Exelon Records ComEd-driven $776 Million Charge against Goodwill; Announces Solid Third Quarter Operating Results.

CHICAGO -- Exelon CorporationeIUs (Exelon) third quarter 2006 consolidated loss prepared in accordance with GAAP was $44 million, or $0.07 per share, compared with earnings of $725 million, or $1.07 per diluted share, in the third quarter of 2005.

The third quarter 2006 loss was primarily driven by an impairment of the goodwill at Commonwealth Edison Company (ComEd), resulting in a non-cash charge of $776 million, or $1.15 per diluted share. Due to the significant negative impact of the Illinois Commerce CommissioneIUs (ICC) July 26, 2006 order in ComEdeIUs Rate Case, ComEd performed a goodwill impairment analysis, which resulted in the above-mentioned charge.

ExeloneIUs adjusted (non-GAAP) operating earnings for the third quarter of 2006 were $690 million, or $1.02 per diluted share, compared with $645 million, or $0.95 per diluted share, for the same period in 2005. The 7 percent increase in adjusted (non-GAAP) operating earnings per share was primarily the result of higher margins on wholesale market sales, increased output due to strong nuclear performance at Exelon Generation Company, LLC (Generation) and higher electric revenues associated with certain authorized rate increases at PECO Energy Company (PECO). The Exelon-operated nuclear plants achieved a 95.8 percent capacity factor for the third quarter of 2006, compared with 95.0 percent for the third quarter of 2005, and an all-time high summer capacity factor of 98.1 percent. The positive factors were partially offset by the effects of unfavorable weather conditions as compared with last year in the ComEd and PECO service territories, higher operating and maintenance expense, and increased depreciation and amortization, including the scheduled higher competitive transition charge (CTC) amortization at PECO.

eIuOur third quarter performance was strong, as shown by the operating earnings, nuclear performance, fossil fleet availability, and improving generation margins,eIN said John W. Rowe, ExeloneIUs chairman, president and CEO. Rowe continued, eIuWe were, of course, very disappointed by the results in the ComEd delivery rate case, which led to the goodwill charge, and will seek to improve ComEd's financial strength through our request for rehearing and future rate cases. As you know, the rate case is not the only issue in Illinois, and ComEd is currently committed to opposing a proposed rate freeze extension in the Illinois legislature. ComEd must have the financial strength to meet its own obligations and cannot look to the other Exelon companies to do that. Both ComEd and Exelon are prepared to take any legal measures necessary to protect themselves.eIN

A non-GAAP financial measure, adjusted (non-GAAP) operating earnings for the third quarter of 2006 do not include the following items that are included in reported GAAP earnings (all after tax):

* A charge of $776 million, or $1.15 per diluted share, related to the impairment of ComEdeIUs goodwill.

* Mark-to-market gains of $58 million, or $0.08 per diluted share, primarily from GenerationeIUs non-trading activities.

* A one-time benefit of $52 million, or $0.08 per diluted share, approved by the ICCeIUs July 26 order to recover previously incurred losses on the extinguishment of debt as part of ComEd's 2004 Accelerated Liability Management Plan.

* Expenses of $42 million, or $0.06 per diluted share, related to certain merger-related costs associated with the recently terminated merger with Public Service Enterprise Group Incorporated (PSEG). This charge includes approximately $35 million for the write-off of previously capitalized merger-related costs.

* Severance and severance-related charges of $14 million, or $0.02 per diluted share.

* A net loss of $13 million, or $0.02 per diluted share, associated with investments in synthetic fuel-producing facilities, including the impact of mark-to-market losses associated with the related derivatives.

Adjusted (non-GAAP) operating earnings for the third quarter of 2005 do not include the following items that are included in reported GAAP earnings (all after-tax):

* Mark-to-market gains of $52 million, or $0.08 per diluted share, from GenerationeIUs non-trading activities.

* Earnings of $28 million, or $0.04 per diluted share, from investments in synthetic fuel-producing facilities, including the impact of mark-to-market gains associated with the related derivatives.

2006 Earnings Outlook

eIuWith three quarters of strong performance behind us, we are confident in our ability to deliver 2006 results in our operating earnings guidance range of $3.15 to $3.30 per share,eIN said Rowe. Earnings guidance is based on the assumption of normal weather for the remainder of the year.

With increasing focus on its individual businesses, Exelon is providing guidance for each operating companyeIUs contribution to 2006 earnings. The following table indicates guidance ranges by operating company for 2006 adjusted (non-GAAP) operating earnings per Exelon share.

