22606--2/6/2009--EXELON_GENERATION_CO

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Exelon s generation and energy delivery businesses are highly regulated. Fundamental changes in regulation could disrupt Exelon s business plans and adversely affect its operations and financial results. Market performance and other changes may decrease the value of decommissioning trust funds and benefit plan assets, which then could require significant additional funding. Legislators or regulators may respond to anticipated increases in rates following the end of the retail electric generation rate cap transition period in Pennsylvania on December 31, 2010 by enacting laws or regulations aimed at restricting or controlling those rates or by establishing rate relief programs that could require significant funding from PECO and/or Generation that could adversely affect PECO and/or Generation s results of operations. The Illinois Settlement Legislation enacted in 2007 providing rate relief to Illinois electric customers and requiring other changes in the electric industry in lieu of harmful alternatives such as rate freezes, caps, or a tax on generation, could be reversed or modified by new legislation that could be harmful to ComEd and Generation. Changes in taxation as well as the inherent difficulty in quantifying potential tax effects of business decisions could negatively impact the Registrants results of operations. 1999 sale of fossil generating assets. Tax reserves and the recoverability of deferred tax assets. Increases in taxes and fees. Exelon s holding company structure could limit its ability to pay dividends. The Registrants may incur substantial costs to fulfill their obligations related to environmental and other matters. Exelon and Generation may incur material costs of compliance if Federal and/or state legislation is adopted to address climate change. The Registrants could be subject to higher costs and/or penalties related to mandatory reliability standards. Exelon and its subsidiaries have guaranteed the performance of third parties, which may result in substantial costs in the event of non-performance. Results of operations may be negatively affected by increasing costs. The Registrants employees, contractors, customers and the general public may be exposed to a risk of injury due to the nature of the energy industry. Failure to attract and retain an appropriately qualified workforce may negatively impact the Registrants results of operations. War, acts and threats of terrorism, natural disaster and other significant events may adversely affect Exelon s results of operations, its ability to raise capital and its future growth. Generation s business may be negatively affected by the restructuring of the energy industry. Generation may be negatively affected by possible Federal legislative or regulatory actions that could weaken competition in the wholesale markets or affect pricing rules in the RTO markets. Due to its dependence on its two most significant customers, ComEd and PECO, Generation will be negatively affected in the event of non-performance or change in the creditworthiness of either of its most significant customers. Generation s affiliation with ComEd and PECO, together with the presence of a substantial percentage of Generation s physical asset base within the ComEd and PECO service territories, could increase Generation s cost of doing business to the extent future complaints or challenges regarding ComEd and PECO retail rates result in settlements or legislative or regulatory requirements funded in part by Generation. Generation may not be able to effectively respond to competition in the energy industry. Generation may not be able to effectively respond to increased demand for energy. Generation s financial performance may be negatively affected by liabilities arising from its ownership and operation of nuclear facilities. Generation s financial performance may be negatively affected by price volatility, availability and other risk factors associated with the procurement of nuclear and fossil fuel. Financial performance and load requirements may be adversely affected if Generation is unable to effectively manage its power portfolio. Generation is exposed to price fluctuations and other risks of the wholesale power market that are beyond its control, which may negatively impact its results of operations. Generation s risk management policies cannot fully eliminate the risk associated with its commodity trading activities. Generation s business is capital intensive and the costs of capital projects may be significant. Generation s long-lived assets may become impaired, which would result in write-offs of the impaired amounts. Exelon s and ComEd s goodwill may become impaired, which would result in write-offs of the impaired amounts. Increases in customer rates and the impact of economic downturns may lead to greater expense for uncollectible customer balances. Additionally, increasing rates could lead to decreased volumes delivered. Both of these factors may decrease