ML003767967

PECO Energy Company'S Merger with Unicorn Corporation Limerick Generating Station, Units I and 2 Permit Transfer Request

ML003767967
Person / Time
Site:	Limerick
Issue date:	11/01/2000
From:	Hutton J PECO Energy Co
To:	Document Control Desk, Office of Nuclear Reactor Regulation
References
-nr, -RFPFR
Download: ML003767967 (478)

Text

{{#Wiki_filter:Nuclear Group Headquarters 200 Exelon Way A Unit of PECO Energy Kennett Square, PA 19348 November 1, 2000 Docket Nos. 50-352 50-353 License Nos. NPF-39 NPF-85 U.S. Nuclear Regulatory Commission ATTN: Document Control Desk Washington, DC 20555

Subject:

PECO Energy Company's Merger with Unicom Corporation Limerick Generating Station, Units 1 and 2 Permit Transfer Request

Dear Sir/Madam:

In accordance with Appendix B of the Limerick Generating Station (LGS) Units I and 2 Operating Licenses, this letter is being submitted to provide copies of the applications for transferring PECO Energy's Limerick Generating Station permits and licenses to Exelon Generation Company as a result of the merger of PECO Energy and Unicom Corporation. Enclosed is a copy of the cover letter and enclosures sent to the Pennsylvania Department of Environmental Protection including the transfer applications for the following permit types: NPDES permits, Dam permits, Water Encroachment/Obstruction permits, Public Water Supply permits, Title V permits, Storage Tank Registrations, and RCRA Hazardous Waste Identification Numbers. Also enclosed is a copy of the cover letter and attachments sent to the Delaware River Basin Commission (DRBC) for transferring the DRBC Dockets. Only Dockets related to Limerick Generating Station are enclosed; references to other dockets are not enclosed. If you have any questions or require additional information, please do not hesitate to contact us. Very truly yours, James A. Hutton Director - Licensing Enclosures Q oof cc: H. J. Miller, Administrator, USNRC, Region I (w/o enc) A. L. Burritt, USNRC Senior Resident Inspector, LGS (w/o enc)

PECO Energy Company's Merger with Unicorn Corporation Limerick Generating Station, Units I and 2 Permit Transfer Reguest ATTACHMENTS AS FOLLOWS - PECO Energy's letter to PaDEP - PaDEP's letter to PECO Energy - PECO Energy's letter to the Bureau of Regulatory Counsel - Matrix of all PECO Energy's existing and pending permits, licenses and approvals - PECO Energy and Unicom's Joint Proxy Statement - Registration/Permitting of Storage Tanks Application - Notification of Regulated Waste Activity Application - Application for NPDES or WQM Part II Permit Transfer - Water Encroachment/Obstruction Permit Application - Title V Operating Permit Application - Application for Transfer of a Public Water Supply Permit - Dams permit Application - Exelon Power's letter to the Delaware River Basin Commission - Delaware River Basin Commission's letter to PECO Energy - Table 1 DRBC Dockets to be Transferred - Docket No. D-69-2 10 CP (Final) (Revision 10) - Docket No. D-69-21 0 CP (Final) (Revision 9) - Docket No. D-69-21 0 CP (Final) (Revision No. 8) - Docket No. D-69-2 10 CP (Final) (Revision 6) - Docket No. D-69-210 CP (Final) (Revision No. 5) - Docket No. D-69-21 0 CP (Final) (Revision No. 4) - Docket No. D-69-2 10 CP (Final) (Revision No. 2) - NO. 88-5 - NO. 87-2 - Docket No. D-69-2 10 CP (Final) (Revised) - Docket No. D-69-2 10 CP (Final) - Docket No. D-69-2 10 CP

Exel fM 200 Exelon Way www.exeloncorp.com Power Kennett Square, PA 19348 October 31, 2000 Mr. John J. Kennedy, P.E. Assistant Director Southeast Regional Office Lee Park, Suite 6010 555 North Lane Conshohocken, PA 19428

Subject:

PECO Energy Company's Merger with Unicom Corporation Permit Transfer Request As outlined in PaDEP's letter to PECO Energy (attached) the enclosed package contains several applications for transferring PECO Energy's permits and licenses to Exelon Generation Company. Enclosed are transfer applications for the following permit types; NPDES permits, Dam permits, Water Encroachment/Obstruction permits, Submerged Lands License Agreements, Public Water Supply permits, Title V permits, Plant Operating Approvals, Storage Tank Registrations, and RCRA Hazardous Waste Identification Numbers. Also enclosed are 2 copies of PECO Energy's compliance history, a matrix (paper and electronic) containing a list of all PECO Energy's existing and pending permits, licenses, and approvals, a copy of PECO Energy and Unicom's Joint Proxy Statement describing the merger in detail, and a check in the amount of $6,000 (Check Number 11004494) covering all applicable permit transfer fees. A tax identification number for Exelon Generation Company is currently not available. The number will be assigned once legal restructuring is complete and all generating assets are transferred to the new company. Restructuring is anticipated to be completed by January 1, 2001. Once the number is available, PECO Energy will forward the ID to PaDEP. Please note that all permits and licenses can not be transferred to Exelon Generation until legal restructuring is complete.

PECO Energy would welcome the opportunity to meet with the Department to review and discuss the enclosed package. If you have any questions regarding the applications, please contact me at (610) 765-5514. Legal questions regarding our submittal or the nature of the merger can be referred to Mr. Edward J. Cullen at (215) 841-4273. Sincerely, Robert M. Matt , Jr. Manager Environmental Affairs

bcc: C. A. Jacobs w/o attachments It cc J. Doering J. D. von Suskil 91 19 W. Jefferson 91 T. A Shea T. M. Chaykun II K. S. Kemper I' R. W. Sauer Is LI J. J. McCormick G. L. Johnston R. C. Braun D. L. Fish w/ attachments

Pennsylvania Department of Environmental Protection Rachel Carson state uOffce BuTIMdng P.O. Box 2063 Harrisburg, PA 17105-2063 September 1, 2000 Office of Field Operations 717-787-5028 Edward J. Cullen, Jr. PECO Energy Company 2301 Market Street P. 0. Box 8699 Philadelphia, PA 19101-8699

Dear Mr. Cullen:

This is in response to the proposed merger involving PECO Energy and the Unicorn Corporation. The Department would recommend a simplified approach to having the necessary permits, licenses and approvals (including insurance and bonding requirements) transferred from PECO to Exelon Generation Company. There is no additional environmental or public health exposure resulting from this transaction. This approach would allow all of the permits, licenses and approvals to be transferred through a single transaction with one public notice and comment period. The Southeast Regional Office would coordinate the Department's review of the permits, licenses and approvals for all of the facilities involved. The Department recommends the following "one stop" approach for this transaction:

1. PECO would send the Department a letter describing the timing and nature of the transaction and requesting that all permits, licenses and approvals be transferred to Exelon Generation Company when the transaction closes;

2. PECO would provide a single permit, license and approval transfer application and any related documents for each class of permit, license and approval;

3. PECO would provide any updates to compliance history submissions required under the Department's regulations. If compliance problems are identified they would, of course, need to be addressed;

4. PECO would provide a paper and electronic copy of a matrix of all existing permits, licenses and approvals sorted by facility, including identification numbers, contact persons, a listing of the fee for each permit license and approval and the name of the new contact person;

5. PECO would provide a single check in the amount of the aggregate of the transfer fees identified in the existing permit, license and approval matrix;

6. PECO would provide a paper and electronic copy of a matrix of all pending permit applications, license applications or other approval applications sorted by facility, An Equal Opportunity Employer www.dep.state.pa.us Printed on Recycled Paper

Edward J. Cullen, Jr. 2 717-787-5028 PECO Energy Company including identification numbers, contact persons and the name of the new contact person; and

7. PECO would provide the name of a program contact and attorney contact to be available to address any issues that are identified during the Department's review of the information.

This information would be sent directly to John Kennedy, Assistant Regional Director, for the Southeast Regional Office. John would act as the contact person for getting the necessary Department input and review of the transfer applications. The Department would publish a single notice in the Pennsylvania Bulletin providing an opportunity for public comment on the transfer of the permits, licenses and approvals. PECO would publish any required newspaper notice on a facility basis. PECO would also provide any necessary municipal notification on a facility basis. I recognize that even with this simplified approach there may be a number of "glitches" that we may need to address. For example, there may be some errors in the Department's current data system for some of the permits, licenses and approvals. Hopefully, this simplified process will provide an opportunity to clean up all of the data and information. I believe that this "one stop" approach will simplify the process of transferring the existing permits, licenses and approvals. Please let me know if you would like to take advantage of this approach. Sincerely,

                                             /*%Terry R. Fabian Deputy Secretary for Field Operations cc:    David Hess John Kennedy Karen Basset Duke Pepper

COMMONWEALTH OF PENNSYLVANIA Department of Environmental Protection Office of Field Operations August 25, 2000 717-787-5028

SUBJECT:

Delegation of Authority TO: Executive Staff SEP06 2000 Regional Directors Bureau Directors REFER TO-__- ,_ FROM: Terry R. fabian-/:./,2, -- 1' Deputy Secretary for Field Operations While I am out of the office August 30-September 5, 2000, I delegate authority for those actions delegated to me by the Secretary including signature authority, expenditures, and any policy actions within the Office of Field Operations to Eric Conrad.

Legal Department PECO ENERGY PECO Energy Company 2301 Market Street PO Box 8699 James W. Durham Philadelphia, PA 19101-8699 Senior Vice President 215 841 5544 and General Counsel Fax 215 568 3389 Edward J. Cullen, Jr. DePuty General Counsel Direct Dial: 215 841 4273 Sandra H. Byrne Legal Administrator Paul R. Bonney Jessica N. Cone July 11, 2000 Todd D. Cutler Susan Sciamanna Foehl Amy E. Frank M. Dukes Pepper, Jr. Vilna Waldron Gaston Gregory Golazeski Assistant Director John C. Halderman Conrad 0. Kattner Bureau of Regulatory Counsel Kristopher Keys Rachel Carson State Office Building, 9th Floor Henri P. Marcial Kent D. Murphy P. 0. Box 8464 Jeffrey J. Norton Mark B. Peabody Harrisburg, PA 17105-8464 Roslyn G. Pollack H. Alfred Ryan Richard S. Schlegel

Dear Mr. Pepper:

Jenny R Shulbank Ward L. Smith Lynn R. Steen Delia W Stroud John Kennedy, Assistant Regional Director, Southeast Regional Office and Saundra M. Yaklin Karen Bassett, Assistant Regional Director, Southcentral Regional Office Ronald L Zack Assistant General Counsel requested that we provide you with additional detailed information regarding the merger involving PECO Energy and Unicorn Corporation. I am enclosing a copy of PECO Energy and Unicom's Joint Proxy Statement which describes the merger in detail and includes a copy of the Plan of Exchange and Merger Agreement. Please let me know if you need any additional information. Sincerely, Edward J. Culle-a, Jr. Enclosure cc: John J. Kennedy, P.E. Karen Bassett 160453

July 11, 2000 Page 2 bcc: Robert M. Matty, Jr.

Permits and Documents PERMITS, REGISTRATIONS, AND OTHER DOCUMENTS REQUIRING CHANGE OF OWNERIOPERATOR New Permit or ID Existing or Contact Contact Facility Permit, License, Approval Number Municipality County Pending FEE Person Person Barbadoes Island Water Obstruction & Encroachment Permit 10146 W. Norriton Montgomery Existing None L.Quiveors L.Quiveors Bradshaw NPDES Permit PA0052221 Bedminster Bucks Existing None L. Quiverors D. Fish Bradshaw Reservoir Management Permit D 09-181A Bedminster Bucks Existing None L. Quiverors D. Fish Bradshaw E. Branch Perkiomen - Encroachment Permit E 09-77A Bedminster Bucks Existing None L. Quiverors D. Fish Bradshaw E. Branch Perkiomen Transmission Main E 09-51A Bedminster Bucks Existing None L. Quiverors D. Fish Perkiomen Creek Intake Structure Water Obstruction & Encroachment Permit 19615 Bedminster Bucks Existing None L. Quiverors D. Fish Chester Generating Station Title V Permit 23-00018 Chester Delaware Existing $600.00 K. Peck K. Peck Conowingo Generating Station Reservoir Management Permit D 36-211 Darlington Harford Existing None L. Quiverors L. Quiverors Cromby Generating Station Notification of Regulated Waste Activity PAD000796276 E. Pikeland Chester Existing None R. Ogitis R. Ogitis Cromby Generating Station NPDES Permit PA001 1631 E. Pikeland Chester Existing None L.Quiverors L. Quiverors Cromby Generating Station Registration/Permitting of Storage Tanks 15-02635 E. Pikeland Chester Existing Prorate-TBD R. Ogitis R. Ogitis Cromby Generating Station Title V Permit 15-00019 E. Pikeland Chester Existing $600.00 K.Peck K. Peck Cromby Generating Station Submerged Land License Agreement w/Permit E 15-231 E. Pikeland Chester Existing None L.Quiverors L. Quiverors Cromby Generating Station Water Obstruction & Encroachment Permit E 15-018 E. Pikeland Chester Existing None L. Quiverors L. Quiverors Cromby Generating Station Water Obstruction & Encroachment Permit E 15-028 E. Pikeland Chester Existing None L. Quiverors L. Quiverors Cromby Generating Station Water Obstruction & Encroachment Permit E 15-060 E. Pikeland Chester Existing None L. Quiverors L. Quiverors Cromby Generating Station Water Obstruction & Encroachment Permit E 15-082 E. Pikeland Chester Existing None L. Quiverors L. Quiverors Cromby Generating Station Water Obstruction & Encroachment Permit 11312 E. Pikeland Chester Existing None L. Quiverors L. Quiverors Cromby Generating Station Water Obstruction & Encroachment Permit 20490 E. Pikeland Chester Existing None L. Quiverors L. Quiverors Cromby Generating Station Water Obstruction & Encroachment Permit 11070 E. Pikeland Chester Existing None L. Quiverors L. Quiverors Cromby Generating Station Reservoir Management Permit D 46-27 E. Pikeland Chester Existing None L. Quiverors L. Quiverors Croydon Generating Station Notification of Regulated Waste Activity PAD000796284 Bristol Bucks Existing None R. Ogitis R. Ogitis Croydon Generating Station NPDES Permit PAR900003 Bristol Bucks Existing None L. Quiverors L. Quiverors Croydon Generating Station Registration/Permitting of Storage Tanks 09-02638 Bristol Bucks Existing Prorate-TBD R. Ogitis R. Ogitis Croydon Generating Station Title V Permit 09-00016 Bristol Bucks Existing $600.00 K. Peck K. Peck Croydon Generating Station Water Obstruction & Encroachment Permit E09-659 Bristol Bucks Existing None L. Quiverors L. Quiverors Croydon Generating Station Water Obstruction & Encroachment Permit E09-394 Bristol Bucks Existing None L. Quiverors L. Quiverors Delaware Generating Station NPDES Permit PA0011622 Philadelphia Philadelphia Existing None L. Quiverors L. Quiverors Delaware Generating Station Submerged Land License Agreement w/Permit E 51-134 Philadelphia Philadelphia Existing None L,Quiverors L. Quiverors Delaware Generating Station Notification of Regulated Waste Activity PAD000796292 Philadelphia Philadelphia Existing None R. Ogitis R. Ogitis Delaware Generating Station Registration/Permitting of Storage Tanks 51-02642 Philadelphia Philadelphia Existing Prorate-TBD R. Ogitis R. Ogitis Page 1

