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 of $2 million and $16 million, respectively. 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 $19 million CENG severance liability pursuant to the Master Agreement. For the years ended December 31, 2014 and 2013, respectively, Exelon and Generation recorded severance benefit costs associated with the employee reductions of $3 million and $2 million within Operating and maintenance expense in their Consolidated Statements of Operations and Comprehensive Income. The estimated amount of severance payments associated with this plan is expected to be approximately $24 million. As of December 31, 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 December 31, 2014 are not material.

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



Year Ended December 31, 2014	Exelon and Generation
Severance Liability
Balance at December 31, 2013	$	2
Integration of CENG ^(a)	19
Severance charges	3
Payments	(11		)
Balance at December 31, 2014	$	13

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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 includes an additional $3 million of severance charges incurred in the first quarter of 2014 by CENG. See Note 5 - Investment in Constellation Energy Nuclear Group, LLC for additional information.

Cash payments under the severance plan began in 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. Exelon adjusts its accrual each quarter to reflect its best estimate of remaining severance costs.

The amount of severance expense associated with the post-merger integration recognized for the twelve months ended December 31, 2014 and 2013 is not material. Estimated costs to be incurred after December 31, 2014 are not immaterial.

For the year ended December 31, 2012, the Registrants recorded the following severance benefit costs associated with identified job reductions within Operating and maintenance expense in their Consolidated Statements of Operations and Comprehensive Income, except for those costs that were capitalized as regulatory assets related to ComEd and BGE:



Year Ended December 31, 2012
Severance Benefits ^(a)	Exelon ^(b)		Generation		ComEd ^(b)		PECO		BGE ^(b)
Severance charges	$	124	$	80	$	14	$	7	$	17
Stock compensation	7		4		1		—		1
Other charges	7		4		1		—		1
Total severance benefits	$	138	$	88	$	16	$	7	$	19

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(a)	The amounts above include $46 million at Generation, $14 million at ComEd, $7 million at PECO, and $7 million at BGE, for amounts billed by BSC through intercompany allocations for the year ended December 31, 2012.


(b)	Exelon, ComEd and BGE established regulatory assets of $35 million, $16 million and $19 million, respectively, for severance benefits costs for the year ended December 31, 2012. The majority of these costs are expected to be recovered over a five-year period.

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:



Severance liability	Exelon			Generation			ComEd			PECO		BGE
Balance at December 31, 2012	$	111		$	33		$	1		$	—	$	11
Severance charges ^(a)	5			1			—			—		—
Stock compensation	1			—			—			—		—
Payments	(64		)	(24		)	(1		)	—		(5		)
Balance at December 31, 2013	$	53		$	10		$	—		$	—	$	6
Payments	(41		)	(7		)	—			—		(4		)
Balance at December 31, 2014	$	12		$	3		$	—		$	—	$	2

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(a)	Includes salary continuance and health and welfare severance benefits. Amounts primarily represent benefits provided for under Exelon’s ongoing severance plan. One-time termination benefits were not material for the years ended December 31, 2014 and December 31, 2013.

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

Ongoing Severance Plans

The Registrants provide severance, health and welfare benefits under Exelon’s ongoing severance benefit plans to terminated employees in the normal course of business, which were 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 years ended December 31, 2014, 2013, and 2012, 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:



Severance Benefits ^(a)	Exelon		Generation		ComEd		PECO		BGE
Severance Charges-2014	$	7	$	5	$	1	$	—	$	1
Severance Charges-2013	18		16		2		—		—
Severance Charges-2012	19		14		2		1		3

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(a)	The amounts above for Generation include $1 million, $2 million, and $0 million for amounts billed by BSC through intercompany allocations for the years ended December 31, 2014, December 31, 2013, and December 31, 2012, respectively. Amounts billed by BSC to ComEd, PECO and BGE were not material.


(b)	The amount of ongoing severance for Generation for the year ended December 31, 2014 includes a $3 million severance reserve as a result of anticipated employee position reductions due to recent acquisitions.

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