon either the prime rate or a LIBOR-based rate, plus an adder based upon the particular Registrant’s credit rating. Exelon Corporate, Generation, ComEd, PECO and BGE have adders of 27.5, 27.5,7.5, 0.0 and 0.0 basis points for prime based borrowings and 127.5, 127.5, 107.5, 90.0 and 100.0 basis points for LIBOR-based borrowings. The maximum adders for prime rate borrowings and LIBOR-based rate borrowings are 65 basis points and 165 basis points, respectively. The credit agreements also require the borrower to pay a facility fee based upon the aggregate commitments under the agreement. The fee varies depending upon the respective credit ratings of the borrower.

Credit Agreements

In May 2014, concurrently and in connection with entering into the agreement to acquire PHI, Exelon entered into a credit facility to which the lenders committed to provide Exelon a 364-day senior unsecured bridge credit facility of $7.2 billion to support the contemplated transaction and provide flexibility for timing of permanent financing. The bridge credit facility was subsequently reduced to $3.9 billion as a result of the June 2014 equity issuances discussed below, as well as, applicable asset divestitures. During the three and nine months ended September 30, 2014, Exelon recorded $11 million and $20 million to interest expense in connection with the bridge facility, respectively. It is not currently expected that Exelon will be required to draw upon this credit facility.

Long-Term Debt

Issuance of Long-Term Debt

During the nine months ended September 30, 2014, the following long-term debt was issued:



Company	Type	Interest Rate		Maturity	Amount		Use of Proceeds
Exelon	Junior Subordinated Notes	2.500	%	June 1, 2024	$	1,150	Used to finance a portion of the acquisition of PHI and for general corporate purposes
Generation	Nuclear Fuel Purchase Contract	3.350	%	June 30, 2018	$	38	Used for procurement of uranium
Generation	ExGen Renewables I Project Financing^(a)	LIBOR + 4.250%		February 6, 2021	$	300	Used for general corporate purposes
Generation	ExGen Texas Power Project Financing ^(a)	LIBOR + 4.750%		September 18, 2021	$	675	Used for general corporate purposes
Generation	Energy Efficiency Project Financing	4.120	%	December 31, 2015	$	12	Funding to install energy conservation measures in Washington, DC
Generation	AVSR DOE Project Financing	3.056% - 3.143%		January 5, 2037	$	125	Used for Antelope Valley solar development
Generation	Nuclear Fuel Purchase Contract	3.250	%	June 30, 2018	$	32	Used for procurement of uranium
ComEd	First Mortgage Bonds Series 115	2.150	%	January 15, 2019	$	300	Used to refinance existing mortgage bonds
ComEd	First Mortgage Bonds Series 116	4.700	%	January 15, 2044	$	350	Used to refinance existing mortgage bonds
PECO	First and Refunding Mortgage Bonds	4.150	%	October 1, 2044	$	300	Used to refinance existing mortgage bonds and general corporate purposes

(a) See ExGen Renewables I Project Financing and ExGen Texas Power Project Financing discussed below.

Junior Subordinated Notes

In June 2014, Exelon issued $1.15 billion of junior subordinated notes in the form of 23 million equity units at a stated amount of $50.00 per unit. Net proceeds from the issuance were $1.11 billion, net of a $35 million underwriter fee. The net proceeds are expected to be used to finance a portion of the acquisition of PHI and for general corporate purposes.

Each equity unit represents an undivided beneficial ownership interest in Exelon’s 2.50% junior subordinated notes due in 2024 and a forward equity purchase contract which settles in 2017. The junior subordinated notes are expected to be remarketed in 2017. In connection with the remarketing, Exelon may modify the maturity date of the notes to a date earlier than June 1, 2024 but not earlier than June 1, 2020, remove redemption provisions of the notes, or change the interest rate on the notes, including changing the interest rate from fixed to floating. Investors that participate in the remarketing receive the remarketing proceeds and may use those funds to either settle the equity forward upon settlement date or invest in the remarketed debt and use other funds for the share purchase. Exelon intends to use the remarketing proceeds to repay debt issued or for other corporate purposes as soon as practical following such settlements. If the remarketing fails, holders of the notes will have the right to put their notes to Exelon for an amount equal to the principal amount of notes held by such holder plus accrued interest. The equity units carry a total annual distribution rate of 6.5%, which is comprised of a quarterly coupon rate of interest of 2.5% and a quarterly contract payment of 4.0% (contract payments).