Permits and Documents Eddystone Generating Station Notification of Regulated Waste Activity PAD000796318 Eddystone Delaware Existing None R. Ogitis R. Ogitis Eddystone Generating Station NPDES Permit 0013714 Eddystone Delaware Existing None L. Quiverors L. Quiverors Eddystone Generating Station Registration/Permitting of Storage Tanks 23-02643 Eddystone Delaware Existing Prorate-TBD R. Ogitis R. Ogitis Eddystone Generating Station Title V Permit 23-00017 Eddystone Delaware Pending $300.00 K. Peck K. Peck Eddystone Generating Station RACT Permit 23-0017A Eddystone Delaware Existing $300.00 K. Peck K. Peck Eddystone Generating Station Water Obstruction & Encroachment Permit E23-309 Eddystone Delaware Existing None L. Quiverors L. Quiverors Eddystone Generating Station Submerged Land License Agreement w/Permit E 23-200 Eddystone Delaware Existing None L. Quiverors L. Quiverors Eddystone Generating Station Water Obstruction & Encroachment Permit E 23-023 Eddystone Delaware Existing None L. Quiverors L. Quiverors Fairless Hills Steam Generating Station NPDES Permit 0057088 Falls Bucks Existing None L. Quiverors L. Quiverors Fairless Hills Steam Generating Station Title V Permit 09-00066 Falls Bucks Pending $300.00 K.Peck K.Peck Fairless Hills Steam Generating Station RACT Permit 09-0066 Falls Bucks Existing $300.00 K.Peck K.Peck Fairless Hills Steam Generating Station Notification of Regulated Waste Activity PAR000026617 Falls Bucks Existing None R. Ogitis R. Ogitis Fairless Hills Steam Generating Station Registration/Permitting of Storage Tanks 09-37252 Falls Bucks Existing Prorate-TBD R. Ogitis R. Ogitis Limerick Generating Station Notification of Regulated Waste Activity PAD000797951 Limerick Montgomery Existing None R. Ogitis D. Fish Limerick Generating Station NPDES Permit PA0051926 Limerick Montgomery Existing None L. Quiveors D. Fish Limerick Generating Station Registration/Permitting of Storage Tanks 46-00320 Limerick Montgomery Existing Prorate-TBD R. Ogitis D. Fish Limerick Generating Station Title V Permit 46-00038 Limerick Montgomery Existing $600.00 T. Sylvester D. Fish Limerick Generating Station Public Water Supply Permit 4696507 Limerick Montgomery Existing None L. Quiveors D. Fish Limerick Generating Station Public Water Supply Permit 4696508 Limerick Montgomery Existing None L. Quiveors D. Fish Limerick Generating Station Water Obstruction & Encroachment Permit 19161 Limerick Montgomery Existing None L. Quiverors D. Fish Limerick Generating Station Water Obstruction & Encroachment Permit 19194 Limerick Montgomery Existing None L. Quiverors D. Fish Limerick Generating Station Water Obstruction & Encroachment Permit 19972 Limerick Montgomery Existing None L. Quiverors E. Fish Limerick Generating Station Water Obstruction & Encroachment Permit 19616 Limerick Montgomery Existing None L. Quiverors D. Fish Pottstown - Limerick Airport NPDES Permit PA0054089 Limerick Montgomery Existing None L.Quiveors D. Fish Falls Unit Substation Title V Permit 09-00017 Falls Bucks Existing $600.00 K. Peck K. Peck Moser Unit Substation Registration/Permitting of Storage Tanks 46-02634 Lower Pottsgrove Montgomery Existing Prorate-TBD R. Ogitis R. Ogitis Moser Unit Substation Title V Permit 46-00039 Lower Pottsgrove Montgomery Existing $600.00 K. Peck K. Peck Muddy Run Recreation Park Registration/Permitting of Storage Tanks 36-18522 Holtwood Lancaster Existing Prorate-TBD R. Ogitis R. Ogitis Muddy Run Recreation Park Notification of Regulated Waste Activity PAD982661696 Holtwood Lancaster Existing None R. Ogitis R. Ogitis Muddy Run Pumped Storage Facility Notification of Regulated Waste Activity PAD000798116 Drumore Lancaster Existing None R. Ogitis R. Ogitis Muddy Run Pumped Storage Facility NPDES Permit PA0009741 Drumore Lancaster Existing None L.Quiveors L. Quiveors Muddy Run Pumped Storage Facility Registration/Permitting of Storage Tanks 36-60413 Drumore Lancaster Existing Prorate-TBD R. Ogitis R. Ogitis Muddy Run Pumped Storage Facility Reservoir Management Permit D 36-255 Drumore Lancaster Existing None L. Quiverors L. Quiverors Muddy Run Pumped Storage Facility Reservoir Management Permit D 36-256 Drumore Lancaster Existing None L. Quiverors L. Quiverors Page 2

Permits and Documents Peach Bottom Atomic Power Station Notification of Regulated Waste Activity PAD000798132 Peach Bottom York Existing None R. Ogitis D. Fish Peach Bottom Atomic Power Station NPDES Permit PA0009733 Peach Bottom York Existing None L.Quiveors D. Fish Peach Bottom Atomic Power Station Public Water Supply Permit 6791502 Peach Bottom York Existing None L. Quiveors D. Fish Peach Bottom Atomic Power Station Registration/Permitting of Storage Tanks 67-60412 Peach Bottom York Existing Prorate-TBD R. Ogitis D. Fish Peach Bottom Atomic Power Station Title V Permit 67-05020 Peach Bottom York Existing $600.00 T. Sylvester D. Fish Peach Bottom Atomic Power Station Water Obstruction & Encroachment Permit E 36-693 Peach Bottom York Pending None L. Quiveors D. Fish Peach Bottom Atomic Power Station Submerged Land License Agreement w/Permit E 67-503 Peach Bottom York Existing None L. Quiverors D. Fish Peach Bottom Atomic Power Station Water Obstruction & Encroachment Permit E 67-133 Peach Bottom York Existing None L. Quiverors D. Fish Peach Bottom Atomic Power Station Water Obstruction &Encroachment Permit E 67-391 Peach Bottom York Existing None L.Quiverors D. Fish Peach Bottom Atomic Power Station Water Obstruction &Encroachment Permit E 67-612 Peach Bottom York Existing None L.Quiverors D. Fish Peach Bottom Atomic Power Station Reservoir Management Permit D 67-492 Peach Bottom York Existing None L. Quiveors D. Fish Peach Bottom Atomic Power Station Water Obstruction &Encroachment Permit 16968 Peach Bottom York Existing None L. Quiveors D. Fish Peach Bottom Atomic Power Station Water Obstruction &Encroachment Permit 16969 Peach Bottom York Existing None L. Quiveors D. Fish Peach Bottom Atomic Power Station Water Obstruction &Encroachment Permit 17333 Peach Bottom York Existing None L.Quiveors D. Fish Peach Bottom Atomic Power Station Water Obstruction &Encroachment Permit 18092 Peach Bottom York Existing None L.Quiveors D. Fish Peach Bottom Atomic Power Station Water Obstruction &Encroachment Permit 18093 Peach Bottom York Existing None L.Quiveors D. Fish Pennsbury Power Station Notification of Regulated Waste Activity PAR000023945 Falls Bucks Existing None R. Ogitis R. Ogitis Pennsbury Power Station Operating Permit 09-0077 Falls Bucks Existing $300.00 K. Peck K. Peck Pennsbury Power Station Synthetic Minor Permit Falls Bucks Pending $300.00 K. Peck K. Peck Richmond Generating Station NPDES Permit 0011649 Philadelphia Philadelphia Existing None L. Quiveors L. Quiveors Richmond Generating Station Submerged Land License Agreement w/Permit E 51-134 Philadelphia Philadelphia Existing None L. Quiverors L. Quiverors Richmond Generating Station Notification of Regulated Waste Activity PAD000798462 Philadelphia Philadelphia Existing None R. Ogitis R. Ogitis Richmond Generating Station Registration/Permitting of Storage Tanks 51-18525 Philadelphia Philadelphia Existing Prorate-TBD R. Ogitis R. Ogitis Schuylkill Generating Station Notification of Regulated Waste Activity PAD982579807 Philadelphia Philadelphia Existing None R. Ogitis R. Ogitis Schuylkill Generating Station NPDES Permit PA0011657 Philadelphia Philadelphia Existing None L. Quiveors L. Quiveors Schuylkill Generating Station Registration/Permitting of Storage Tanks 51-02644 Philadelphia Philadelphia Existing Prorate-TBD R. Ogitis R. Ogitis Schuylkill Generating Station Submerged Land License Agreement w/Permit E51-134 Philadelphia Philadelphia Existing None L. Quiveors L. Quiveors Schuylkill Generating Station Water Obstruction & Encroachment Permit E 51-069 Philadelphia Philadelphia Existing None L. Quiveors L. Quiveors Page 3

          ..
         -1  iCom             PECO ENERGY Joint Proxy Statement for 2000 Annual Meetings of Shareholders and Prospectus Proposed Merger to Form Exelon Corporation I I- I

PECO ENERGY MERGER PROPOSED - YOUR VOTE IS VERY IMPORTANT have unanimously approved a merger of The Boards of Directors of PECO Energy Company and Unicorn Corporation believe that this merger provides an excellent equals that will create a new holding company, Exelon Corporation. We both the energy industry. We expect that the opportunity for our two regional companies to become a national leader in value than either of us could achieve on our combined company will create greater opportunities for building shareholder own. of Exelon common stock for each share If the merger is completed, PECO Energy shareholders will receive one share 0.875 shares of Exelon common stock and $3.00 in of PECO Energy common stock, and Unicom shareholders will receive of the merger consideration will result in approximately cash for each share of Unicorn common stock. The cash portion at the completion of the merger. Upon completion of the merger, $500 million of cash being paid to Unicorn shareholders shareholders and approximately 46% approximately 54% of Exelon common stock will be owned by former PECO Energy Energy and Unicorn currently expect that of Exelon common stock will be owned by former Unicorn shareholders. PECO the merger. We expect Exelon common 328,000,000 shares of Exelon common stock will be issued in connection with stock will be listed on the New York Stock Exchange. and PECO Energy intends to In addition, Unicorn intends to repurchase $1,000,000,000 of its outstanding shares the completion of the merger. As of May 12, 2000, Unicorn had repurchase $500,000,000 of its outstanding shares prior to and PECO Energy had completed all of its repurchases. Unicorn completed approximately $585 million of its repurchases, meetings and the completion of the intends to complete its remaining repurchases between the time of the shareholder merger. and the approvals of the shareholders In order to complete the merger, we must obtain necessary regulatory approvals voted on at your company's annual meeting is of our companies. Information about the merger and the other items to be plan to attend your company's annual meeting, please contained in this proxy statement/prospectus. Whether or not you take the time to vote by proxy card, telephone or Internet. 27, 2000, at 9:30 a.m., local time, at PECO Energy shareholders will vote at PECO Energy's annual meeting on June Pennsylvania. Unicom the Millenium Hall of the Loews Philadelphia Hotel, 1200 Market Street, in Philadelphia, on June 28, 2000, 10:30 a.m., local time, at the Grand Ballroom of the shareholders will vote at Unicorn's annual meeting Hyatt Regency Chicago, 151 East Wacker Drive, in Chicago, Illinois. on You should consider the risk factors relating to the merger that we describe beginning page 17 of this proxy statement/prospectus before voting. find additional information regarding We encourage you to review carefully this proxy statement/prospectus. You can Can Find More Information" on page 154 of PECO Energy and Unicom by referring to the section entitled "Where You this proxy statement/prospectus. our Boards of Directors in We enthusiastically support this combination of our companies and join with recommending that you vote FOR the approval of the merger agreement. Corbin A. McNeill, Jr. John W. Rowe Chairman, President and Chief Executive Officer Chairman, President and Chief Executive Officer PECO Energy Company Unicorn Corporation Your vote is important. If voting by mail, please complete, sign, date and return your proxy. If voting by telephone or Internet, please follow the instructions on your proxy card. approved or disapproved the Neither the Securities and Exchange Commission nor any state securities regulator has Exelon common stock to be issued in merger and other transactions described in this proxy statement/prospectus or the accurate or adequate. Any representation connection with the merger, or determined if this proxy statement/prospectus is to the contrary is a criminal offense. This proxy statement/prospectus is dated May 15, 2000, and is first being mailed to shareholders on or about May 18, 2000.

PECO ENERGY, PECO ENERGY COMPANY NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 27, 2000 To the Shareholders of PECO Energy Company: We will hold the 2000 annual meeting of the shareholders of PECO Energy Company on Tuesday, June 27, 2000, at 9:30 a.m., local time, at the Millenium Hall of the Loews Philadelphia Hotel, 1200 Market Street, in Philadelphia, Pennsylvania, for the following purposes:

      "* to consider a proposal to adopt the agreement and plan of exchange and merger dated as of September 22, 1999, as amended and restated as of January 7, 2000, among PECO Energy, Exelon and Unicorn,
      " to consider and vote upon a proposal to postpone or adjourn the annual meeting, if proposed by PECO Energy's board of directors,
      "* to elect four members to the PECO Energy board of directors, and
      "* to ratify PricewaterhouseCoopers, LLP as PECO Energy's independent auditors for 2000.

Only holders of record of shares of PECO Energy common stock at the close of business on April 5, 2000, the record date for the annual meeting, are entitled to notice of, and to vote at, the annual meeting and any adjournments or postponements of it. We cannot complete the share exchange described in the accompanying proxy statement/prospectus unless holders of a majority of all shares of PECO Energy common stock casting votes at the PECO Energy annual meeting vote to adopt the merger agreement, assuming that holders of a majority of all PECO Energy common stock entitled to vote are present in person or by proxy at the annual meeting. For more information about the share exchange and the other transactions contemplated by the merger agreement, please review the accompanying proxy statement/prospectus and the merger agreement attached to it as Annex A. Whether or not you plan to attend the annual meeting, please complete, sign and date the enclosed proxy and return it promptly in the enclosed postage-paid envelope. You may also cast your vote by Internet or by telephone by following the instructions on your proxy card. If you do not vote by proxy, Internet, telephone or in person at the annual meeting, it will have no effect in determining whether the merger agreement will be adopted or on the other matters being considered at the PECO Energy annual meeting. Please do not send any stock certificates at this time. By order of the board of directors, Katherine K. Combs Deputy General Counsel and Corporate Secretary Philadelphia, Pennsylvania May 18, 2000

UNICOM CORPORATION NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 28, 2000 To the Shareholders of Unicorn Corporation: We will hold the 2000 annual meeting of the shareholders of Unicorn Corporation on Wednesday, June 28, 2000, at 10:30 a.m., local time, at the Grand Ballroom of the Hyatt Regency Chicago, 151 East Wacker Drive, Chicago, Illinois, for the following purposes:

     " to consider a proposal to approve the agreement and plan of exchange and merger dated as of September 22, 1999, as amended and restated as of January 7, 2000, among PECO Energy, Exelon and Unicorn,
     " to consider and vote upon a proposal to postpone or adjourn the annual meeting, if proposed by Unicorn's board of directors,
     "* to elect nine directors to the Unicorn board of directors, and
     "* to ratify Arthur Andersen LLP as Unicorn's independent auditors for 2000.

Only holders of record of shares of Unicorn common stock at the close of business on May 12, 2000, the record date for the annual meeting, are entitled to notice of, and to vote at, the annual meeting and any adjournments or postponements of it. We cannot complete the merger described in the accompanying proxy statement/prospectus unless the holders of at least two-thirds of the outstanding shares of Unicom common stock vote to approve the merger agreement. For more information about the merger and the other transactions contemplated by the merger agreement, please review the accompanying proxy statement/prospectus and the merger agreement attached to it as Annex A. Whether or not you plan to attend the annual meeting, please complete, sign and date the enclosed proxy and return it promptly in the enclosed postage-paid envelope. You may also cast your vote by Internet or by telephone by following the instructions on your proxy card. If you do not vote by proxy, Internet, telephone or in person at the annual meeting, your shares will be treated as voted against the merger agreement. Please do not send any stock certificates at this time. As described under "The Merger-Dissenters' Rights" in Chapter I of the enclosed proxy statement/prospectus, any holder of Unicorn common stock entitled to vote at the annual meeting is entitled to dissent and obtain payment for his or her shares if the merger is completed. In order to perfect the right to dissent, a holder of Unicorn common stock must (1) deliver to Unicorn at the office of the Corporate Secretary at 10 South

Dearborn Street,

Chicago, Illinois 60603 before the shareholder vote for the approval of the merger agreement a written demand for payment for his or her shares, (2) not vote his or her shares in favor of the proposed merger agreement and (3) otherwise follow the procedures set forth in Sections 11.65 and 11.70 of the Illinois Business Corporation Act, a copy of which is attached to the accompanying proxy statement/prospectus as Annex E. By Order of the Board of Directors, John P. McGarrity Secretary Chicago, Illinois May 18, 2000

REFERENCES TO ADDITIONAL INFORMATION This joint proxy statement/prospectus incorporates important business and financial information about PECO Energy and Unicorn from other documents that are not included in or delivered with this joint proxy statement/prospectus. This information is available to you without charge upon your written or oral request. You can obtain those documents incorporated by reference in this joint proxy statement/prospectus by requesting them in writing or by telephone from the appropriate company at the following addresses: PECO Energy Company Unicorn Corporation 2301 Market Street 37th Floor, 10 South Dearborn Street Post Office Box 8699 Post Office Box A-3005 Philadelphia, Pennsylvania 19101-8699 Chicago, Illinois 60690-3005 Telephone: (215) 841-4000 Telephone: (312) 394-7398 If you would like to request documents, please do so by June 19, 2000, in order to receive them before your annual meeting. See "Where You Can Find More Information" on page 154.