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The outlook for 2006 adjusted (non-GAAP) operating earnings for Exelon and its subsidiaries excludes the following items:

* mark-to-market adjustments from non-trading activities;

* investments in synthetic fuel-producing facilities;

* certain costs associated with the recently terminated merger with PSEG;

* significant impairments of intangible assets;

* certain severance and severance-related costs;

* significant changes in decommissioning obligation estimates;

* any impact of the ICCeIUs July 26 order rehearing process in the fourth quarter of 2006;

* losses on extinguishments of long-term debt to be recovered by ComEd as approved in the July 26 ICC rate order; and

* other unusual items, including any future changes to GAAP.

Giving consideration to these factors, Exelon estimates GAAP earnings in 2006 will fall in the range of $2.15 to $2.30 per share, excluding any impact of the ICCeIUs July 26 order rehearing process in the fourth quarter of 2006. This range is lower than the previous estimate of $3.00 to $3.30 per share primarily due to the impairment of ComEdeIUs goodwill in the third quarter.

Third Quarter Highlights

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OPERATING COMPANY RESULTS

ComEd consists of the retail and wholesale electricity transmission and distribution operations in northern Illinois.

ComEd recorded a net loss in the third quarter of 2006 of $506 million compared with net income of $224 million in the third quarter of 2005. The third quarter 2006 net loss included (all after tax) a non-cash charge of $776 million related to the impairment of ComEdeIUs goodwill, a one-time benefit of $52 million approved by the ICCeIUs July 26 order to recover previously incurred losses on the extinguishment of debt as part of ComEd's 2004 Accelerated Liability Management Plan, and severance and severance-related charges of $5 million. The third quarter 2005 net income included a reduction in severance and severance-related reserves of $3 million after tax and certain integration costs associated with the recently terminated merger with PSEG of $1 million after tax. Excluding the impact of these and other minor items, ComEdeIUs net income in the third quarter of 2006 increased $1 million compared with the same quarter last year, primarily due to a one-time benefit approved by the ICCeIUs July 26 order to recover previously incurred environmental costs associated with manufactured gas plants and lower purchased power expense attributable to a contractual decrease in prices associated with ComEdeIUs power purchase agreement with Generation, largely offset by the impact of less favorable weather.

In the ComEd service territory, cooling degree-days were down 12 percent relative to the same period in 2005, but were 18 percent above normal. ComEdeIUs total retail kWh deliveries decreased 4 percent in 2006 as compared with 2005, with a 12 percent decrease in deliveries to the residential customer class, largely due to less favorable weather. ComEdeIUs third quarter 2006 revenues were $1,840 million, down 6 percent from $1,948 million in 2005, primarily due to decreased deliveries to residential and Power Purchase Option (PPO) customers. For ComEd, weather had an unfavorable after-tax impact of $33 million on third quarter 2006 earnings relative to 2005 and had a favorable after-tax impact of $10 million relative to the normal weather that was incorporated in earnings guidance.

The number of customers being served in the ComEd region has increased 1.3 percent since the third quarter of 2005, while weather-normalized kWh deliveries declined 1.5 percent compared with the third quarter of 2005, according to our models, largely due to a decrease in usage per customer for the residential and small commercial and industrial classes.

PECO consists of the retail electricity transmission and distribution operations and the retail natural gas distribution business in southeastern Pennsylvania.

PECOeIUs net income in the third quarter of 2006 was $134 million, a decrease from net income of $166 million in the third quarter of 2005. The third quarter 2006 net income included (all after tax) severance and severance-related charges of $3 million, and expenses of $3 million related to certain integration costs associated with the recently terminated merger with PSEG. The third quarter 2005 net income included (after tax) expenses of $3 million related to certain integration costs associated with the recently terminated merger with PSEG. Excluding the impact of these items, PECOeIUs net income in the third quarter of 2006 decreased $29 million compared with the same quarter last year primarily due to higher CTC amortization and higher storm costs, partially offset by higher revenues, net of purchased power and fuel expense, and an investment tax credit refund and associated interest income. Higher net revenues reflected certain authorized electric rate increases, including a scheduled CTC rate increase, partially offset by lower net electric revenues as a result of unfavorable weather. The increases in CTC amortization expense and CTC rates are in accordance with PECO's 1998 restructuring settlement with the Pennsylvania Public Utility Commission (PAPUC). As expected, the increase in CTC amortization expense exceeded the increase in CTC revenues.

In the PECO service territory, cooling degree-days were down 18 percent from 2005, but were 8 percent above normal. PECOeIUs total electric retail kWh deliveries decreased 4 percent, with residential deliveries down 9 percent. Total gas retail deliveries were up 4 percent from the 2005 period. PECOeIUs third quarter 2006 revenues were $1,379 million, up 4 percent from $1,322 million in 2005, primarily due to the above-mentioned electric rate increases and a net increase in gas rates through PAPUC-approved changes to the purchased gas adjustment clause. For PECO, weather had an unfavorable after-tax impact of $7 million on third quarter 2006 earnings relative to 2005 and a favorable after-tax impact of $4 million relative to the normal weather that was incorporated in earnings guidance.