Each purchase contract obligates the holder to purchase, and Exelon to sell, for $50.00 a number of shares of Exelon’s common stock in accordance with the conversion ratios set forth below:


•	If the market price equals or exceeds $43.7484, then 1.1429 shares.


•	If the market price is less than $43.7484 but greater than $35.00, a number of shares of common stock having a value, based on the market price, equal to $50.00


•	If the market price is less than or equal to $35.00, then 1.4286 shares.

A holder’s ownership interest in the notes is pledged to Exelon to secure the holder’s obligation under the related forward equity purchase contract. If a holder of the forward equity purchase contract chooses at any time to no longer be a holder of the notes, such holder’s obligation under the purchase contract must be secured by a U.S. Treasury security.

At the time of issuance, the $1.15 billion of junior subordinated notes were recorded within Long-term debt on Exelon’s Consolidated Balance Sheet. Additionally, at the time of issuance, the present value of the contract payments of $131 million were recorded to Long-term debt, representing the obligation to make contract payments, with an offsetting reduction to Common stock. The obligation for the contract payments will be accreted to interest expense over the 3 year period ending in 2017 in Exelon’s Consolidated Statement of Operations and Comprehensive Income. The Long-term debt recorded for the contract payments is considered a non-cash financing transaction that was excluded from Exelon’s Consolidated Statements of Cash Flows. Until settlement of the equity purchase contract, earnings per share dilution resulting from the equity unit issuance will be determined under the treasury stock method.

Non-Recourse Debt

The following describes certain indebtedness that was incurred by Generation's project company subsidiaries during the nine months ended September 30, 2014. The indebtedness described below is a component of the total $2.7 billion net book value of certain generating facilities pledged as collateral as of September 30, 2014. All associated project financing liabilities are non-recourse to Exelon and Generation.

ExGen Renewables Energy I, LLC

On February 6, 2014, ExGen Renewables I, LLC (EGR), an indirect subsidiary of Exelon and Generation, borrowed $300 million aggregate principal amount pursuant to a non-recourse senior secured loan, due February 6, 2021. The loan bears interest at a variable rate equal to LIBOR plus 4.25%, subject to a 1% LIBOR floor. EGR indirectly owns Continental Wind LLC (Continental Wind). In addition to the financing, EGR entered into interest rate swaps with a notional amount of $240 million at an interest rate of 2.03% to manage a portion of the interest rate exposure in connection with the financing, see Note 9 — Derivative Financial Instruments for additional information regarding interest rate swaps.

ExGen Texas Power, LLC

On September 18, 2014, ExGen Texas Power, LLC (EGTP), an indirect subsidiary of Exelon and Generation, borrowed $675 million aggregate principal amount pursuant to a non-recourse senior secured term loan, scheduled to mature on September 18, 2021. The term loan bears interest at a variable rate equal to LIBOR plus 4.75%, subject to a 1% LIBOR floor. As part of the agreement, a revolving credit facility was established for the amount of $20 million available through (and scheduled to mature on) September 18, 2019. In addition to the financing, EGTP entered into a floating-to-fixed interest rate swap with an initial notional amount of approximately $505 million at an interest rate of 2.34% to manage a portion of the interest rate exposure in connection with this financing. See Note 9 — Derivative Financial Instruments for additional information regarding interest rate swaps.