TABLE OF CONTENTS Page INTRODUCTION ... CHAPTER I-THE MERGER .................................. I.................. 1 Questions and Answsers About the Merger ................ ................ ......... 1 Summary .................................................................. 4 G eneral . ........................ ... ........ .. ............ ........... ... . 4 The Annual M eetings ...................................................... 8 The Merger .............................................................. 9 Comparative Per Share Information ............................................ 13 Selected Historical and Unaudited Pro Forma Combined Condensed Financial Data ......... 14 Risk Factors Relating to the Merger .............................................. 17 Special Note Regarding Forward-Looking Statements ................................ 20 T h e M erger ... ..... ... .. ............ ....... ..... ......... ...... .. .......... . 22 Background to the M erger ................................................... 22 Reasons for the M erger ..................................................... 27 PECO Energy Board of Directors Recommendation ................................. 29 Opinions of PECO Energy's Financial Advisors .................................... 32 Unicorn Board of Directors Recommendation ..................................... 41 Opinion of Unicorn's Financial Advisor ......................................... 45 Board of Directors, Management and Operations of Exelon After the Merger .............. 52 Corporate Restructuring ..................................................... 54 Interests of PECO Energy's Directors and Management in the Merger .................... 55 Interests of Unicorn's Directors and Management in the Merger ....................... 57 Indemnification and Insurance ................................................. 61 Form of the Merger; Merger Consideration; Conversion of Shares ....................... 62 Procedures for (Exch 4nge of Certificates; Fractional Shares ........................... 62 Effective Time of gt;M erger ................................................. 63 4 Listing of Exl lon Capital Stock ................................................ 63 Dividends ..................................... ........................... 63 Material United States Federal Income Tax Consequences of the Merger ................. 64 Accounting Treatment ....................................................... 67 D issenters' Rights ......................................................... 67 Workforce and Employee Benefit Matters ....................................... 69 Effect on Awards Outstanding Under Stock Plans .................................. 70 Resale of Exelon Common Stock .............................................. 70 Regulatory Matters ........................................................... 71 General ................................................................. 71 State Approvals ........................................................... 71 Public Utility Holding Company Act ............................................ 71 Nuclear Regulatory Commission .............................................. 72 Federal Energy Regulatory Commission ......................................... 72 United States Antitrust ..................................... ............... 73 Status of Regulatory Approvals ................................................ 73 The M erger A greem ent ....................................................... 74 Conditions to the Completion of the Merger ...................................... 74 No Solicitation............................................................75 Ter ination ............................................................. . 76 Termination Fees; Reimbursement of Expenses ................................... 77 Conduct of Business Pending the Merger ......................................... 78

                                                                                             -a                 -

O ther Agreem ents ......................................................... 80 Amendment; Extension and W aiver ............................................ 81 Expenses ..... ... ............... ..... ... ..... ............ .......... .... .. 82 Representations and Warranties ............................................... 82 Exelon Articles of Incorporation ............................................... 83 Exelon B y-laws ........................................................... 83 Comparative Stock Prices and Dividends .......................................... 84 Unaudited Pro Forma Combined Condensed Financial Statements ...................... 85 Description of Exelon Capital Stock ............................................. 97 General .......................................................... ...... 97 Common Stock ........................................................... 97 Preferred Stock ... ......................................................... 97 Comparison of Rights of Shareholders- ............................................ 97 Size of the Board of Directors ................................................ 97 Classification of the Board of Directors .......................................... 98 Cumulative Voting ......................................................... 98 V acancies on the Board ...................................................... 98 Rem oval of Directors ....................................................... 99 Special Meetings of Shareholders .............................................. 100 Corporate Action Without a Shareholder Meeting ................................... 100 Charter Amendments ".............................................. ..... 100 By-law Amendments ....................................................... 102 Business Combinations/Fair Price Provisions ...................................... 102 Other Antitakeover Protection ................................................. 104 Interested Shareholder Transactions ......... . ............................. .104 Indemnification of Directors, Officers and Employees ............................... 106 Limitation of Personal Liability of Directors ....................................... 108 Constituencies Statutes ................ ................................ ...... 109 Dividends ............................................. ................. 109 Loans to Directors ...................................... .. ........... 110 Shareholder Records ....... . ........................ ........... 110 Issuance of Rights or Options ':. ',e Shares to Directors, Officers and Employees ...... 110 Dissenters' R ights ........... ............................................... 110 Legal M atters ......................................................... ..... 111 Exp erts . ......... ... ... ................ ........ ........ ........... ....... .. 111 CHAPTER IL-INFORMATION ABOUT THE PECO ENERGY ANNUAL MEETING AND OTHER PROPOSALS ............................... 112 The PECO Energy Annual Meeting . 112 Date, Time and Place ....................................................... 112 Purpose of PECO Energy Annual Meeting ....................................... 112 PECO Energy Record Date; Stock Entitled to Vote; Quorum .......................... 112 Vote Required ................................................... ........ 113 Voting by PECO Energy Directors and Executive Officers............................. 113 Voting Your Shares ........................ .................... ..... .... 113 Voting of Proxies .......................................................... 114 Revocability of Proxies ..................................................... 114 Solicitation of Proxies ...................................................... 114 Proposals for PECO Energy Annual Meeting .................... I................... 115 Item 1-PECO Energy Merger Proposal ......................................... 115 Item 2-Postponement or Adjournment of Annual Meeting ............................ 115 Item 3-Election of PECO Energy Directors.................. .................... 115 Item 4-Ratification of Appointment of Independent Auditors ..;....................... 130 O ther M atters ............................................................ 130

CHAPTER Ill-INFORMATION ABOUT THE UNICOM ANNUAL MEETING AND OTHER PROPOSALS . ...................................................... 132 The Unicorn Annual Meeting ................................................ 132 Date, Time and Place ....................................................... 132 Purpose of Unicorn AnnualM eeting.............................................. 132 Unicorn Record Date; Stock Entitled to Vote; Quorum .............................. 132 V ote R equired ............................................................ 132 Voting by Unicorn Directors and Executive Officers ................................ 133 How to Vote ,Your Shares ................................................... 133 How Your Proxy Will be Voted ................................................ 134 Revocability of Proxies ..................................................... 134 Solicitation of Proxies .......... ............................................ 134 Proposals for Unicorn Annual Meeting ............................................ 135 Item 1- Unicorn M erger Proposal ............................................. 135 Item 2-Postponement or Adjournment of Annual Meeting ............. ............... 135 Item 3- Election of Unicorn Directors ........................................... 135 Item 4-Ratification of Appointment of Independent Auditors .......................... 152 Other M atters ............................................................... 152 CHAPTER IV-WHERE YOU CAN FIND MORE INFORMATION ........................ 154 ANNEXES Annex A Agreement and Plan of Merger Annex B Opinion of Morgan Stanley & Co. Incorporated Annex C Opinion of Salomon Smith Barney Inc. Annex D Opinion of Wasserstein Perella & Co., Inc. Annex E Illinois Business Corporation Act-Right to Dissent

INTRODUCTION This proxy statement/prospectus is being mailed to shareholders of PECO Energy and Unicorn in connection with each company's annual meeting of shareholders. The document is organized into four chapters. Chapter I-'"The Merger" provides summary and detailed information about PECO Energy's and Unicorn's proposed merger of equals on which the shareholders of each company will vote at their annual meeting. Chapter II-'"Information About the PECO Energy Annual Meeting and Other Proposals" provides information about PECO Energy's annual meeting, the matters that PECO Energy shareholders will vote on at the PECO Energy annual meeting, including election of directors and ratification of independent auditors, and how shareholders may vote or grant a proxy and the vote required to adopt each proposal to be presented. Unicorn shareholders will not vote on these matters. Chapter III-' 'Information About the Unicom Annual Meeting and Other Proposals" provides information about Unicorn's annual meeting, the matters that Unicorn shareholders will vote on at the Unicorn annual meeting, including election of directors and ratification of independent auditors, and how shareholders may vote or grant a proxy and the vote required to adopt each proposal to be presented. PECO Energy shareholders will not vote on these matters. Chapter IV--'Where You Can Find More Information" explains where shareholders of PECO Energy and Unicom can find more information about each of the companies. You should read this proxy statement/prospectus carefully before you vote your shares. i

CHAPTER I-THE MERGER QUESTIONS AND ANSWERS ABOUT THE MERGER Q: Why are PECO Energy and Unicom proposing to merge? A: We believe that this merger will provide substantial strategic and financial benefits to PECO Energy's and Unicorn's shareholders, employees and customers, including:

      "* expanding our generation capacity,
      "* enhancing our power marketing and trading business,
      "* broadening our distribution platform,
      "* providing a foundation for growth of our unregulated businesses, and
      "* producing cost savings.

To review the reasons for the merger in greater detail, see pages 27 through 29. Q: What is the structure of the merger? A: The combination will occur in two steps, a first step share exchange and a second step merger, which are described in this booklet. After both steps, PECO Energy and Commonwealth Edison Company, Unicom's principal subsidiary, will be wholly owned subsidiaries of Exelon. Both PECO Energy and Commonwealth Edison Company will retain their individual names and identities in their service territories. In this proxy statement/prospectus, we will sometimes refer to the first step exchange and the second step merger together as the "merger." Q: What will I receive in the merger? A: If the merger is completed, PECO Energy shareholders and Unicom shareholders will receive the following: For each share of PECO Energy common stock: For each share of Unicorn common stock:

• one share of Exelon common stock
• 0.875 shares of Exelon common stock, and 0 $3.00 in cash.

Q: Why was the merger agreement amended? A: As we have previously announced, earlier this year the boards of directors of our companies unanimously approved an amendment to the merger agreement providing for certain changes to the terms of the merger. The amendment allows the companies to repurchase $1,500,000,000 of common stock prior to the completion of the merger rather than waiting until the merger is completed to pay this cash to shareholders. This permits the companies to take advantage of lower market prices for their stock. The amendment changes what you will receive in the merger because the $1,500,000,000 in cash that was intended to be paid as part of the merger under the original agreement will now be paid as part of the repurchases. As described above, PECO Energy shareholders will receive Exelon common stock and Unicorn shareholders will receive Exelon common stock and cash. The cash portion of the merger consideration will result in approximately $500 million of additional cash being paid to Unicom shareholders at the completion of the merger. The opportunity for shareholders to choose to receive Exelon common stock or cash in the original merger agreement has been eliminated. We believe that the amendment to the merger agreement creates additional value for shareholders, while retaining the benefits of the original agreement. Overall, the revised merger consideration to be paid to shareholders of each of our companies is intended to be comparable to that contemplated in the original merger agreement. 1

As stated in the previous paragraph, we intend to repurchase before the closing of the merger a total of

   $1.5 billion of common stock of both companies ($1.0 billion by Unicorn and $500 million by PECO Energy). As of May 12 , 2000, Unicorn had completed approximately $585 million of its repurchases, and PECO Energy had completed all of its repurchases. Unicom intends to complete its remaining repurchases between the time of the annual meetings and the completion of the merger.

We expect that reducing the number of shares outstanding through the repurchases described above will have a positive effect on earnings per share of Exelon. By taking advantage of lower prices for the companies' common stock, we believe that we will be able to repurchase more shares at lower prices than we would have been able to under the original merger agreement. Q: What do I need to do now? A: After carefully reading and considering the information contained in this proxy statement/prospectus, please complete and sign your proxy and return it in the enclosed postage-paid envelope or vote by telephone or by Internet as soon as possible, so that your shares may be represented at your annual meeting. If you sign, date and send in your proxy and do not indicate how you want to vote, we will count your proxy as a vote for the approval of the merger agreement. If you are a PECO Energy shareholder and you abstain from voting or do not vote, you will have no effect in determining whether the merger agreement will be adopted. If you are a Unicorn shareholder and you abstain from voting or do not vote, your shares will be treated as having been voted against approval of the merger agreement. The boards of directors of each company are unanimously recommending that their shareholders vote FOR the merger agreement. Q: When is the annual meeting? A: The PECO Energy annual meeting will take place on Tuesday, June 27, 2000 and the Unicorn annual meeting will take place on Wednesday, June 28, 2000. You may attend your annual meeting and vote your shares in person rather than signing and mailing your proxy or voting by telephone or by Internet. Q: Can I vote my shares by telephone or by Internet? A: If you hold your stock in your own name, you may vote by telephone or by Internet, by following the instructions included on your proxy card. If your shares are held in "street name," you will need to contact your broker or other nominee to find out whether you will be able to vote by telephone or by Internet. Q: If my broker holds my shares in "street name," will my broker vote my shares? vote. A: Your broker will vote your shares on the merger proposal only if you provide instructions on how to You should follow the directions provided by your broker regarding how to instruct your broker to vote your shares. If you are a PECO Energy shareholder and you do not provide your broker with instructions on how to vote your shares, your shares will not be voted, which will have no effect in determining whether the merger agreement will be adopted. If you are a Unicom shareholder and'you do not provide your broker with instructions on how to vote your shares, it will be equivalent to a vote against approval of the merger agreement. See Chapters II and III for how your broker will vote on other matters under consideration at the annual meetings. Q: Can I change my vote after I have mailed my signed proxy? can A: Yes. You can change your vote at any time before your proxy is voted at your annual meeting. You do this in one of three ways. First, you can send a written notice stating that you would like to revoke 2

your proxy. Second, you can complete and submit a new later-dated proxy or cast a new vote by telephone or by Internet. Third, you can attend your annual meeting and vote in person. Simply attending your annual meeting without voting will not revoke your proxy. Q: Should I send in my stock certificates now? A: No. After the completion of the merger, we will send to you written instructions for exchanging your stock certificates. Q: What about future dividends? A: Until the merger is completed, PECO Energy expects to continue to pay annual dividends on PECO Energy common stock of $1.00 per share and Unicom expects to continue to pay annual dividends on Unicorn common stock of $1.60 per share. We expect that, after the merger, Exelon will pay annual dividends of $1.69 per share. The payment of dividends by PECO Energy, Unicorn and Exelon, however, is subject to approval and declaration by their boards of directors and will depend on a variety of factors, including business conditions and financial condition, earnings and cash requirements. Q: When do you expect to complete the merger? A: We are pursuing all necessary approvals and anticipate completing the merger in the second half of 2000. Q: Who can help answer my questions? A: If you have any questions about the merger or if you need additional copies of this proxy statement/prospectus or the enclosed proxy, you should contact Morrow & Co., Inc. as follows: For registered shareholders: 1-800-566-9061 For brokers and financial institutions: 1-800-662-5200 3

SUMMARY

This summary highlights selected information from this proxy statement/prospectusand may not contain all of the information that is important to you. To understand the mergerfully andfor a more complete description of the legal terms of the merger, you should read carefully this entire proxy statement/prospectus and the other documents to which we refer. See "Where You Can Find More Information" on page 154. We have included page references parenthetically to direct you to a more complete description of the topics presented in this summary. General The Companies PECO Energy Company 2301 Market Street Post Office Box 8699 Philadelphia, Pennsylvania 19101-8699 (215) 841-4000 Incorporated in Pennsylvania in 1929, PECO Energy Company is engaged principally in the production, purchase, transmission, distribution and sale of electricity to residential, commercial, industrial and wholesale customers in its franchised service territory in southeastern Pennsylvania. Since 1999, the Commonwealth of Pennsylvania has required the unbundling of retail electric services in Pennsylvania into separate generation, transmission and distribution services with open retail competition for generation services. With the commencement of deregulation, PECO Energy serves as the local distribution company providing electric distribution services in southeastern Pennsylvania and bundled electric service to customers who cannot or do not choose an alternate electric generation supplier. Through its Exelon Energy division, PECO Energy is a competitive generation supplier offering competitive energy supply to customers throughout Pennsylvania. The Company's Exelon Infrastructure Services subsidiary provides utility infrastructure services to customers in several regions of the United States. PECO Energy has also formed AmerGen Energy Company, a joint venture with British Energy plc, to acquire and operate nuclear generating facilities. PECO Energy also engages in the wholesale marketing of electricity on a national basis. PECO Energy also participates in joint ventures which provide telecommunication services in the Philadelphia metropolitan region. Unicorn Corporation 37th Floor, 10 South Dearborn Street Post Office Box A-3005 Chicago, Illinois 60690-3005 (312) 394-7398 Unicorn, incorporated in January 1994, is the parent of its principal subsidiary, Commonwealth Edison Company, a regulated electric utility, and Unicorn Enterprises, an unregulated subsidiary engaged through its subsidiaries in energy service activities. CornEd is engaged principally in the production, purchase, transmission, distribution and sale of electricity to a diverse base of residential, commercial, industrial and wholesale customers. CornEd was organized in the State of Illinois on October 17, 1913 as a result of the merger of Cosmopolitan Electric Company into the original corporation named Commonwealth Edison Company. The latter had been incorporated on September 17, 1907. ComEd's electric service territory has an area of approximately 11,300 square miles and an estimated population of approximately eight million as of December 31, 1999. It includes the city of Chicago, an area of approximately 225 square miles with an estimated population of approximately three million from which CornEd derived approximately one-third of its consumer revenues in 1999. CoinEd had 3.5 million electric customers at December 31, 1999. Unicorn Enterprises is engaged, through subsidiaries, in district cooling and related services, retail electric services, retail gas services, performance contracting, distributed energy, active energy management systems and the design, installation and servicing of heating, ventilation and air conditioning facilities. 4

Exelon Corporation Exelon Corporation is currently a wholly owned subsidiary of PECO Energy that has no assets and has not to date conducted any business. It will become the parent holding company of PECO Energy, CornEd, PECO Energy's subsidiaries and Unicorn's other subsidiaries following completion of the merger. Exelon is a Pennsylvania corporation. Structure of the Merger The merger involves two transactions, a first step share exchange between PECO Energy and its wholly owned subsidiary Exelon, after which PECO Energy will be a wholly owned subsidiary of Exelon, and a second step merger of Unicorn into Exelon. The corporate structures of PECO Energy and Unicorn before the merger and Exelon after the merger appears as follows: Pre-Merger Post-Merger 5

Board of Directors and Management of Exelon After the Merger (page 52) The merger agreement provides for certain arrangements relating to the board of directors and management of Exelon during a transition period lasting from the completion of the merger until December 31, 2003, including the following:

    "* upon completion of the merger, Exelon's board of directors will have 16 members, eight of whom will completion of be serving as members of PECO Energy's board of directors immediately prior to the Energy's  board  of  directors  immediately    prior to that the merger and who are recommended by PECO Unicom's    board  of directors  immediately     prior to the time, and eight of whom will be members of by  Unicom's    board  of  directors  immediately    prior completion of the merger and who are recommended to that time,
     "* from the completion of the merger until the end of the transition period, Corbin A. McNeill, Jr. and John W. Rowe will be co-chief executive officers of Exelon,
     "* during the first half of the transition period, Mr. McNeill will be chairman of the Exelon board of board of directors directors and Mr. Rowe will be chairman of the executive committee of the Exelon and president of Exelon,
     "* during the second half of the transition period, Mr. Rowe will be chairman of the Exelon board of board of directors and Mr. McNeill will be chairman of the executive committee of the Exelon directors,
     "* at the end of the transition period, Mr. Rowe will become chairman of the board of directors and sole of directors, and chief executive officer of Exelon and Mr. McNeill will remain on the Exelon board
      "* if at any time either Mr. McNeill or Mr. Rowe is unwilling or unable to hold any of these positions, the position.

other, if he is still a co-chief executive officer of Exelon, will succeed to the management positions In addition, the merger agreement contains arrangements relating to other senior arrangements are and the locations of Exelon's corporate headquarters and other principal offices. These described elsewhere in this proxy statement/prospectus. Material United States FederalIncome Tax Consequences of the Merger (page 63) and Unicom common The merger is structured to be tax-free to holders of PECO Energy common stock except with respect to cash received in exchange for stock for United States federal income tax purposes, received instead of any fractional shares of Exelon common stock. Unicom common stock, including any cash will depend on the Tax matters are very complicated. The tax consequences of the merger to you for a full understanding of the tax facts of your own situation. You should consult your own tax advisor consequences of the merger to you. Board of Directors Recommendations PECO Energy (page 29) The PECO Energy board of directors:

       "* approved the amendment to the merger agreement, the merger and the other transactions contemplated by the merger agreement,
        "* determined that the merger and the other transactions contemplated by the merger agreement were fair to and in the best interests of PECO Energy and its shareholders, and
        " recommended that the PECO Energy shareholders vote for the adoption of the merger agreement.

