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

Exelon sponsors defined benefit pension plans and other postretirement benefit plans for essentially all Generation, ComEd, PECO, BGE and BSC employees.

As a result of the consolidation of CENG into Generation on April 1, 2014, the obligations associated with CENG's pension and other postretirement plans are reflected in the disclosures below based on an April 1, 2014 valuation adjusted for subsequent activity. The plans include essentially all former employees at CENG. Exelon assumed sponsorship of the CENG pension and other postretirement benefit plans on July 14, 2014. CENG will fund the underfunded balances of the pension and other post retirement benefit plans measured at July 14, 2014 on an agreed payment schedule or upon the occurrence of certain specified events, such as EDF's disposition of a majority of its interest in CENG. Payments received from CENG related to the funded plans will be contributed to the appropriate benefit trusts.

Defined Benefit Pension and Other Postretirement Benefits

During the first quarter of 2014, Exelon received an updated valuation of several of its pension and other postretirement benefit obligations to reflect actual census data as of January 1, 2014. This valuation resulted in an increase to the pension obligation of $35 million and an increase to the other postretirement benefit obligation of $12 million. Additionally, accumulated other comprehensive loss increased by approximately $12 million (after tax), regulatory assets increased by approximately $34 million, and regulatory liabilities increased by approximately $5 million. During the second quarter of 2014, Exelon received an updated valuation for the remainder of its pension and other postretirement benefit obligations to reflect actual census data as of January 1, 2014. This valuation resulted in an increase to the pension obligation of $13 million and an increase to the other postretirement benefit obligation of $3 million. Additionally, accumulated other comprehensive loss increased by approximately $1 million (after tax) and regulatory assets increased by approximately $15 million.

In April 2014, Exelon announced plan design changes for certain other postretirement benefit plans, which required an interim remeasurement of the benefit obligation for those plans using assumptions as of April 30, 2014, including updated discount rates and asset values. The remeasurement resulted in a decrease in the net periodic benefit costs for other postretirement benefits of approximately $149 million for the period May 2014 through December 2014 as compared to the net periodic benefit costs that were anticipated based on the January 1, 2014 valuation. The remeasurement resulted in a decrease in Exelon's non-pension postretirement benefit obligations, regulatory assets, and accumulated other comprehensive loss of approximately $790 million, $240 million , and $259 million (after tax), respectively, and an increase in regulatory liabilities of approximately $125 million .

The following tables present the components of Exelon’s net periodic benefit costs for the three and nine months ended September 30, 2014 and 2013. The majority of the 2014 pension benefit cost for Exelon-sponsored plans is calculated using an expected long-term rate of return on plan assets of 7.00% and a discount rate of 4.80%. The majority of the 2014 other postretirement benefit cost is calculated using an expected long-term rate of return on plan assets of 6.59% for funded plans and a discount rate of 4.90% for all plans. Certain of the other postretirement benefit plans were remeasured as of April 30, 2014 using an expected long-term rate of return on plan assets of 6.59% and a discount rate of 4.30%. Costs for the three and nine months ended September 30, 2014 reflect the impact of this remeasurement. On July 14, 2014 Exelon became the sponsor of the pension and other postretirement plans formerly sponsored by CENG. The components of cost for the CENG plans are included in the table below for the period from April 1, 2014 to September 30, 2014 and reflect the valuation performed on April 1, 2014. The 2014 pension benefit cost for these plans is calculated using an expected long-term rate of return on plan assets of 7.75% and discount rates ranging from 3.60% - 4.30%. The 2014 other postretirement benefit cost is calculated using a discount rate of 4.55%. A portion of the net periodic benefit cost is capitalized within the Consolidated Balance Sheets.



	Pension Benefits Three Months Ended September 30,						Other Postretirement Benefits Three Months Ended September 30,
	2014^(a)			2013^(a)			2014^(a)			2013^(a)
Service cost	$	74		$	79		$	27		$	41
Interest cost	189			163			42			48
Expected return on assets	(251		)	(253		)	(39		)	(33		)
Amortization of:
Prior service cost (benefit)	3			3			(44		)	(4		)
Actuarial loss	106			140			15			20
Settlement charges	—			9			—			—
Net periodic benefit cost	$	121		$	141		$	1		$	72



	Pension Benefits Nine Months Ended September 30,						Other Postretirement Benefits Nine Months Ended September 30,
	2014^(b)			2013^(b)			2014^(b)			2013^(b)
Service cost	$	218		$	238		$	90		$	122
Interest cost	561			488			144			145
Expected return on assets	(743		)	(761		)	(115		)	(99		)
Amortization of:
Prior service cost (benefit)	10			10			(79		)	(14		)
Actuarial loss	316			421			35			62
Settlement charges	—			9			—			—
Net periodic benefit cost	$	362		$	405		$	75		$	216

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(a)	For the three months ended September 30, 2014, the cost for pension benefits and other postretirement benefits related to CENG were $2 million and $3 million, respectively. CENG is not included in the 2013 amounts.