ComEd s results from operations and cash flows. ComEd would be required to provide significant amounts of collateral under its agreements with counterparties in the event that it were to lose its investment grade rating while certain wholesale market conditions exist. The impact of economic downturns may lead to lower revenues and greater expense for uncollectible customer balances. Additionally, increasing rates could lead to a decrease in volumes delivered. Both of these factors may decrease PECO s results from operations and cash flows. PECO would be required to provide significant amounts of collateral under its agreements with counterparties in the event that it were to experience a downgrade in its credit rating or fall below investment grade. Due to PECO s dependence on Generation to fulfill 100% of its electric energy supply requirements under a PPA, PECO could be negatively affected in the event of Generation s inability to perform under the PPA. PECO may be subject to the risk of a legislative or regulatory mandated requirement to purchase Philadelphia Gas Works (PGW). Changes in ComEd s and PECO s terms and conditions of service, including their respective rates, are subject to regulatory approval proceedings and/or negotiated settlements that are at times contentious, lengthy and subject to appeal, which lead to uncertainty as to the ultimate result and which may introduce time delays in effectuating rate changes. ComEd and PECO are likely to be subject to higher transmission operating costs in the future as a result of PJM s RTEP and the rate design between PJM and MISO. The impact of not meeting the criteria of Financial Accounting Standards Board Statement No. 71, Accounting for the Effects of Certain Types of Regulation (SFAS No. 71) could be material to ComEd and PECO. Mandatory Federal or additional state energy conservation and RPS legislation could negatively affect the costs and cash flows of ComEd and PECO. ComEd s and PECO s respective ability to deliver electricity, their operating costs and their capital expenditures may be negatively affected by transmission congestion. ComEd s and PECO s operating costs, and customers and regulators opinions of ComEd and PECO, are affected by their ability to maintain the availability and reliability of their delivery systems. The effects of weather and the related impact on electricity and gas usage may decrease ComEd s and PECO s results of operations and cash flows. ComEd s and PECO s businesses are capital intensive, and the costs of capital projects may be significant. A reduction of Exelon s credit rating could result in a reduction of the credit rating of ComEd or PECO, or both. Exelon may not successfully complete its proposed acquisition of NRG. If Exelon is successful in its proposed acquisition of NRG, Exelon may not be able to realize all of the benefits expected to be derived from the acquisition. Exelon s indebtedness following the consummation of an acquisition of NRG will be higher than Exelon s existing indebtedness. Therefore, it may be more difficult for Exelon to pay or refinance its debts, and Exelon may need to divert its cash flow from operations to debt service payments. The additional indebtedness could limit Exelon s ability to pursue other strategic opportunities and increase its vulnerability to adverse economic and industry conditions. The terms that may be included in debt agreements entered into by Exelon in connection with the acquisition of NRG may impose many restrictions on Exelon. A failure by Exelon to comply with any of these restrictions could result in the acceleration of Exelon s debt. Were this to occur, Exelon might not have, or be able to obtain, sufficient cash to pay the accelerated indebtedness. Exelon has only conducted a review of NRG s publicly available information and has not had access to NRG s non-public information. Therefore, Exelon may be subject to unknown liabilities of NRG which may have a material adverse effect on Exelon s financial condition and results of operations. The acquisition is subject to various regulatory approvals, and obtaining such approvals may delay or prevent Exelon s acquisition of NRG or may require divestitures. The market price of Exelon common stock may decline as a result of the exchange offer and the second-step merger. Uncertainties exist in integrating the business and operations of Exelon and NRG. Even if the exchange offer is completed, full integration of NRG s operations with Exelon s may be delayed if Exelon is unable to solicit proxies from NRG stockholders in a sufficient amount to approve the second-step merger. The acquisition could trigger certain provisions contained in NRG s employee benefit plans or other agreements that could require Exelon to make change of control payments or permit a counter-party to an agreement with NRG to terminate that agreement. The consummation of the exchange offer may accelerate NRG s existing indebtedness.

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22606--2/6/2009--EXELON_GENERATION_CO_LLC