6

Unicorn (page 41) The Unicorn board of directors:

        "*  approved the amendment to the merger agreement. the merger and the other transactions contemplated by the merger agreement,
        "*  determined that the merger and the other transactions contemplated by the merger agreement were fair to and in the best interests of Unicorn and its shareholders, and
        "* recommended that Unicorn shareholders vote for the approval of the merger agreement.

To review the background and reasons for the merger in greater detail, as well as certain risks related to the merger, see pages 22 through 27, 27 through 29, 29 through 32 and 41 through 45. Fairness Opinions of FinancialAdvisors PECO Energy (page 32) In deciding to approve the merger, the PECO Energy board of directors considered the separate opinions of its co-financial advisors, Morgan Stanley & Co. Incorporated and Salomon Smith Barney Inc., to the effect that as of January 7, 2000, the consideration to be received by holders of PECO Energy common stock in the merger was fair from a financial point of view to those holders. These opinions are attached as Annexes B and C to this proxy statement/prospectus. These opinions are directed to the PECO Energy board and address only the fairness of the consideration to be received by the holders of PECO Energy common stock pursuant to the terms of the transaction. They are not recommendations as to how you should vote on the merger. The opinions describe important exceptions, assumptions and limitations and we encourage PECO Energy shareholders to read these opinions carefully. Unicorn (page 45) In deciding to approve the merger, the Unicorn board of directors considered the opinion of its financial advisor, Wasserstein Perella & Co., as to the fairness, from a financial point of view, as of January 6, 2000, of the aggregate consideration to be received by holders of Unicorn common stock in the merger. This opinion is attached as Annex D to this proxy statement/prospectus. This opinion was directed to the Unicorn board of directors and addressed only the fairness from a financial point of view to the shareholders of Unicom of the aggregate consideration to those shareholders provided for in the merger agreement. It did not address the fairness of the cash consideration or the number of shares of Exelon common stock into which a share of Unicorn common stock may be converted individually, nor did it express any view on any other aspect of the merger or any other terms of the merger agreement. This opinion does not constitute a recommendation to any shareholder of Unicorn as to how any shareholder should vote on the merger. The opinion describes important exceptions, assumptions and limitations and we encourage Unicom shareholders to read this opinion carefully. Interests of PECO Energy's and Unicom's Directorsand Management in the Merger (page 55) In considering the recommendations of the PECO Energy board of directors and Unicom board of directors with respect to the merger agreement, you should be aware that some PECO Energy and Unicorn directors and officers have interests in the merger as directors or officers that may be different from, or greater than, your interests. If we complete the merger, eight PECO Energy directors and eight Unicorn directors will become members of the board of directors of Exelon and several current PECO Energy or Unicorn executive officers, including the current chief executive officers of PECO Energy and Unicorn, will continue to be executive officers of Exelon after the merger, as described under "The Merger-Board of Directors and Management of Exelon After the Merger" in this Chapter I. 7

PECO Energy has entered into change in control agreements with approximately 100 officers and key employees in the four highest generic salary categories of PECO Energy. Unicom has entered into an employment agreement with Mr. Rowe and change in control agreements with 10 other senior executive officers and has also established the Key Management Severance Plan covering eligible executive officers and key employees. These agreements and plans will provide the officers with severance benefits if their employment with the combined company is terminated after the merger and other rights in connection with the merger. The Unicom officers and employees who have options to purchase Unicom common stock will have their options adjusted in order to give the holders of options value substantially equivalent to that received by holders of outstanding shares in the merger. The number of shares into which the options are exercisable, and the option price, will be adjusted as if the exchange ratio for Unicom common stock were 0.95, instead of the 0.875 applicable to the exchange of outstanding shares, and the $3.00 per share cash consideration will be disregarded. Also, following the merger, Exelon will indemnify, and provide directors' and officers' insurance for, the directors and officers of PECO Energy and Unicom for events occurring before the merger, including events that are related to the merger agreement. The members of our boards of directors knew about these additional interests, and took them into account, when they approved the merger agreement and the merger. The Annual Meetings Dates PECO Energy (page 112) The 2000 annual meeting of PECO Energy shareholders will be held on Tuesday, June 27, 2000, at 9:30 a.m., local time, at the Millenium Hall of the Loews Philadelphia Hotel, 1200 Market Street, in Philadelphia, Pennsylvania. At the PECO Energy annual meeting, shareholders will be asked to adopt the merger agreement and vote on other matters described in Chapter II of this proxy statement/prospectus. Unicorn (page 132) The 2000 annual meeting of Unicorn shareholders will be held on Wednesday, June 28, 2000, at 10:30 a.m., local time, at the Grand Ballroom of the Hyatt Regency Chicago, 151 East Wacker Drive, Chicago, Illinois. At the Unicom annual meeting, shareholders will be asked to approve the merger agreement and vote on other matters described in Chapter III of this proxy statement/prospectus. Record Dates; Voting Power PECO Energy (page 112) PECO Energy shareholders are entitled to vote at the PECO Energy annual meeting if they owned shares of PECO Energy common stock as of the close of business on April 5, 2000, the PECO Energy record date. On April 5, 2000, there were approximately 181,454,576 shares of PECO Energy common stock entitled to vote at the PECO Energy annual meeting. PECO Energy shareholders will have one vote at the PECO Energy annual meeting for each share of PECO Energy common stock that they owned on the PECO Energy record date. Unicorn (page 132) Unicom shareholders are entitled to vote at the Unicorn annual meeting if they owned shares of Unicorn common stock as of the close of business on May 12, 2000, the Unicom record date. 8

On May 12, 2000, there were approximately 176,522,602 shares of Unicorn common stock entitled to vote at the Unicorn annual meeting. Unicorn shareholders will have one vote at the Unicom annual meeting for each share of Unicom common stock that they owned on the Unicorn record date. Unicorn shareholders have cumulative voting rights in the election of directors. See "Chapter III". Votes Required to Approve Merger PECO Energy (page 113) The affirmative vote of the holders of a majority of all shares of PECO Energy common stock casting votes at the PECO Energy annual meeting is required to adopt the merger agreement, assuming that holders of a majority of all PECO Energy common stock entitled to vote are present at the annual meeting. Unicom (page 132) The affirmative vote of holders of at least two-thirds of the shares of Unicorn common stock outstanding on the Unicom record date is required to approve the merger agreement. Share Ownership of Directors and Executive Officers PECO Energy (page 113) On April 5, 2000, directors and executive officers of PECO Energy and their affiliates owned and were entitled to vote approximately 354,247 shares of PECO Energy common stock, or approximately 0.2% of the shares of PECO Energy common stock outstanding on that date. Unicorn (page 133) On May 12, 2000, directors and executive officers of Unicorn and their affiliates owned and were entitled to vote less than 1% of Unicom common stock outstanding on that date. The Merger (page 22) The merger agreement is attached as Annex 1 to this proxy statement/prospectus. We encourage you to read the merger agreement. It is the principaldocument governing the merger. Conditions to the Completion of the Merger (page 74) PECO Energy and Unicorn will complete the merger only if they satisfy or, in some cases, waive, several conditions, including the following:

     "*  approval of the merger agreement by shareholders of PECO Energy and Unicorn,
     "*  approval of the Exelon common stock for listing on the New York Stock Exchange,
     "* expiration or termination of the waiting period applicable to the merger under the Hart-Scott- Rodino Antitrust Improvements Act,
    "   receipt of all required regulatory approvals, with all approvals becoming final orders that do not impose terms or conditions which, individually or in the aggregate, could reasonably be expected to have a

material adverse effect on Exelon,

    "   accuracy of representations and warranties and performance of obligations contained in the merger agreement by PECO Energy and Unicorn,
    "   absence of events, changes, effects or developments having a material adverse effect on either PECO Energy's or Unicom's business, assets, condition (financial or otherwise), prospects or results of operations, and
    "*  receipt of a tax opinion of counsel to each of PECO Energy and Unicorn.

9

Termination of the Merger Agreement (page 76)

1. PECO Energy and Unicorn can jointly agree to terminate the merger agreement at any time prior to completing the merger, including after approval by the PECO Energy shareholders or the Unicorn shareholders.

2. Either PECO Energy or Unicorn can terminate the merger agreement (including after approval by the PECO Energy shareholders or the Unicorn shareholders) if:

(a) the second step merger is not completed by March 31, 2001, unless the failure is the result of a breach by the party seeking to terminate, (b) governmental entity permanently prohibits the completion of the merger, (c) a condition to the obligation of a party to complete the merger becomes incapable of satisfaction prior to March 31, 2001, unless the failure of the condition to be met is the result of a material breach of the merger agreement by the party seeking to terminate, (d) the Unicorn shareholders do not approve the merger agreement at a Unicorn shareholders meeting, (e) the PECO Energy shareholders do not adopt the merger agreement at a PECO Energy shareholders meeting, (f) a condition to the completion of the merger cannot be satisfied because the other party breached the merger agreement as a result of which a closing condition relating to representations, warranties or covenants cannot be satisfied or which has not been cured or cannot be cured within 30 days, (g) the other party's board of directors or any committee of the board of directors withdraws or modifies its approval or recommendation, or publicly proposes to do so, or approves or recommends any competing proposal, or proposes to do so, or otherwise breaches its no-solicitation covenant in any material respect, or (h) prior to obtaining its shareholder approval of the merger agreement:

                "* the party receives an unsolicited superior proposal,
                "* the board of directors of the party determines in good      faith, based upon the advice of its outside counsel, that its fiduciary obligations require  it to (a) withdraw or modify its approval or recommendation of the merger      agreement  and the   merger,   (b) terminate the merger agreement and (c) enter into a definitive   agreement   for the  competing   proposal,
                "* the party complies with its no-solicitation covenants,
                "* the party pays the required termination fee, and
                "* the board of directors of the party approves and the party enters into an agreement providing for the implementation of the superior proposal.

Termination Fees; Reimbursement of Expenses PECO Energy (page 77) PECO Energy must pay to Unicorn a termination fee of $250 million and reimburse Unicorn for its out-of pocket expenses actually incurred in connection with the merger agreement and the transactions contemplated by the merger agreement up to a limit of $15 million, if any of the following occur:

     "* PECO Energy terminates the merger agreement for the reason described in paragraph 2(h) above under
          "--Termination of the Merger Agreement",
     "*  Unicorn terminates the merger agreement for the reason described in paragraph 2(g) above under
          "--Termination of the Merger Agreement", or 10

any competing proposal for PECO Energy has been proposed or publicly disclosed and

           " the merger agreement is terminated by (a) PECO Energy for the reason described in paragraph 2(a) above under "-Termination of the Merger Agreement", (b) either PECO Energy or Unicom for the reason described in paragraph 2(e) above under "--Termination of the Merger Agreement" or (c) Unicorn for the reason described in paragraph 2(f) above under "--Termination of the Merger Agreement" for a willful breach or failure to perform, and
           "* within 18 months of termination PECO Energy enters into a definitive agreement to consummate or consummates any competing proposal.

In addition, PECO Energy must reimburse Unicorn (whether or not a termination fee-triggering event occurs) for its out-of-pocket expenses actually incurred in connection with the merger agreement and the transactions contemplated by the merger agreement up to a limit of $15 million, if:

       "* either PECO Energy or Unicorn terminates the merger agreement for the reason described in paragraph 2(e) above under "-Termination of the Merger Agreement", or
       "*  Unicorn terminates the merger agreement for the reason described in paragraph 2(f) above under
           "-Termination of the Merger Agreement".

Unicoin (page 77) Unicorn must pay to PECO Energy a termination fee of $250 million and reimburse PECO Energy for its out-of-pocket expenses actually incurred in connection with the merger agreement and the transactions contemplated by the merger agreement up to a limit of $15 million, if any of the following occur:

       "* Unicorn terminates the merger agreement for the reason described in paragraph 2(h) above under
           "-Termination of the Merger Agreement",
       "* PECO Energy terminates the merger agreement for the reason described in paragraph 2 (g) above under
           "--Termination of the Merger Agreement", or
      " any competing proposal for Unicorn has been proposed or publicly disclosed and
          " the merger agreement is terminated by (a) Unicorn for the reason described in paragraph 2(a) above under "-Termination of the Merger Agreement", (b) either Unicorn or PECO Energy for the reason described in paragraph 2(d) above under "-Termination of the Merger Agreement" or (c) PECO Energy for the reason described in paragraph 2(f) above under "--Termination of the Merger Agreement" for a willful breach or failure to perform, and
         "*  within 18 months of termination Unicorn enters into a definitive agreement to consummate or consummates any competing proposal.

In addition, Unicom must reimburse PECO Energy (whether or not a termination fee-triggering event occurs) for its out-of-pocket expenses actually incurred in connection with the merger agreement and the transactions contemplated by the merger agreement tip to a limit of $15 million, if:

     "* either PECO Energy or Unicorn terminates the merger agreement for the reason described in paragraph 2(d) above under   "--Termination   of the Merger Agreement" or
     "* PECO Energy terminates the merger agreement for the reason described in paragraph 2(f) above under
          "-Termination of the Merger Agreement".

Regulatory Approvals (page 71) In order to complete the merger, we must receive approvals from and/or make filings with various federal and state regulatory agencies. At the federal level, these approvals include approval of the Securities and Exchange Commission, the Nuclear Regulatory Commission and the Federal Energy Regulatory Commission. II

In addition, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act must have expired or been terminated. At the state level, PECO Energy must receive approval from regulators in Pennsylvania. Unicorn has filed a required notice of the merger with regulators in Illinois and no other regulatory action is required in Illinois to complete the merger. Accounting Treatment (page 67) The merger is expected to be accounted for using the purchase method of accounting with PECO Energy being deemed to have acquired Unicom. Dissenters' Rights PECO Energy Shareholders (page 67) Under Pennsylvania law, PECO Energy shareholders do not have dissenters' rights in connection with the merger. Unicorn Shareholders (page 67) Under Illinois law, Unicorn shareholders have dissenters' rights in connection with the second step merger. Expenses (page 82) PECO Energy and Unicorn will each bear its own expenses in connection with the merger, except that PECO Energy and Unicorn will share equally the costs of filing the registration statement. of which this proxy statement/prospectus is a part, with the Securities and Exchange Commission and printing and mailing this proxy statement/prospectus to PECO Energy and Unicorn shareholders. Comparative Stock Prices and Dividend Information (page 84) Shares of PECO Energy common stock and Unicorn common stock are listed on the New York Stock Exchange. The following table presents the last reported sale price of one share of PECO Energy common stock and one share of Unicorn common stock, as reported on the New York Stock Exchange Composite Transaction reporting system on September 22, 1999, the last full trading day prior to the public announcement of the proposed merger, on January 6, 2000, the last full trading day prior to the public announcement of the amendment of the merger agreement, and on May 11, 2000, the last day for which this information could be calculated prior to the date of this proxy statement/prospectus. PECO Energy Unicom Common Common Date Stock Stock September 22, 1999 ............................... $38.1250 $37.0625 January 6, 2000 .................................. $36.0000 $34.3750 March 31, 2000 .................................. $36.8750 $36.5000 M ay 11, 2000 ................................... $45.5000 $42.8125 Until the merger is completed, PECO Energy expects to continue to pay annual dividends on PECO Energy common stock of $1.00 per share and Unicorn expects to continue to pay annual dividends on Unicorn common stock of $1.60 per share. We expect that, after the merger, Exelon will pay annual dividends of $1.69 per share. The payment of dividends by PECO Energy, Unicorn and Exelon, however, is subject to approval and declaration by their boards of directors and will depend on a variety of factors, including business conditions and their financial condition, earnings and cash requirements. 12