(b)	For the period April 1, 2014 to September 30, 2014, the cost for pension benefits and other postretirement benefits related to CENG were $5 million and $6 million, respectively. CENG is not included in the 2013 amounts.

The amounts below represent Generation’s, ComEd’s, PECO’s, BGE’s and BSC's allocated portion of the pension and postretirement benefit plan costs, which were included in Capital expenditures and Operating and maintenance expense during the three and nine months ended September 30, 2014 and 2013.



	Three Months Ended September 30,				Nine Months Ended September 30,
Pension and Other Postretirement Benefit Costs	2014		2013		2014		2013
Generation^(a)	$	54	$	87	$	193	$	259
ComEd	33		77		129		231
PECO	7		11		28		32
BGE	17		14		50		41
BSC^(b)	11		24		37		58

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(a)	For the three months ended September 30, 2014, the cost for pension benefits and other postretirement benefits related to CENG were $2 million and $3 million, respectively. For the period April 1, 2014 to September 30, 2014, the cost for pension benefits and other postretirement benefits related to CENG were $5 million and $6 million, respectively. CENG is not included in the 2013 amounts.


(b)	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.

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 make qualified pension plan contributions of $308 million to its qualified pension plans in 2014, of which Generation, ComEd, PECO and BGE will contribute $160 million, $119 million, $11 million and $0 million, respectively. Exelon's and Generation's expected qualified pension plan contributions above include $53 million and $51 million, respectively, related to the CENG plans for the period April 1, 2014 to December 31, 2014, of which $43 million will be funded by CENG as agreed to in the EMA. 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 $18 million in 2014, of which Generation, ComEd, PECO and BGE will make payments of $9 million, $1 million, $0 million and $1 million, respectively. Exelon's and Generation's expected non-qualified pension plan benefit payments above include $3 million related to the CENG plans for the period April 1, to December 31, 2014.

Unlike qualified pension plans, other postretirement benefit plans are not subject to statutory minimum contribution requirements and certain plans are not funded. Exelon’s management has historically considered several factors in determining the level of contributions to its funded other postretirement benefit plans, including levels of benefit claims paid and regulatory implications (amounts deemed prudent to meet regulator expectations and best assure continued rate recovery). Exelon expects to make other postretirement benefit plan contributions, including benefit payments related to unfunded plans and reflecting the impact of recent plan design changes, of approximately $290 million in 2014, of which Generation, ComEd, PECO and BGE expect to contribute $128 million, $121 million, $4 million and $18 million, respectively. Exelon's and Generation's expected other postretirement benefit plan payments above include $5 million related to the CENG plans for the period April 1, 2014 to December 31, 2014.

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 a liability hedging investment strategy for its qualified pension plans that has reduced the volatility of its pension assets relative to its pension liabilities. Exelon may increase or decrease the liability hedging portfolio as the funded status of its plans changes. The overall objective is to achieve long term investment returns that, taking into account projected contributions and liquidity requirements, provide sufficient assets to meet current and future benefit obligations while maintaining acceptable levels of funding status volatility. 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 various 401(k) defined contribution savings plans that 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 the matching contributions to the savings plans during the three and nine months ended September 30, 2014 and 2013:



	Three Months Ended September 30,				Nine Months Ended September 30,
Savings Plan Matching Contributions	2014		2013		2014		2013
Exelon^(a)	$	34	$	18	$	82	$	61
Generation^(a)	17		8		41		29
ComEd	8		6		20		16
PECO	2		2		6		6
BGE	3		1		7		5
BSC^(b)	4		1		8		5

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(a)	Includes $1 million related to CENG for the three months ended September 30, 2014 and for the period from April 1, 2014 to September, 30 2014. CENG is not included in the 2013 amounts.


(b)	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.