Severance (Exelon, Generation, ComEd, PECO and BGE)

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.

CENG Integration-Related Severance

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 September 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 September 30, 2014 are not material.

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



Nine Months Ended September 30, 2014
Severance Liability	Exelon and Generation
Balance at December 31, 2013	$	2
Integration of CENG^(a)	19
Severance charges	2
Payments	(7		)
Balance at September 30, 2014	$	16

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(a)	Includes the fair value of the CENG integration-related obligation as of April 1, 2014, the date of consolidation. Note this does not include $4 million of severance charges that were paid out prior to consolidation. See Note 6 — Investment in Constellation Energy Nuclear Group, LLC for additional information.

Cash payments under the severance plan began by CENG in the first quarter of 2014. Substantially all cash payments under the plan are expected to be made by the end of 2015.

Constellation Merger-Related Severance

Upon closing the merger with Constellation, Exelon recorded a severance accrual for the anticipated employee position reductions as a result of the post-merger integration. The majority of these positions are corporate and Generation support positions. Since then, Exelon has identified specific employees to be severed pursuant to the merger-related staffing and selection process as well as employees that were previously identified for severance but have since accepted another position within Exelon and are no longer receiving a severance benefit.

The amount of severance expense associated with the post-merger integration recognized for the three and nine months ended September 30, 2014 and 2013 is not material. Estimated costs to be incurred after September 30, 2014 are not material.

Amounts included in the table below represent the severance liability recorded by Exelon, Generation, ComEd, PECO and BGE for employees of those Registrants and exclude amounts billed through intercompany allocations:



Nine Months Ended September 30, 2014
Severance Liability	Exelon			Generation			ComEd		PECO		BGE
Balance at December 31, 2013	$	53		$	10		$	—	$	—	$	6
Payments	(36		)	(5		)	—		—		(4		)
Balance at September 30, 2014	$	17		$	5		$	—	$	—	$	2

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

Ongoing Severance Plans

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 nine months ended September 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 Ended
September 30, 2014	$	(2	)	$	(2	)	$	—	$	—	$	—
September 30, 2013	$	12		$	11		$	1	$	—	$	—



	Exelon		Generation		ComEd		PECO		BGE
Nine Months Ended
September 30, 2014	$	4	$	3	$	1	$	—	$	—
September 30, 2013	$	14	$	12	$	2	$	—	$	—

The severance liability balances associated with these ongoing severance benefits as of September 30, 2014 and December 31, 2013 are not material.