Comparative Per Share Information The December 31, 1999 and 1998 selected comparative per share information of PECO Energy and Unicorn and the March 31, 2000 and 1999 selected comparative per share information of Unicorn, set forth below, were derived from audited financial statements. The March 31, 2000 and 1999 selected comparative per share information of PECO Energy set forth below has been derived from unaudited financial statements and, in the opinion of management of PECO Energy, includes all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation for such periods. Due to the effect of seasonal fluctuations and other factors on the operations of PECO Energy and Unicorn, financial results for the three-month period ending March 31, 2000 are not necessarily indicative of results for the year ended December 31, 2000. You should read the information in this section along with PECO Energy's and Unicorn's historical consolidated financial statements and accompanying notes for the periods referred to above included in the documents described under "Where You Can Find More Information" on page 154. You should also read the unaudited pro forma combined condensed financial statements and accompanying discussion and notes included in this proxy statement/prospectus starting on page 85. At or for At or for the Three the Year Ended Months Ended December 31, March 31, 1999 1998 2000 1999 PECO Energy-Historical Basic earnings per common share ........................... $ 2.91 $ 2.24 $ 0.89 $ 0.69 Diluted earnings per average common share ................... 2.89 2.23 0.89 0.68 Cash dividends per common share .......................... 1.00 1.00 0.25 0.25 Book value per outstanding common share .................... 9.78 13.61 10.43 12.18 Unicorn-Historical Basic earnings per common share ........................... $ 2.62 $ 2.35 $ 1.01 $ 0.32 Diluted earnings per common share ......................... 2.61 2.34 1.00 0.32 Cash dividends declared per common share ................... 1.60 1.60 0.40 0.40 Book value per outstanding common share .................... 24.50 23.49 22.13 23.33 At or for At or for the Three the Year Ended Months Ended December 31, 1999 March 31, 2000 Unaudited Pro Forma Combined Basic earnings before extraordinary items per common share ....... $3.72 $ 1.04 Diluted earnings before extraordinary items per common share ..... 3.70 1.04 Book value per outstanding common share .................... . - 21.12 13

Selected Historical and Unaudited Pro Forma Combined Condensed Financial Data PECO Energy The following selected financial data of PECO Energy at December 31, 1999, 1998, 1997, 1996 and 1995, and for each of the five years in the period ended December 31, 1999, are derived from audited consolidated financial statements. The following selected financial data of PECO Energy at March 31, 2000 and 1999, and for the three-month periods ended March 31, 2000 and 1999, are derived from unaudited consolidated financial statements incorporated by reference in this proxy statement/prospectus. You should note the following in reading the PECO Energy selected historical financial information:

     "  In 1999, PECO Energy, through a wholly owned subsidiary, securitized $4 billion of its authorized stranded cost recovery. The proceeds from securitization have been used to repurchase common equity, preferred securities and debt pursuant to the terms of the Pennsylvania Public Utility Commission's (PUC) Restructuring Order.
     "* In 1999, an extraordinary loss of $37 million (after-tax) was recorded related to the early redemption of long-term debt.
     "* In 1998, PECO Energy recognized a $124.2 million charge to earnings before taxes for its early retirement and separation program related to costs incurred in connection with its Cost Competitiveness Review workforce reduction program. This charge is reflected in its operating income.
     "* In 1998, an extraordinary loss of $20 million (after-tax) was recorded related to the early redemption of long-term debt.
     "* In 1997, PECO Energy recognized a $3.1 billion extraordinary charge to earnings before taxes reflecting the effects of the PUC's Restructuring Order and deregulation of its electric generation operations.

You should read the information in this section along with PECO Energy's financial statements and accompanying notes incorporated by reference in this proxy statement/prospectus. See "Where You Can Find More Information" on page 154. Historical At or for the Three Months Ended, At or for the Year ended December 31, March 31, (unaudited) 1999 1998 1997 1996 1995 2000 1999 (Dollars in millions, except per share amounts) Income Statement Data: Operating revenues .......... $ 5,437 $ 5,263 $ 4,601 $ 4.284 $ 4,186 $ 1,343 $ 1,252 Net income (loss) from continuing operations ....... 582 513 (1,497) 517 610 165 156 Earnings (loss) per average common share ............ 2.91 2.24 (6.80) 2.24 2.64 0.89 0.69 Dividends per common share ... 1.00 1.00 1.80 1.755 1.65 0.25 0.25 Balance Sheet Data: Total assets ................ $13,120 $12,048 $12,357 $15,261 $15,309 $13,031 $14,971 Long-term debt ............. 5,969 2,920 3,853 3,936 4,199 5.895 6,084 Common shareholders' equity . . 1,773 3,057 2,727 4,646 4,531 1,895 2,486 14

Unicom The following selected financial data of Unicorn at December 31, 1999, 1998, 1997, 1996 and 1995 and for each of the five years in the period ended December 3 1. 1999 are derived from the audited consolidated financial statements. The following selected financial data of Unicom at March 31, 2000 and 1999, and for the three-month periods ended March 31, 2000 and 1999, arc derived from audited consolidated financial statements incorporated by reference in this proxy statement/prospectus. You should note the following in reading the Unicorn selected historical financial information:

     "  In December 1999, Unicorn completed the sale of CornEd's fossil generating assets, representing an aggregate generating capacity of approximately 9,772 megawatts, to Edison Mission Energy, a subsidiary of Edison International, for $4.8 billion in cash. In accordance with the Illinois Public Utilities Act, the gain on the sale was recorded as a regulatory liability and was used to recover regulatory assets.
     "* In  1999. an extraordinary loss of $28 million (after-tax) was recorded related to the early redemption of long-term debt.
     "  In December 1998, CornEd initiated the issuance of $3.4 billion of transitional trust notes. During 1999, the proceeds from the transitional trust notcs, net of transaction costs, were, as required by the Illinois Electric Service Customer Choice and Rate Relief Law of 1997 (the "Illinois Act"), used to repurchase higher cost, long-term debt, preference siock aid Unicorn common stock.
     "  In January 1998, the boards of directors of Unicomn and CornEd authorized the permanent cessation of electric generation operations and the retirement of ComEd's 2,080 megawatt Zion nuclear generating station. The retirement resulted in a charge in the fourth quarter of 1997 of $523 million (after-tax), or
        $2.42 per common share (diluted).
     "  In December 1997, CoinEd discontinued SFAS 71 and recognized an extraordinary charge of $810 million (after-tax), or $3.75 per common share (diluted), reflecting the effects of the Illinois Act and deregulation of its electric generation operations. The Illinois Act is expected to ultimately lead to market-based pricing of electric generation services.
     "  In 1997, CornEd changed its accounting method for revenue recognition to record revenues associated with service which has been provided to customers but has not yet been billed at the end of each accounting period. This change in accounting method increased operating results for the year 1997 to reflect the one-time cumulative effect of a change for years prior to 1997 by $197 million (after-tax), or
        $0.91 per common share.

You should read the information in this section along with Unicorn's financial statements and accompanying notes incorporated by reference in this proxy statement/prospectus. See "Where You Can Find More Information" on page 154. Historical At or for the At or for the Year ended December 31, Three Months Ended (audited) March 31, 1999 1998 1997 1996 1995 2000 1999 (Dollars in millions, except per share amounts) Income Statement Data: Operating revenues ............................ S6,848 S 7,103 $ 7,083 $ 6,937 $ 6,910 S 1,658 S 1.538 Net income (loss) f-orn continuing operations ........ 597 510 (239) 666 660 195 97 Earnings pcr average diluted common share .......... 2.61 2.34 (3.94) 3.09 2.98 1.00 0.32 Dividends per common share ..................... 1.60 1.60 1.60 1.60 1.60 0.40 0.40 Balance Sheet Data: Total assets .................................. 23,406 25,690 22,700 23,388 23,250 21,156 23,990 Long-term debt ............................... 7.130 7,793 5.737 6,070 6,549 6.965 7.677 Common shareholders' equit3 ..................... 5.333 5,099 4,919 6.104 5,770 3,932 5,065 15

PECO Energy and Unicorn Pro Forma Combined The following selected unaudited pro forma combined condensed financial data of PECO Energy and Unicorn have been prepared to reflect the acquisition of Unicorn by PECO Energy under the purchase method of accounting. The selected unaudited pro forma combined condensed financial data is derived from the unaudited pro forma combined condensed financial statements contained elsewhere in this proxy statement/prospectus. The unaudited pro forma combined condensed financial statements do not give effect to the estimated cost savings and revenue enhancements as a result of the merger or the costs to achieve such savings and revenue enhancements or one-time merger-related costs. The Unicorn and PECO Energy adjustments and the merger are reflected in the unaudited pro forma combined condensed balance sheet contained elsewhere in this proxy statement/prospectus as if they occurred on March 31, 2000. The unaudited pro forma combined condensed statement of income for the three months ended March 31, 2000 and for the year ended December 31, 1999 contained elsewhere in this proxy statement/prospectus assume that these transactions were completed on January 1, 1999. The following unaudited pro forma combined condensed financial data is for illustrative purposes only. It is not necessarily indicative of the financial position or operating results that would have occurred had the merger been completed as of the dates referred to above. The data is not necessarily indicative of future financial position or operating results. Results of operations and financial position in the first year after the merger could differ significantly from the unaudited pro forma combined condensed financial data, which is based on past operations. Future operations will be affected by various factors including operating performance, energy market developments, and other matters. You should read the financial information in this section along with historical financial statements and unaudited pro forma combined condensed financial statements and accompanying notes, either incorporated by reference or included in this proxy statement/prospectus. See "Unaudited Pro Forma Combined Condensed Financial Statements" on page 85 and "Where You Can Find More Information" on page 154. At or for the At or for the Three Months Year Ended Ended December 31, 1999 March 31, 2000 (Dollars in millions, except per share amounts) Income Statement Data: Operating revenues ................................... $12,225 $ 2,987 Income before extraordinary items ........................ .1,172 329 Income before extraordinary items per share-diluted ........... 3.70 1.04 Balance Sheet Data: Total assets ......................................... .- $36,014 Long-term debt ...................................... -. 13,860 Redeemable preferred securities .......................... -. 478 Common shareholders' equity ............................ -. 6,654 16

RISK FACTORS RELATING TO THE MERGER In addition to the other inJbrinationinclhded and inco*poorated by reference in this proxy statement/prospectus, PECO Energy and Unicorn shareholdersshould consider carefullv the matters described below in detennining whether to adopt or approve the mierger agreement. The considerationto be received by shareholders in the merger is fixed and will not be adjusted in the event of any change in the stock prices of PECO Energy or Unicorn prior to the merger. Upon completion of the merger, each share of PECO Energy common stock will be exchanged for one share of Exelon common stock, and each share of Unicorn common stock will be exchanged for 0.875 shares of Exelon common stock plus $3.00. These exchange ratios and the cash amount to be received by Unicorn shareholders are fixed and will not be adjusted in the event of changes in the prices of PECO Energy common stock or Unicorn common stock. There may be a significant amount of time between the dates when PECO Energy and Unicorn shareholders vote on the merger agreement at the annual meetings and the date when the merger is completed. The prices of PECO Energy common stock and Unicorn common stock on the dates of the meetings may not be indicative of their prices immediately prior to completion of the merger and the price of Exelon common stock after the merger is counpleted. The relative prices of shares of PECO Energy common stock and Unicomn common stock may vary significantly between the date of this proxy stateinentp*Tospectus, the dates of the anitual iuetCings and the completion of the merger. These variations may be caused by changes in the businesses, operations, results and prospects of our companies, market expectations of the likelihood that the merger will be completed and the timing of completion, the prospects of post-merger operations, the effect of any conditions or restrictions imposed on or proposed with respect to the combined company by regulators, general market and economic conditions, and other factors. In addition, it is impossible to predict accurately the market price of Exelon common stock to be received by PECO Energy and Unicorn shareholders after the completion of the merger. We urge you to obtain current market quotations for your company's common stock at the time you are making your decision as to how to vote. The integrationof PECO Energy and Unicornfollowing the merger will present significant challenges which may result in the combined company not operating as effectively as expected or in a failure to achieve the anticipatedpotential benefits of the merger. PECO Energy and Unicorn will face significant challenges in consolidating functions, integrating their organizations, procedures and operations in a timety and efficient manner, and retaining key PECO Energy and Unicorn personnel. The integration of PECO Energy and Unicorn will be complex and time-consuming and the managements of PECO Energy and Unicorn will have to dedicate substantial effort to it and these efforts could divert management's focus and resources from other strategic opportunities and from operational matters during the integration process. In addition, integrating portions of the organizations of the two companies requires regulatory approvals, which could be delayed or not received at all. The delay or failure to integrate PECO Energy and Unicorn and to manage successfully the challenges presented by the integration process may result in the combined company not operating as effectively as expected or achieving the anticipated potential benefits of the merger, including expected cost savings and synergies, or achieving them later than anticipated. In addition, the integration will have to be completed amidst recent and future developments in the electric and gas utility industries, including restructuring, deregulation and increased competition. Combining the nuclear operations of PECO Energy and Unicorn will present significantchallenges which may affect the combined company's ability to maintain and improve the efficient operation of its nuclear generatingplants. The combined nuclear operations of Exelon will be significantly larger than either company's nuclear operations and will require the integration of nuclear operations among PECO Energy and Unicorn. Exelon's nuclear operation will be the largest in the United States in terms of size and geographic scope. Exelon will have to build on the successful nuclear management of PECO Energy and Unicorn to maintain and improve the efficient operation of its nuclear generating plants. 17

ffi The merger is subject to the receipt of consents and approvals from government entities that could delay completion of the merger or impose conditions that could have a materialadverse effect on the combined company or cause abandonment of the merger. Completion of the merger is conditioned upon the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and the receipt of consents, orders, approvals or clearances, as required, from the Securities and Exchange Commission, the Federal Energy Regulatory Commission, the Nuclear Regulatory Commission and the Pennsylvania Public Utility Commission. In addition, notice of the second step merger must be filed with the Illinois Commerce Commission. A substantial delay in obtaining satisfactory approvals or the imposition of unfavorable terms or conditions in the approvals could have a material adverse effect on the business, financial condition or results of operations of PECO Energy or Unicom or may cause the abandonment of the merger by PECO Energy or Unicorn. The companies have also applied for regulatory approvals of the restructuring of PECO Energy and CoinEd. See "The Merger--Corporate Restructuring" in this Chapter I. The approvals required for the restructuring are not necessary to complete the merger. Pursuing the restructuring approvals could have an adverse impact on the merger regulatory proceedings. It is a condition to the completion of the merger that the regulatory approvals required for the merger be obtained as final orders without terms or conditions which could reasonably be expected to have a material adverse effect on Exelon and its prospective subsidiaries after the merger or which would be materially inconsistent with the merger agreement. PECO Energy and Unicom have not determined how they will respond to any of these potential terms or conditions. Efforts of unions to organize workers not currently covered by collective bargainingagreements may increase as a result of the merger which could adversely affect Exelon. About 60% of Unicom's employees are represented by unions. None of PECO Energy's employees are represented by unions. Therefore, PECO Energy's operations may be subject to increased efforts to unionize portions of its workforce. Increased efforts to unionize portions of PECO Energy's work force could adversely effect Exelon through increased labor costs or disruptions of operations. Our unregulated businesses are more risky than our traditionalutility businesses. We expect the combined company's unregulated businesses will contribute a greater proportion of the combined company's earnings than either PECO Energy's or Unicom's unregulated businesses currently contribute to their earnings. Unregulated operations generally carry a higher level of risk than our regulated utility businesses. As a result, we expect the operating results of these businesses to exhibit more variability than our regulated utility businesses. PECO Energy is engaged in power marketing and trading operations on a greater scale than Unicom. The risks associated with this business are different from the risks of the traditional utility business. " Failuresof equipment or facilities in ComEd's distribution system would cause interruptionof the electric services provided by ComEd, which could adversely affect the value of Exelon common stock to be received by PECO Energy shareholders in the merger. Such failures could result in lost revenues, additional costs and possible claims against CoinEd for damages incurred by customers as a result of the outage. During the summer of 1999, CoinEd experienced interruptions in service to a large number of customers due to a series of equipment failures. If ComEd's efforts to repair or replace equipment are not successful in making the necessary improvements to its distribution system, similar outages may occur in the future. " The benefits from share repurchasesmay be less than anticipated. The benefits of accelerated share repurchases may be less than anticipated due to changes in the number of shares of common stock of Unicom and PECO Energy that will actually be repurchased prior to completion of the merger as a result of changing market prices for those shares or other factors. "*A determination by the InternalRevenue Service that the share repurchasesby Unicorn and PECO Energy referred to in the merger agreement are not independent of the merger and, therefore, should is

be integrated with the merger, could result in adverse federal income tax consequences to some Unicorn shareholders. The character of any gain recognized by a Unicorn shareholder in the second step merger will depend on whether the pre-closing share repurchases made by Unicorn and PECO Energy are independent of and, therefore, should not be integrated with the merger. Although this matter is not tree from doubt and there is no directly authoritative precedent on this issue, Jones, Day, Reavis & Pogue, tax counsel to Unicorn, has given its opinion that it is more likely than not that the pre-closing share repurchases will be independent of and will not be integrated with the second step merger and, therefore, that any gain recognized by a Unicorn shareholder, which will be limited to the amount of cash received, will be treated as capital gain, with limited exceptions. This opinion is not binding on the Internal Revenue Service and the Internal Revenue Service may disagree with these conclusions. If the Internal Revenue Service were successful in asserting a contrary view, any gain recognized by Unicorn shareholders in the second step merger would be treated as a dividend rather than a capital gain, with limited exceptions. See "The Merger-Material United States Federal Income Tax Consequences of the Merger- in this Chapter 1. 19