The number of electric customers being served in the PECO region has increased 0.5 percent since the third quarter of 2005, with weather-normalized kWh growth of 0.6 percent compared with the third quarter of 2005, according to our models.

Exelon Generation consists of ExeloneIUs electric generation operations, competitive retail sales and power marketing and trading functions.

Third quarter 2006 net income was $394 million compared with $335 million in the third quarter of 2005. Third quarter 2006 net income included (all after tax) mark-to-market gains of $56 million from non-trading activities, severance and severance-related charges of $6 million, certain integration costs of $2 million associated with the recently terminated merger with PSEG and income of $1 million related to GenerationeIUs prior investment in Sithe, which is reflected as discontinued operations. Third quarter 2005 net income included after-tax mark-to-market gains of $52 million from non-trading activities and after-tax income of $1 million related to GenerationeIUs prior investment in Sithe, which is reflected as discontinued operations. Excluding the impact of these and other minor items, GenerationeIUs net income in the third quarter of 2006 increased $64 million compared with the same quarter last year, primarily due to higher revenue, net of purchased power and fuel expense, partially offset by higher operating and maintenance expense largely due to higher nuclear refueling outage costs.

GenerationeIUs revenue, net of purchased power and fuel expense, increased by $134 million in the third quarter of 2006 compared with the third quarter of 2005 excluding the mark-to-market impact in both years. The quarter-over-quarter increase in revenue, net of purchased power and fuel expense, was driven by higher average margins on wholesale market sales due to more favorably-priced hedges, the impact of higher hydro and nuclear generation, lower purchased power costs and the contractual increase in the prices associated with GenerationeIUs power sales agreement with PECO, partially offset by the contractual decrease in prices associated with GenerationeIUs power sales agreement with ComEd. GenerationeIUs average realized margin on all electric sales, including sales to affiliates and excluding trading activity, was $22.09 per MWh in the third quarter of 2006 compared with $18.52 per MWh in the third quarter of 2005.

Adjusted (non-GAAP) Operating Earnings

Adjusted (non-GAAP) operating earnings, which generally exclude significant one-time charges or credits that are not normally associated with ongoing operations and mark-to-market adjustments from non-trading activities, are provided as a supplement to results reported in accordance with GAAP. Management uses such adjusted (non-GAAP) operating earnings measures internally to evaluate the companyeIUs performance and manage its operations. Reconciliations of GAAP to adjusted (non-GAAP) operating earnings for historical periods are attached. Additional earnings release attachments, which include the reconciliations on pages 7 and 8, are posted on ExeloneIUs Web site: www.exeloncorp.com and have been filed with the Securities and Exchange Commission on Form 8-K on October 27, 2006.

Conference call information: Exelon has scheduled a conference call for 11 AM ET (10 AM CT) on October 27, 2006. The call-in number in the U.S. is 800-418-7236, and the international call-in number is 973-935-8757. No password is required. Media representatives are invited to participate on a listen-only basis. The call will be web-cast and archived on ExeloneIUs Web site: www.exeloncorp.com. (Please select the Investor Relations page.)

Telephone replays will be available until November 10. The U.S. call-in number for replays is 877-519-4471, and the international call-in number is 973-341-3080. The confirmation code is 7947312.

This news release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that are subject to risks and uncertainties. The factors that could cause actual results to differ materially from these forward-looking statements include those discussed herein as well as those discussed in (1) Exelon CorporationeIUs 2005 Annual Report on Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. ManagementeIUs Discussion and Analysis of Financial Condition and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Exelon-Note 20, ComEd-Note 17, PECO-Note 15 and Generation-Note 17; (2) Exelon CorporationeIUs Third Quarter 2006 Quarterly Report on Form 10-Q (to be filed on October 27, 2006) in (a) Part II, Other Information, ITEM 1A. Risk Factors and (b) Part I, Financial Information, ITEM 1. Financial Statements: Note 13; and (3) other factors discussed in filings with the Securities and Exchange Commission (SEC) by Exelon Corporation, Commonwealth Edison Company, PECO Energy Company and Exelon Generation Company, LLC (Companies). Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this news release. None of the Companies undertakes any obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this news release.

Exelon Corporation is one of the nationeIUs largest electric utilities with approximately 5.2 million customers and more than $15 billion in annual revenues. The company has one of the industryeIUs largest portfolios of electricity generation capacity, with a nationwide reach and strong positions in the Midwest and Mid-Atlantic. Exelon distributes electricity to approximately 5.2 million customers in Illinois and Pennsylvania and natural gas to more than 470,000 customers in southeastern Pennsylvania. Exelon is headquartered in Chicago and trades on the NYSE under the ticker EXC.

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