During the nine months ended September 30, 2013, the following long-term debt was issued:



Company	Type	Interest Rate		Maturity	Amount		Use of Proceeds
Generation	Upstream Gas Lending Agreement	2.210 - 2.440%		July 22, 2016	$	5	Used to fund Upstream gas activities
Generation	AVSR DOE Project Financing	2.535 - 3.353 %		January 5, 2037	$	204	Funding for Antelope Valley Solar Development
Generation	Energy Efficiency Project Financing	4.400	%	August 31, 2014	$	9	Funding to install energy conservation measures in Beckley, West Virginia
Generation	Continental Wind Senior Secured Notes	6.000	%	February 28, 2033	$	613	Used for general corporate purposes
ComEd	First Mortgage Bonds Series 114	4.600	%	August 15, 2043	$	350	Used to repay outstanding commercial paper obligations and for general corporate purposes
PECO	First and Refunding Mortgage Bonds	1.200	%	October 15, 2016	$	300	Used to pay at maturity first and refunding mortgage bonds due October 15, 2013 and other general corporate purposes
PECO	First and Refunding Mortgage Bonds	4.800	%	October 15, 2043	$	250	Used to pay at maturity first and refunding mortgage bonds due October 15, 2013 and other general corporate purposes
BGE	Senior Notes	3.350	%	July 1, 2023	$	300	Used to partially refinance Notes due July 1, 2013 and for general corporate purposes

Retirement and Redemptions of Current and Long-Term Debt

During the nine months ended September 30, 2014, the following long-term debt was retired and/or redeemed:



Company	Type	Interest Rate		Maturity	Amount
Generation	2003 Senior Notes	5.35	%	January 15, 2014	$	500
Generation	Pollution Control Loan	4.10	%	July 1, 2014	$	20
Generation	Continental Wind Project Financing	6.00	%	February 28, 2033	$	20
Generation	Kennett Square Capital Lease	7.83	%	September 20, 2020	$	2
Generation	ExGen Renewables I Project Financing	3mL + 4.25%		February 6, 2021	$	3
Generation	AVSR DOE Project Financing	2.33% - 3.55%		January 5, 2037	$	4
Generation	Clean Horizons Solar	2.56	%	September 7, 2030	$	1
Generation	Sacramento Solar Project Financing	2.56	%	December 31, 2030	$	1
Generation	Energy Efficiency Project Financing	4.40	%	August 31, 2014	$	9
ComEd	Mortgage Bonds Series 110	1.63	%	January 15, 2014	$	600
ComEd	Pollution Control Series 1994C	5.85	%	January 15, 2014	$	17
BGE	Rate Stabilization Bonds	5.72	%	April 1, 2017	$	35

On October 1, 2014, PECO retired $250 million aggregate principal of its 5.000% First and Refunding Mortgage Bonds due October 1, 2014.

On October 6, 2014, Generation paid down $11 million of principal and interest of its 3.056% - 3.143% AVSR Solar loan.

During the nine months ended September 30, 2013, the following long-term debt was retired and/or redeemed:



Company	Type	Interest Rate		Maturity	Amount
Generation	Kennett Square Capital Lease	7.830	%	September 20, 2020	$	2
Generation	Solar Revolver	1.930 - 1.950%		July 7, 2014	$	18
Generation	Clean Horizons Solar Project Financing	2.563	%	September 7, 2030	$	1
Generation^(a)	Series A Junior Subordinated Debentures	8.625	%	June 15, 2063	$	450
ComEd	First Mortgage Bonds Series 92	7.625	%	April 15, 2013	$	125
ComEd	First Mortgage Bonds Series 94	7.500	%	July 1, 2013	$	127
BGE	Senior Notes	6.125	%	July 1, 2013	$	400
BGE	Rate Stabilization Bonds	5.720	%	April 1, 2017	$	33

(a)

Represents debt obligations assumed by Exelon as part of the Constellation merger on March 12, 2012 that became callable at face value on June 15, 2013. Exelon and subsidiaries of Generation (former Constellation subsidiaries) assumed intercompany loan agreements that mirror the terms and amounts of the third-party debt obligations of Exelon, which are eliminated in consolidation on Exelon’s Consolidated Balance Sheets. The debentures were redeemed and the intercompany loan agreements repaid on June 15, 2013.