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This proxy statement/prospectus contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, cash flows, dividends, business strategies, operating efficiencies or synergies, budgets, capital and other expenditures, competitive positions, growth opportunities for existing businesses, plans and objectives of management, markets for stock of PECO Energy and Unicom, and after the merger Exelon, and other matters. Statements in this proxy statement/prospectus that are not historical facts are hereby identified as "forward looking statements" for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. These forward-looking statements, including, without limitation, those relating to the future business prospects, revenues and income, in each case relating to PECO Energy and Unicorn, and after the merger Exelon, wherever they occur in this proxy statement/prospectus, are necessarily estimates reflecting the best judgment of the senior management of PECO Energy and Unicorn and involve a number of risks and uncertainties that could cause actual results to differ from those suggested by the forward-looking statements. These forward-looking statements should, therefore, be considered in light of various important factors, including those set forth in this proxy statement/prospectus. Important factors that could cause actual results to differ from estimates or projections contained in the forward-looking statements include without limitation:

     "  the risk of legislative, regulatory or other governmental action seeking to impose additional restrictions on the operations of PECO Energy, Unicorn or Exelon or to increase the burden of necessary regulatory approvals for the merger, or the imposition of unfavorable terms as a condition of approval of the merger, including requirements for rate reductions or allocations to customers of merger cost savings,
     "  the risk of a significant delay in the expected completion of, and unexpected consequences resulting from, the merger, including the inability to close the transaction or unexpected difficulties in integrating the operations of the two companies, difficulties in achieving anticipated cost savings, difficulties in achieving other operational improvements and revenue enhancements, and diversion of management's focus and resources from other strategic opportunities and from operational matters during the integration process,
     "* the  risk that the assumptions and estimates underlying the anticipated cost savings may prove to be faulty or other factors may adversely affect the amount, nature or timing of anticipated cost savings,
     "* the  risk that competition, industry developments, difficulties encountered by the companies in coordinating new business ventures or other difficulties could adversely affect the amount, nature or timing of anticipated revenue enhancements,
     "* changes    in the amount of proceeds received by the companies from securitization transactions or other factors affecting the amount and timing of receipt of available funds to provide the cash consideration for the merger or share repurchases,
      "* future  state and federal regulatory and/or legislative initiatives, including with respect to environmental matters,
      "  the development of competition in the utility industry, including: legislative and regulatory restructuring initiatives, industry restructuring initiatives, transmission system operation, recovery of investments made under traditional regulation, nature of competitors entering the industry, retail wheeling, new pricing structures, former customers entering the generation market, and technological developments resulting in competitive disadvantages,
      "* financial  or regulatory accounting principles or policies imposed by the Financial Accounting Standards Board, the Securities and Exchange Commission, the Federal Energy Regulatory Commission, the Nuclear Regulatory Commission and similar agencies with regulatory oversight, 20

     " factors affecting utility and nonutility operations such as unusual weather conditions, catastrophic weather-related damage, unscheduled generation outages, maintenance or repairs, unanticipated changes to fossil fuel, nuclear fuel or gas supply costs or availability due to higher demand, shortages, transportation problems or other developments, nuclear or environmental incidents, or electric transmission or gas pipeline system constraints, all of which may affect revenues and margins, employee workforce factors, including loss or retirement of key executives, collective bargaining agreements with union employees, union organizing activities or work stoppages,
     " nuclear plant operating risks and nuclear regulatory policies and procedures, including nuclear decommissioning costs and related funding requirements. operating regulations and spent nuclear fuel storage, and
     " factors associated with unregulated investments, including government actions, economic risks, partnership actions, competition and operating risks.

Words such as "estimate", "project", "plan", "intend". "expect", "believe". "anticipate" and similar expressions are intended to identify forward-looking statements, although not every forward-looking statement includes these words. These forward-looking statements are found at various places throughout this proxy statement/prospectus and the other documents incorporated herein by reference, including, but not limited to, the Annual Report on Form 10-K for the year ended December 31, 1998 of each of PECO Energy and Unicorn, including any amendments. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this proxy statement/prospectus. Neither PECO Energy nor Unicorn undertakes, and each disclaims, any obligation to publicly update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this proxy statement/prospectus or to reflect the occurrence of unanticipated events. 21

L THE MERGER The discussion in this proxyv statement/prospectusof the mnerger and the principalterns of the merger agreement dated as of September 22, 1999, as amended and restated as of January 7, 2000, among PECO Energy, Exelon and Unicorn, is subject to, and is qualified in its entirety by reference to, the merger agreement, a coin' of which is attached to this proxy statement/prospectusas Annex A and is incorporatedherein by reference. Background to the Merger General As a result of legislative and regulatory initiatives aimed at restructuring the electric utility industry, the industry has undergone rapid change in recent years. Among other things, competition has increased, particularly with respect to energy supply and retail energy services. Many states, including those states in which PECO Energy and Unicorn currently operate, have either passed or proposed legislation that provides for retail electric competition and deregulation of the price of energy supply. In addition, the wholesale electric energy market has significantly expanded and geographic boundaries are becoming less important. During 1999, a substantial amount of electric generation assets were sold in the United States. PECO Energy and Unicorn expect this trend to continue. Mergers continue at a rapid pace not only between electric companies, but also between electric and gas companies that are seeking to capture value through the convergence of the two industries. At the same time, other companies are focusing on specific portions of the energy industry by disaggregating their generation, transmission, distribution and retail operations, spinning off non-core assets and acquiring assets consistent with their strategic focus. Currently, industry participants are attempting to prepare themselves for increased competition and position themselves to take advantage of these trends. PECO Energy and Unicorn believe that the consolidation and transformation of the electric and natural gas segments of the energy industry will result in the emergence of a limited number of substantial competitors. These large entities will have assets and skills that are necessary to create value in one or more of the traditional segments of the utility industry. PECO Energy and Unicorn believe that companies that have the financial strength, strategic foresight and operational skills to establish scale and an early leadership position in key segments of the energy industry will be best positioned to compete in the new marketplace. Both PECO Energy's and Unicom's boards of directors have focused significant attention on strategic planning to adapt to the evolving competitive environment. The strategic planning activities have concentrated on those factors that would best position the companies for enhanced shareholder value and continued leadership in the competitive energy marketplace. Discussions and Other During the first half of 1998, in connection with PECO Energy's generation growth strategy, Mr. Corbin A. McNeill, Jr., the Chairman of the Board and Chief Executive Officer of PECO Energy, discussed various possible transactions with Mr. John W. Rowe, then the newly elected Chairman of the Board and Chief Executive Officer of Unicorn. These discussions were subsequently expanded to include certain members of senior management of both PECO Energy and Unicorn and certain outside advisors. The parties abandoned these discussions in the fall of 1998 because the parties were unable to agree on an appropriate structure for the transaction and had differing views as to the relative values of the companies. Before and after the fall of 1998, as part of the ongoing execution of each company's strategic plan, each company's chief executive officer along with other members of senior management and with the assistance of outside advisors actively considered a number of potential strategic acquisitions and mergers involving domestic electric and gas utilities of a similar or smaller size, as well as possible asset acquisitions or divestitures. Unicorn engaged in preliminary discussions and exchanged confidential information with three 22

companies other than PECO Energy, and PECO Energy engaged in preliminary discussions and exchanged confidential information with one company other than Unicorn. The management of each company kept its board of directors informed as to the status of the contacts with potential transaction partners and the continued refinement of management's evaluation of strategic alternatives. During this time, Salomon Smith Barney Inc., who had been retained as financial advisor by PECO Energy in May 1998, continued to assist PECO Energy in exploring its strategic options. On January 20, 1999, in connection with its planning initiative, Unicorn retained the services of Wasserstein Perella as its financial advisor to assist Unicorn in exploring its strategic options. On May 20, 1999, at an industry conference, Mr. McNeill and Mr. Rowe had the occasion to meet briefly, at which time they discussed the possibility of exploring a merger involving PECO Energy and Unicom. On June 13, 1999, at another industry conference, Mr. McNeill and Mr. Rowe met again and, after briefly discussing various strategic opportunities available to their companies, decided to meet on June 25. 1999. On June 22, 1999, at a regularly scheduled PECO Energy board of directors meeting, Mr. McNeill described the background of discussions with Unicorn and identified the regulatory changes which stimulated renewed interest in a potential transaction between PECO Energy and Unicorn. The PECO Energy board of directors discussed the possible structure and key terms of a potential transaction and formed, pursuant to a proposal by Mr. McNeill, a special ad hoc committee to advise PECO Energy's management on a potential transaction. The special ad hoc committee consisted of C. A. McNeill, Jr., Chairman: G. F. DiBona, Jr.; R. K. Elliott; R. H. Glanton; and R. Rubin, all of whom, with the exception of Mr. McNeill, were outside directors. The special ad hoc committee's role was to advise management regarding the possible transaction with Unicorn. The role of the special ad hoc committee was not, and the special ad hoc committee did not undertake at any time during the discussions between PECO Energy and Unicorn, to review and make recommendations to the PECO Energy board regarding the merger, the merger agreement or the amendment to the merger agreement. On June 25, 1999, Mr. McNeill and Mr. Rowe met and discussed the potential for a merger of PECO Energy and Unicorn. At this meeting, Mr. McNeill and Mr. Rowe described and compared their companies' strategies and visions for the future. Based on these discussions, Mr. McNeill and Mr. Rowe concluded that the two companies shared sufficiently compatible strategies and goals to warrant further discussions. At a meeting on July 10, 1999, Mr. McNeill and Mr. Rowe and other members of senior management from each company met to discuss and compare their companies' strategies and visions for the future. Based on these discussions, Mr. McNeill and Mr. Rowe concluded that there was a sufficient basis to undertake further exploratory discussions relating to a possible transaction. On July 15, 1999, PECO Energy and Unicom executed a confidentiality agreement providing that each company would keep confidential information furnished by the other in connection with discussions relating to a possible transaction. Beginning in July and continuing in the first half of August, 1999, representatives of management of PECO Energy and Unicorn and their financial advisors met and spoke by telephone on numerous occasions to explore a possible transaction. During these meetings and conversations, PECO Energy's and Unicom's representatives discussed their companies' businesses and operations, the rationale for a potential business combination, alternative structures for and the terms of a possible transaction, regulatory approvals, governance issues and other matters. During this period, the companies also exchanged financial information and members of senior financial management considered cost savings and other financial benefits that might be achieved through a combination of the two companies. Also during this period, management representatives and Cravath, Swaine & Moore, legal advisors to PECO Energy, and Jones, Day. Reavis & Pogue, legal advisors to Unicorn, and the companies' financial advisors conducted business and legal due diligence. 23

On July 26, 1999 and August 25, 1999, PECO Energy entered into engagement letters with Morgan Stanley and Salomon Smith Barney, who were already participating in the preliminary discussions, to act as PECO Energy's financial advisors in exploring a possible transaction with Unicorn. PECO Energy and Unicorn also retained Deloitte Consulting LLC ("Deloitte Consulting") to assist the managements of PECO Energy and Unicorn in their analyses of potential synergies that may result from the merger. At a regularly scheduled PECO Energy board of directors meeting on July 27, 1999, Mr. McNeill and other members of PECO Energy's management summarized the status of discussions with Unicorn and outlined the strategic rationale for, and potential benefits from, a potential transaction with Unicorn as compared to alternatives available to PECO Energy. Also at that meeting, Salomon Smith Barney and Morgan Stanley discussed financial aspects of and possible investor reaction to a potential transaction. Mr. McNeill discussed how the merger would accelerate PECO Energy's growth strategy for its generation and its power marketing business. In addition, Mr. McNeill explained that a merger would provide a platform for expansion of its distribution business, increase the number of electric utility customers and provide a foundation for the growth of PECO Energy's unregulated businesses, such as its infrastructure services and telecommunications businesses. At a regularly scheduled Unicorn board of director's meeting on July 28, 1999, Mr. Rowe reviewed Unicorn management's analysis of the strategic alternatives available to Unicorn, including potential acquisitions by Unicom or a merger-of-equals transaction. Mr. Rowe also discussed with Unicorn's board of directors the contacts that he had with PECO Energy and a limited number of potential acquisition targets in the electric and gas utility industry in the central United States. The Unicorn board of directors encouraged management to continue its evaluation of PECO Energy and these other potential targets, although none of the other opportunities progressed to the point of discussing definitive terms. During late August and September 1999, representatives of the companies and Cravath, Swaine & Moore, legal advisors to PECO Energy, and Jones, Day, Reavis & Pogue, legal advisors to Unicorn, held various discussions to negotiate the terms of a proposed possible merger of equals and began working on a draft merger agreement. In addition, members of senior management and the companies' financial advisors held meetings and discussions at which a possible business plan for a combined company and potential synergies from a transaction and other financial and due diligence matters were discussed. During August and September 1999, there were also numerous meetings and telephone conversations between Mr. McNeill and Mr. Rowe regarding terms of a potential agreement for a merger of equals, in particular board composition of the combined company, management succession for the combined company and the location of the headquarters for the combined company. At a special meeting held on August 23, 1999, the Unicorn board of directors reviewed, among other things, the status of the discussions with PECO Energy as well as the other possible acquisition targets discussed above. After presentations by members of the senior management of Unicorn, the Unicorn board of directors authorized management to continue its discussions with PECO Energy and to review other alternative transactions. On August 24, 1999, the special ad hoc committee and the finance committee of the PECO Energy board of directors held a meeting to hear a preliminary analysis by management of a potential transaction with Unicorn. Representatives from Salomon Smith Barney, Morgan Stanley and Deloitte Consulting attended the meeting. Also at this meeting, representatives of Deloitte Consulting assisted the management of PECO Energy in presenting management's preliminary analysis of potential synergies. James W. Durham, Senior Vice President and General Counsel of PECO Energy, and a representative of Cravath, Swaine & Moore discussed the fiduciary duties of the PECO Energy board of directors under applicable law with respect to its consideration of a transaction with Unicom. The special committee encouraged management to continue discussions with Unicorn. On September 1, 1999, Unicorn's board of directors held a regularly scheduled meeting at which senior management and the company's legal advisors from Jones, Day, Reavis & Pogue and financial advisors from 24

Wasserstein Perella discussed the status of discussions with PECO Energy and the status of other potential transactions. Mr. Rowe asked representatives of Goldman Sachs & Co. who were present to report generally on mergers and acquisitions in the electric industry and potential investor reaction to possible transactions involving Unicorn. Goldman Sachs provided an overview of developments in the electric industry and the need for companies within the industry to make strategic decisions given these developments and further changes that are expected in the industry. Goldman Sachs reported that they believed that a transaction involving PECO Energy would be favorably received by the investment community but that Unicorn would have to clearly and effectively communicate the strategic purpose of a transaction and its expected benefits. The Unicorn board of directors advised management that it should focus its strategic efforts on the proposed transaction with PECO Energy. The Unicorn board of directors determined not to pursue the other alternative transactions that had been considered for several reasons, including the absence of a compatible strategic vision and because these opportunities did not offer as much potential to provide increased shareholder value, the combined financial and management capabilities, as ,vell as the generation, distribution and other business resources necessary to succeed as a national energy company as a possible merger with PECO Energy. On September 1, 1999. the special ad hoc committee of the PECO Energy board of directors held a meeting and discussed Unicorn and various matters related to the corporate governance of the combined company that would result from a possible transaction with Unicom, and authorized Mr. McNeill to continue negotiations with Unicorn. In September 1999, Unicorn engaged Goldman Sachs to assist in Unicorn's development of a plan to effectively communicate with the investor community regarding the transaction. On September 16, Mr. McNeill, Mr. Rowe, Mr. Durham and Ms. Pamela B. Strobel, Executive Vice President and General Counsel of Unicom. met in Chicago, Illinois, and discussed various governance matters in connection with the proposed merger, including the composition of the board of directors of the combined company and management succession for the combined company. On September 20, 1999. Unicorn's board of directors held a special meeting for the purpose of hearing a report on the status of the proposed merger with PECO Energy. At this meeting, board members were given an outline of the preliminary draft of the original merger agreemnent, a copy of the preliminary draft of the original merger agreement. a presentation on fiduciary duties by representatives of Jones, Day, Reavis & Pogue and a detailed report on the results of the due diligence investigation of PECO Energy. The draft of the original merger agreement presented to the Unicorn board of directors at this meeting was preliminary and did not contain exchange ratios. the termination fees or provisions regarding Mr. Rowe's employment agreement. These provisions were still under negotiation at the time of this meeting. Also at this meeting, representatives of Deloitte Consulting assisted the management of Unicorn in making management's presentation outlining the synergies which the managements of Unicorn and PECO Energy estimated could be realized in the proposed merger. In addition, corporate structure, governance and other related matters were discussed. Wasserstein Perella made a detailed financial presentation at the special meeting. Mr. McNeill attended this meeting and made a presentation relating to various aspects of the proposed merger and answered questions from members of the Unicorn board of directors. At this meeting, the Unicorn board of directors authorized management to continue negotiations relating to a potential merger with PECO Energy. A special meeting of PECO Energy's board of directors to consider the proposed merger was held on September 22. 1999. At the meeting, board members were given a summary of the final draft of the original merger agreement, a copy of the final draft of the original merger agreement and a presentation relating to the final draft of the original merger agreement and fiduciary duties under applicable law by Mr. Durham and a representative of Cravath, Swaine & Moore. PECO Energy management also provided a financial overview of the proposed merger and a detailed report on the results of due diligence. Representatives of Salomon Smith Barney and Morgan Stanley made a detailed financial presentation to the PECO Energy board of directors and each rendered an oral opinion. which was subsequently confirmed in writing that, as of that date, and based upon and subject to the factors and assumptions contained in the opinions, the consideration to be received in the merger by PECO Energy shareholders was fair from a financial point of view to those 25

I shareholders. Also at this meeting, representatives of Deloitte Consulting assisted the management of PECO Energy in making management's presentation outlining the synergies which the managements of PECO Energy and Unicorn estimated could result from the proposed merger. Mr. Rowe attended this meeting and made a presentation relating to various aspects of the proposed merger and answered questions from members of the PECO Energy board of directors. After considering and discussing the various presentations at that meeting and at prior meetings. as well as the recommendation of PECO Energy's senior management, the PECO Energy board of directors unanimously approved the merger agreement, authorized the execution of the merger agreement and recommended that PECO Energy shareholders vote in favor of adoption of the merger agreement. A special meeting of Unicom's board of directors to consider the proposed merger was held on September 22, 1999. At the meeting, representatives of Jones, Day, Reavis & Pogue made a presentation on fiduciary duties and senior management, financial advisors and representatives of Jones, Day, Reavis & Pogue discussed changes to the original merger agreement and the terms of Mr. Rowe's proposed employment agreement. Final drafts of the original merger agreement and disclosure schedules to the original merger agreement were presented at that meeting and described to directors. Representatives of Wasserstein Perella updated their previous financial presentation to Unicorn's board of directors and rendered an oral opinion which was subsequently confirmed in writing that, as of that date, and based upon and subject to the factors and assumptions contained in the opinion, the consideration to be received in the transaction by the Unicorn shareholders was fair to the Unicorn shareholders from a financial point of view. After considering and discussing the various presentations at that meeting and at prior meetings, as well as the recommendation of Unicom's senior management, the members of the Unicorn board of directors present at the meeting unanimously approved the merger agreement and authorized the execution of the merger agreement. All members were present except Mr. Carlos Cantu. At a board meeting on October 27, 1999, the entire Unicorn board of directors unanimously voted to recommend that Unicorn shareholders vote in favor of approval of the merger agreement. The parties executed the original merger agreement during the evening of September 22, 1999 and, before the opening of trading on the New York Stock Exchange on September 23, 1999, announced the merger. The original merger agreement offered shareholders of PECO Energy the choice to receive one share of Exelon common stock or $45.00 in cash and shareholders of Unicorn the choice to receive 0.95 shares of Exelon common stock or $42.75 in cash. The original merger agreement provided that each company's shareholders would receive a total of $750 million in cash, and shareholders' choices were subject to proration. During the fourth quarter of 1999, the managements of PECO Energy and Unicorn each followed closely the declining prices of the common stock of each of the companies. Each company began to analyze the potential impact on Exelon that would result from accelerating the repurchases of their common stock and/or increasing the number of shares of their common stock to be repurchased before the completion of the merger. This review indicated that earnings per share for Exelon would be enhanced by a further reduction in the outstanding shares of each company. Unicorn took into account the fact that the proceeds of the sale of its fossil generating facilities would be available for stock repurchases. PECO Energy considered potential funding sources for repurchases, including engaging in additional securitization transactions. Each company conducted independent analyses until December. At that time the companies began joint discussions regarding the feasibility of pursuing open market repurchases and accelerating the reduction of outstanding common stock. The companies consulted with their financial advisors regarding the timing and amount of possible stock repurchases and the impact this would have on Exelon and the merger. At the regular Unicorn board of directors meeting on December 15, 1999, management summarized the analysis it was conducting, but the board of directors was not asked to take any action. Beginning in December 1999 and continuing in early January 2000, the companies and their advisors continued discussion and negotiations concerning an amendment to the merger agreement. At a special meeting of the Unicorn board of directors held on January 6, 2000, Mr. Rowe and members of the Unicorn management team presented the Unicorn board of directors with proposed amendments to the 26

financial terms of the merger. The proposed amendments provided that the companies would accelerate the payment of cash to shareholders by repurchasing $1,500,000,000 of common stock to take advantage of lower market prices for each company's stock. In addition, the proposed amendments provided that shareholders would no longer have the opportunity to choose to receive cash or stock of the combined company. Rather, the Unicorn shareholders would receive Exelon common stock and cash in return for their shares of Unicom common stock and PECO Energy shareholders would receive only Exelon common stock. Mr. Rowe and members of Unicom management explained that while the revised merger consideration to be paid to shareholders of each company was intended to be comparable to that contemplated in the original merger agreement, it was expected that reducing the number of shares outstanding through repurchases of more shares of common stock at lower prices would have a positive effect on earnings per share of Exelon as well as the value of Exelon common stock after the merger. At that meeting Jones, Day, Reavis & Pogue presented a brief update to the discussion of the directors' fiduciary duties and Wasserstein Perella gave a financial presentation. At the conclusion of the meeting Wasserstein Perella rendered an oral opinion which was subsequently confirmed in writing that, as of that date, and based upon and subject to the factors and assumptions contained in the opinion, the aggregate consideration to be received by the Unicorn shareholders in the merger was fair from a financial point of view to the Unicom shareholders. Following a full discussion of the revised transactions and the amendments to the merger agreement as a whole, the Unicom directors present at the meeting unanimously adopted the amendments to the merger agreement and authorized the repurchase by Unicom of $1.0 billion of its common stock prior to the closing of the merger. Mr. Edgar Jannotta was unable to attend the entire meeting and left prior to the directors' vote. A special meeting of PECO Energy's board of directors was held on January 7, 2000. At the meeting, Mr. McNeill and other members of PECO Energy's management summarized the revised transaction and the proposed amendments to the merger agreement. Mr. McNeill and members of PECO Energy management explained that while the revised merger consideration to be paid to shareholders of each company was intended to be comparable to that contemplated in the original merger agreement. it was expected that reducing the number of shares outstanding through repurchases of more shares of common stock at lower prices would have a positive effect on earnings per share of Exelon as well as the value of Exelon common stock after the merger. The proposed amendments were identical to those described in the previous paragraph. Mr. Durham and representatives of Cravath, Swaine & Moore, answered the questions of the PECO Energy board of directors relating to their fiduciary duties under applicable law. Representatives of Salomon Smith Barney and Morgan Stanley made a financial presentation to the PECO Energy board of directors and each rendered an oral opinion, which was subsequently confirmed in writing that, as of that date, and based upon and subject to the factors and assumptions contained in the opinions, the consideration to be received in the merger by PECO Energy shareholders was fair from a financial point of view to those shareholders. After considering and discussing the revised transaction and the amendments to the merger agreement as a whole, as well as the recommendation of PECO Energy's senior management, the PECO Energy board of directors unanimously approved the amendment to the merger agreement. authorized the execution of the amendment and recommended that PECO Energy shareholders vote in favor of adoption of the merger agreement. The parties executed the amendment to the merger agreement and announced the revised merger on January 7, 2000. Reasons Jbr the Merger We believe that the common vision of PECO Energy and Unicorn and their complementary strategies, combined with their management, personnel, technical expertise and financial strength, will create a preeminent national energy company with the capabilities and resources required to succeed and grow in the new competitive energy marketplace. We believe that this merger, joining two well-managed companies of similar market capitalization, will provide substantial strategic and financial benefits to PECO Energy's and Unicom's shareholders, employees and customers. These benefits are expected to include: 27

• Expanded Generation Capacity. Exelon is expected to have a portfolio of generation assets with a capacity that will be nearly double that of either PECO Energy or Unicorn alone and that can be deployed to expand our power marketing and trading business. We believe in the competitive and strategic value of size and scope which will increase our future earnings growth rates, creating value for our shareholders. With a focus on nuclear operations excellence, Exelon will have the nation's largest nuclear generation fleet in terms of capacity and number of units. We expect to achieve synergies in operations and supply management by combining best practices and operating capabilities. The expansion strategy of Exelon will be consistent with PECO Energy's disciplined acquisition programs and will provide a framework for adding value to Unicom's nuclear fleet.
• Enhanced Power Marketing and Trading Business. Based on the expanded generation capacity of Exelon, we intend to extend the scale and the scope of our proven power marketing and trading business by:

  "* exploiting the flexibility and geographic diversity of the combined portfolio,
  "* broadening the portfolio of customized products offered to customers,
  "* enhancing our position as a preferred counterparty, and
  "* pursuing additional generation development and contract opportunities.

Broadened DistributionPlatform. Exelon will have approximately 5 million electric customers

  -among the largest electric utility customer bases in the nation-and expects to use its existing distribution facilities as a platform for regional consolidation based on:

• an unwavering commitment to top-tier reliability and customer satisfaction,

  "* sharing   of best practices and systems while also respecting each company's commitment to its local community and service territory,
   "* growth through market extension and strategic acquisitions, and
   "* the benefits of more diversified economic, weather and market conditions.

• Strategic Fit and Compatibility. PECO Energy, with its generation focus yet substantial number of distribution customers, and Unicorn, with its distribution focus yet substantial generation capacity, have complementary strategies and compatible corporate cultures and visions of the future of the energy business. In addition, the companies have a shared commitment to supporting and participating in competitive electric markets, are already competing in deregulated markets in our respective service territories and are prepared for further industry restructuring.
• Foundationfor Growth of UnregulatedBusinesses. We expect the merger to provide the critical mass and the development and operating infrastructure to expand the broad and complementary unregulated businesses of PECO Energy and Unicorn, with a focus on infrastructure services, energy solutions and telecommunications. In addition, the merger is expected to enhance the flexibility of the companies to take advantage of new opportunities for unregulated businesses, including:

   "* leveraging of infrastructure services over a broader customer base,
   "* capitalizing on opportunities in the telecommunications business, and
   "* exploiting cross-selling opportunities in the energy solutions business.

Cost Savings. We believe that the merger will produce cost savings through the elimination of duplication in corporate and administrative programs, generation consolidation, greater efficiencies in the power marketing and trading business, unregulated ventures integration, improved purchasing power (non-fuel), and the combination of portions of the two workforces. Although the following estimates are only approximations of the cost savings which the combined company may achieve, we estimate that the combined company will achieve regulated and unregulated net annual cost savings of approximately 28

       $100 million in the first year following completion of the merger, increasing to approximately
       $180 million by the third year. Approximately 60% of these estimated savings will be attributable to regulated activities and the remainder to unregulated activities. Estimated savings include only those cost savings and cost avoidance items management expects to achieve as a result of the merger.

PECO Energy Board of Directors Recommendation At its meeting on September 22, 1999, after due consideration, the PECO Energy board of directors unanimously:

    "  approved the original merger agreement, the first step exchange. the second step merger and the other transactions contemplated by the original merger agreement,
    "  determined that the first step exchange, the second step merger and the other transactions contemplated by the original merger agreement were fair to and in the best interests of PECO Energy and its shareholders, and
    "  recommended that the PECO Energy shareholders vote for the adoption of the original merger agreement.

At its meeting on January 7, 2000, after due consideration, the PECO Energy board of directors:

    "* approved   the amendment to the merger agreement, the first step exchange, the second step merger and the other transactions contemplated by the merger agreement,
    "* determined   that the first step exchange, the second step merger and the other transactions contemplated by the merger agreement were fair to and in the best interests of PECO Energy and its shareholders, and
    "* recommended      that the PECO Energy shareholders vote for the adoption of the merger agreement.

In approving the merger and making these determinations and recommendations, the PECO Energy board of directors consulted with PECO Energy's management as well as its outside legal counsel and financial advisors, and considered a number of factors, including the following:

• all the benefits of the merger described under -Reasons for the Merger" above,

    "* the  PECO Energy board of directors' understanding of the present and anticipated environment in the utility industry, and how possible consolidation within the utility industry could affect PECO Energy's competitive position in the industry,
    "  the risks and potential rewards associated with, as an alternative to the merger, continuing to execute PECO Energy's strategic plan as a stand-alone entity. These risks include, among others, the risks associated with remaining a stand-alone entity amidst industry-wide restructuring and consolidation, and the rewards include, among others, the ability of existing PECO Energy shareholders to partake in the potential future growth and profitability of PECO Energy,
    "  the possibility of pursuing, as an alternative to the merger, an acquisition of or a business combination or joint venture with an entity other than Unicom and the conclusion of the PECO Energy board of directors that a transaction with Unicom is more feasible, and is expected to yield greater benefits, than the likely alternatives. The PECO Energy board of directors reached this conclusion for reasons including Unicom's interest in pursuing a transaction with PECO Energy, PECO Energy's view that the merger could be acceptably completed from a timing and regulatory standpoint, and PECO Energy management's assessment of the alternatives to, and the expected benefits of, the merger and the compatibility of the companies as described under "--Reasons for the Merger-Strategic Fit and Compatibility" above,

• the PECO Energy board of directors' consideration of the financial condition, results of operations, prospects and businesses of PECO Energy and Unicorn, including the revenues of the companies, their 29

I complementary businesses, the financial exposure of each company to nuclear operations, the ability of each company to recover investments in generation under the applicable state electric restructuring legislation, the stock price performance of PECO Energy shares and Unicom shares prior to signing the merger agreement, "* the fixed exchange ratio for the Exelon common stock to be received by PECO Energy shareholders, "* the opportunity for PECO Energy shareholders to participate, as holders of Exelon common stock, in a combined enterprise that will be a preeminent national energy company with the capabilities and resources required to succeed and grow in the new competitive energy marketplace, "* the repurchases by PECO Energy of its common stock expected to be completed prior to the completion of the merger, "* management's expectation that the merger will be accretive to PECO Energy shareholders during the first full fiscal year after completion of the merger, "* the favorable impact that a further reduction in outstanding shares would have on earnings per share of Exelon common stock following the merger, "* that management expected that revising the merger consideration would not result in a change to the anticipated date of completion of the merger, "* that the revisions to the merger would constitute a modification for accounting purposes that could lead to a reduction in goodwill for accounting purposes and a commensurate further enhancement of Exelon's earnings per share, "* that, overall, the revised merger consideration was intended to be comparable to that provided for in the original merger agreement, " the fact that the basic features of the merger of equals transaction were not changed, including provisions regarding board composition, senior management and headquarters, "* management's expectation that Exelon will pay an annual dividend of $1.69 per share, "* current industry, economic and market conditions and the prospects of further restructuring and consolidation in the electric and gas utility industries, "* the accounting treatment of the merger as an acquisition of Unicom by PECO Energy and the impact that accounting would likely have on Exelon, including the creation of goodwill, "* the ability to complete the merger as a tax-free transaction for U.S. federal income tax purposes and have the conversion of shares of PECO Energy common stock into Exelon common stock be tax-free to shareholders, "* the terms and conditions of the merger agreement, including the conditions to closing and the termination fees payable under certain circumstances (see "The Merger Agreement-Conditions to the Completion of the Merger", "The Merger Agreement-Termination" and "The Merger Agreement

  -Termination Fees; Reimbursement of Expenses" in this Chapter I),

"* the various analyses and presentations of Morgan Stanley and Salomon Smith Barney and their written opinions, copies of which are attached as Annexes B and C to this proxy statement/prospectus, to the effect that, as of January 7, 2000, and based upon and subject to the various assumptions and limitations set forth in the respective opinions, the consideration proposed to be received by PECO Energy shareholders in the merger was fair from a financial point of view to PECO Energy shareholders, "* the other advice from PECO Energy management and the PECO Energy board of directors' financial, legal and other advisors over an extended period, and the discussions of the PECO Energy board of directors concerning the proposed merger agreement, "* the corporate governance aspects of the merger, including the role that PECO Energy's current management would play in the management of the combined company and the composition of the combined company's board of directors (see "--Board of Directors and Management of Exelon After the Merger" below), 30

  "* the   fact that while Exelon's corporate headquarters will be located in Chicago, Illinois, the headquarters of Exelon's generation and power marketing businesses and of PECO Energy, which will be a subsidiary of Exelon after the merger, will be in southeastern Pennsylvania,
  "* the positive    impact the merger is expected to have on the reliability and cost of service provided to PECO Energy customers,
 "    although the consolidated workforce of the companies is expected to be reduced by approximately 5%,

that the impact of the reduction is intended to be minimized through a combination of separation packages and attrition and that the anticipated expansion of the combined business could result in increased employment opportunities in Exelon,

 "* although     the quantities and prices of goods and services purchased by PECO Energy may be reduced due to greater efficiencies and improved purchasing power, the anticipated expansion of the combined business could result in an increase in the goods or services purchased by Exelon,
 "* that   the combined company would continue PECO Energy's commitment to the communities of southeastern Pennsylvania, including through financial and other support to civic and charitable organizations,
 "   that while the merger is likely to be completed, there are risks associated with obtaining necessary regulatory approvals. First, it is possible that regulatory authorities or other third parties could seek to impose unfavorable terms or conditions in the required approvals. Secondly, if a required approval is not obtained, it is possible that the merger may not be completed even if approved by shareholders (see "Regulatory Matters" and "The Merger Agreement-Conditions to the Completion of the Merger" in this Chapter I),
"* the impact of regulations under various state and federal laws, including the additional regulatory oversight that would result from the addition of public utility operations in Illinois, and the issues involved in the registration of Exelon as a holding company, and the regulation of PECO Energy and CoinEd as subsidiaries of a registered holding company, under the Public Utility Holding Company Act of 1935 (see "Regulatory Matters" in this Chapter I),
"* that although PECO Energy's relationships with regulators, customers, governments and partners might be negatively affected because of uncertainty surrounding PECO Energy's future status and direction pending completion of the merger, the PECO Energy board of directors believe that any potential negative effect will cease once the merger is completed,

• the problems inherent in merging the operations of two large and geographically separated companies, including the potential diversion of management resources,

" the requirement for a supermajority vote of the Exelon board of directors or the concurrence of Mr. Rowe and Mr. McNeill required to alter certain arrangements regarding the management of Exelon.

including the composition of Exelon's board of directors and board committees, the identity of Exelon's chairman of the board of directors, chairman of the executive committee of the board of directors, co chief executive officers, president and other senior officers and the location of Exelon's corporate headquarters and other principal offices, and "* the interests that certain executive officers and directors of PECO Energy, including Mr. McNeill, may have with respect to the merger in addition to their interests as shareholders of PECO Energy generally (see "--Interests of PECO Energy's Directors and Management in the Merger" below). The PECO Energy board of directors also considered: "* the risk that the benefits sought in the merger would not be obtained,

• the risk that the merger would not be completed,

"* the effect of the public announcement of the merger on PECO Energy's sales, customer, supplier and creditor relationships, operating results and ability to retain employees and the trading price of PECO Energy shares, 31

     "  the substantial management time and effort that will be required to complete the merger and integrate the operations of the two companies,
    "* the impact of the merger on PECO Energy employees,
     "* the possibility that various provisions of the merger agreement  might have the effect of discouraging other persons potentially interested in a combination with PECO Energy from pursuing such an opportunity, and
     "* other matters described under "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements."

This discussion of the information and factors considered by the PECO Energy board of directors in making its decision is not intended to be exhaustive but is believed to include all material factors and risks considered by the PECO Energy board of directors. In view of the wide variety of factors and risks considered in connection with its evaluation of the merger, including the amendments, and the complexity of these matters, the PECO Energy board of directors did not find it useful to and did not attempt to quantify, rank or otherwise assign relative weights to these factors or to evaluate them individually, but rather evaluated them as a whole. The PECO Energy board of directors relied on the experience and expertise of Morgan Stanley and Salomon Smith Barney, its financial advisors, for quantitative analysis of the financial terms of the merger to the extent included in the financial advisors' presentation to the PECO Energy board of directors. See -- Opinions of PECO Energy's Financial Advisors" below. In addition, the PECO Energy board of directors did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to its ultimate determination, but rather the PECO Energy board of directors conducted an overall analysis of the factors described above, including through discussions with and questioning of PECO Energy's management and legal, financial and accounting advisors. Individual members of the PECO Energy board of directors may have given different weight to different factors. Opinions of PECO Energy's FinancialAdvisors Pursuant to the letter agreements dated July 26, 1999 and May 15, 1998 (as amended by the letter agreement dated August 25, 1999) PECO Energy retained Morgan Stanley and Salomon Smith Barney to act as its financial advisors in connection with the merger. On January 7, 2000, Morgan Stanley and Salomon Smith Barney each rendered to the board of directors of PECO Energy their opinions subsequently confirmed in writing that, as of such date and based upon and subject to the factors and assumptions set forth in their opinions, the consideration to be received in the merger by the holders of shares of common stock of PECO Energy was fair from a financial point of view to those holders. The full texts of each of the fairness opinions, which set forth the assumptions made, matters considered, and qualifications and limitations of the reviews undertaken by Morgan Stanley and Salomon Smith Barney, are attached as Annexes B and C to this proxy statement/prospectus and are incorporated into this proxy statement/prospectus by reference. The summary of the fairness opinions set forth in this proxy statement/prospectus is qualified in its entirety by reference to the full texts of these opinions. Holders of PECO Energy common stock should read these opinions carefully and in their entirety. The fairness opinions were provided to the PECO Energy board of directors for its information and are directed only to the fairness from a financial point of view of the consideration to be received in the merger by PECO Energy shareholders. The fairness opinions do not constitute recommendations to any PECO shareholder as to how any shareholder should vote on the merger or how PECO Energy shareholders should act with respect to PECO Energy's repurchase of its common stock. The summaries set forth below do not purport to be complete descriptions of the analyses underlying the Morgan Stanley opinion or the Salomon Smith Barney opinion or the presentation jointly made by Morgan Stanley and Salomon Smith Barney to the PECO Energy board of directors in connection with their approval and recommendation of the merger. The preparation of a fairness opinion is a complex analytic process 32

involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a fairness opinion is not readily susceptible to partial analysis or summary description. In arriving at their opinions, neither Morgan Stanley nor Salomon Smith Barney attributed any particular weight to any analysis or factor that it considered, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, each of Morgan Stanley and Salomon Smith Barney believes that its analyses must be considered as a whole and that selecting portions of its analyses. without considering all analyses, would create an incomplete view of the process underlying the preparation of the fairness opinions. Opinion of Morgan Stanley In connection with rendering its opinion, Morgan Stanley, among other things:

      "* reviewed    certain publicly available financial statements and other information of Unicorn and PECO Energy,
      "  reviewed certain internal financial statements and other financial and operating data concerning Unicom prepared by the management of Unicorn,
      "* reviewed   certain financial projections prepared by the management of Unicorn,
      "* reviewed   and discussed with senior executives of PECO Energy and Unicorn an analysis prepared by PECO Energy and Unicorn regarding estimates of the amount and timing of certain strategic, financial and operational benefits anticipated from the merger.
      " discussed the past and current operations and financial condition and the prospects of Unicorn,
      "* reviewed   certain internal financial statements and other financial operating data concerning PECO Energy prepared by the management of PECO Energy,
      "* reviewed certain financial projections prepared by the management of PECO Energy,
      "* discussed the past and current operations and financial condition and the prospects of PECO      Energy, and reviewed the pro forma impact of the merger on PECO Energy's earnings and cash flow per share.

consolidated capitalization and financial ratios.

      "  reviewed the reported prices and trading activity for the common stock of both Unicorn and PECO Energy,
     "   compared the financial performance of Unicorn and the prices and trading activity of Unicorn common stock with that of certain other comparable publicly traded companies and their securities,
     "  compared the financial performance of PECO Energy and the prices and trading activity of PECO Energy common stock with that of certain other comparable publicly traded companies and their securities,
     "* reviewed    the financial terms, to the extent publicly available, of certain comparable merger transactions,
     "* reviewed    and discussed with the management of PECO Energy and Unicorn proposed uses of the proceeds from the sale of Unicorn's fossil fuel generation assets.
     "* participated   in discussions and negotiations among representatives of PECO Energy and Unicorn and their financial and legal advisors,
     "* reviewed the merger agreement, and
     "* performed other analyses as Morgan        Stanley deemed appropriate.

Morgan Stanley assumed and relied upon, without independent verification, the accuracy and completeness of the information it reviewed for the purposes of its opinion. With respect to the financial projections, Morgan Stanley assumed that they were reasonably prepared on bases reflecting the best currently available 33

ffi-estimates and judgments of the future financial performance of Unicorn and PECO Energy. In addition, Morgan Stanley assumed that the merger will be treated as a tax-free reorganization and/or exchange to PECO Energy and Unicorn, pursuant to the Internal Revenue Code of 1986, and will be consummated in accordance with the terms set forth in the merger agreement. Morgan Stanley did not make any independent valuation or appraisal of the assets or liabilities of Unicorn and PECO Energy, nor was it furnished with any such appraisals. With respect to the analysis of the strategic, financial and operational benefits estimated and expected to result from the merger, Morgan Stanley assumed that the analysis was reasonably prepared on bases reflecting the best currently available estimates and judgments of the benefits and the future financial performance of the combined company, and Morgan Stanley relied upon, without independent verification, this analysis. Morgan Stanley's opinion was necessarily based on economic, market and other conditions as in effect on, and the information made available to Morgan Stanley as of, the date of its opinion. Morgan Stanley assumed that, in connection with the receipt of all the necessary regulatory approvals for the merger, no restrictions will be imposed that would have any material adverse effect on the contemplated benefits to be derived in the merger. Morgan Stanley noted that it is not a legal or regulatory expert and that it relied upon, without independent verification, the assessment of PECO Energy's legal and regulatory advisors with respect to the legal and regulatory matters related to the merger. In addition, Morgan Stanley's opinion did not in any manner address the prices at which the Exelon common stock will trade following completion of the merger, and Morgan Stanley expressed no opinion or recommendation as to how PECO Energy shareholders should vote at the shareholders' meeting to be held in connection with the merger. In the past, Morgan Stanley and its affiliates have provided financial advisory and financing services for PECO Energy and have received fees for the rendering of these services. In the ordinary course of Morgan Stanley's trading and brokerage activities, Morgan Stanley or its affiliates may at any time hold long or short positions, trade or otherwise effect transactions, for its own account or for the account of customers, in the equity or debt securities of PECO Energy or Unicorn. Opinion of Salomon Smith Barney In arriving at its opinion, Salomon Smith Barney, among other things:

     "* reviewed the terms of the merger agreement,
     "* held discussions with certain senior officers, directors and other representatives and advisors of PECO Energy and certain senior officers and other representatives and advisors of Unicorn concerning the businesses, operations and prospects of PECO Energy and Unicorn,
     "* examined   certain publicly available business and financial information relating to PECO Energy and Unicorn,

• examined certain financial forecasts and other information and data for PECO Energy and Unicorn which were provided to or otherwise discussed with Salomon Smith Barney by the respective managements of PECO Energy and Unicorn,

     "* reviewed   and discussed with senior officers of PECO Energy and Unicorn an analysis prepared by PECO Energy and Unicorn regarding the estimates of the amount and timing of certain strategic, financial and operational benefits expected to be derived from the merger,
     "* reviewed   and discussed with the managements of PECO Energy and Unicorn proposed uses of the proceeds from the sale of Unicom's fossil fuel generation assets, and
     "* conducted    such other analyses and examinations and considered such financial, economic and market criteria as it deemed appropriate in arriving at its opinion.

In rendering its opinion, Salomon Smith Barney assumed and relied upon, without independent verification, the accuracy and completeness of all financial and other information and data publicly available or furnished to or otherwise reviewed by or discussed with it. With respect to financial forecasts and other 34

information and data provided to or otherwise reviewed by or discussed with Salomon Smith Barney, the managements of PECO Energy and Unicom advised Salomon Smith Barney that these forecasts and other information and data were reasonably prepared reflecting the best currently available estimates and judgments of the managements of PECO Energy and Unicorn as to the future financial performance of PECO Energy and Unicorn. With respect to the analysis regarding the strategic, financial and operational benefits expected to be derived from the merger, Salomon Smith Barney assumed that this analysis has been reasonably prepared on bases reflecting the best currently available estimates and judgments of the benefits and the future financial performance of the combined company and it relied upon, without independent verification, this analysis. Salomon Smith Barney assumed, with the consent of PECO Energy's board of directors, that the merger will be effected in all material respects in accordance with the terms of the merger agreement and that the merger will be treated as a tax-free reorganization and/or exchange to PECO Energy and Unicom for federal income tax purposes and, in the course of obtaining the necessary regulatory' approvals for the merger. no limitations, restrictions or conditions will be imposed that would have a material adverse effect on PECO Energy. Unicorn, Exelon or the combined company or the contemplated benefits anticipated to result from the merger. Salomon Smith Barney did not express any opinion as to what the value of the Exelon common stock actually will be when issued to PECO Energy and Unicorn shareholders pursuant to the merger or the price at which the Exelon common stock will trade subsequent to the completion of the merger. Salomon Smith Barney did not make and was not provided with an independent evaluation or appraisal of the assets or liabilities, contingent or otherwise, of PECO Energy or Unicorn nor did it make any physical inspection of the properties or assets of PECO Energy or Unicorn. In connection with its engagement, Salomon Smith Barney was not requested to, and did not, solicit third party, indications of interest in the acquisition of all or a part of PECO Energy. Salomon Smith Barney' expressed no view as to, and its opinion did not address, the relative merits of the merger as compared to any alternative business strategies that rnight exist for PECO Energy or the effect of any other transaction in which PECO Energy might engage. Salomon Smith Barney's opinion was necessarily based upon information available, and financial, stock market and other conditions and circumstances existing and disclosed to Salomon Smith Barney, as of the date of its opinion. Salomon Smith Barney was engaged to render financial advisory services to PECO Energy' in connection with the merger and will receive a fee for these services, a significant portion of which is contingent upon completion of the merger. Salomon Smith Barney has in the past provided investment banking services to each of PECO Energy and Unicom unrelated to the merger, and has received compensation for these services. In the ordinary course of its business, Salomon Smith Barney or any of its affiliates may actively trade or hold the securities of PECO Energy and Unicorn for its own account or for the account of its customers and, accordingly, may at any time hold a long or short position in such securities. In addition, Salomon Smith Barney and its affiliates, including Citigroup Inc. and its affiliates, may maintain relationships with PECO Energy, Unicorn and their affiliates. Salomon Smith Barney's advisory services and opinion were provided for the information of the board of directors of PECO Energy in its evaluation of the merger and its opinion was not intended to be and does not constitute a recommendation to any shareholder as to how such shareholder should vote on any matters relating to the merger. Presentationto the PECO Energy Board of Directors The following is a summary of the material financial and comparative analyses jointly performed by Morgan Stanley and Salomon Smith Barney and presented to the PECO Energy board of directors in connection with the rendering of their fairness opinions. Morgan Stanley and Salomon Smith Barney jointly' prepared the presentation made to the PECO Energy board of directors and each of them relied on the analyses included in this presentation in rendering their fairness opinions. In arriving at their opinions, Morgan Stanley and Salomon Smith Barney considered the analyses as a whole and did not attribute any particular weight to 35

any specific analysis. Each of Morgan Stanley and Salomon Smith Barney believes that its analyses should be considered as a whole and that selecting one analysis. without considering all analyses, would be contrary to the process underlying the rendering of their fairness opinions. Some of the analyses include information presented in tabular format. In order to fully understand the financial analyses used by PECO Energy's financial advisors, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. ComparablePublic Companies Analysis. PECO Energy's financial advisors reviewed and compared certain financial information, ratios and public market multiples relating to PECO Energy and Unicom to corresponding financial data for comparable publicly traded utility companies. The financial advisors selected these companies based upon the financial advisors' views as to the comparability of the financial and operating characteristics of these companies to PECO Energy and Unicorn. The companies included in the PECO Energy comparable companies analysis were:

     "* Consolidated Edison, Inc. (pro forma for its pending acquisition of Northeast Utilities),
     "* Public Service Enterprise Group Incorporated.
     "* Entergy Corporation,
     "* Ameren Corporation,
     "* Constellation Energy Group, Inc., and
     "* PP&L Resources, Inc.

The companies included in the Unicorn comparable companies analysis were:

     "* Consolidated Edison, Inc. (pro forma for its pending acquisition of Northeast Utilities),
     "* Entergy Corporation,
     "* Ameren Corporation, and
     "* Wisconsin Energy Corporation (pro forma for its pending acquisition of WICOR INC.).

The financial advisors then reviewed publicly available information to compare financial information and multiples of market value of these companies to PECO Energy's and Unicorn's:

      "* stock price to 1999 estimated earnings per share,
      "* stock price to 2000 estimated earnings per share,
      "* stock price to the September 30, 1999 book value of equity per share, adjusted in the case of PECO Energy, to eliminate the effect of a write-down in connection with a regulatory settlement by PECO Energy, and
      "* firm value (equals equity value plus nonconvertible debt, minority interest, noncovertible preferred stock and all out-of-money convertibles less cash as of September 30, 1999) to the last twelve months'

("LTM") earnings before interest, taxes, depreciation and amortization ('EBITDA'). 36

The following table reflects the results of the analysis, as compared to the multiples for PECO Energy and Unicorn: Price to EPS Firm Value Price to to LTM 1999E 2000E Book Value EBITDA Range Derived from PECO Energy Comparable Companies .............................. 10.5x- 12.Ox 9.5x- ll.Ox 1.3x- l.9x 5.7x--7.3x Range Derived from Unicorn Comparable Companies .............................. 10.5x- 12.0x 9.5x--11.Ox 1.lx-l.4x 5.7x- 7.7x PECO Energy ............................. 11.8x 10.0x 1.9x 7.6 x Unicom .................................. 13.0x 10.7x 1.4x 6.8x Applying a range of multiples derived from the comparable public companies analysis, the financial advisors calculated a range of implied equity values per share of PECO Energy with respect to PECO Energy's:

      " stock price to estimated earnings per share in 1999,

• stock price to estimated earnings per share in 2000,

      "* stock price to the September 30, 1999 book value of equity per share, adjusted to eliminate the effect of a write-down in connection with regulatory settlement by PECO Energy, and
      "* firm value (equals equity value plus nonconvertible debt, minority interest, nonconvertible preferred stock and all out-of-money convertibles less cash as of September 30, 1999) to LTM EBITDA.

Based on this analysis, the financial advisors derived a range of implied equity values per share of PECO Energy of $28.00 to $37.00. Applying a range of multiples derived from the comparable public companies analysis, the financial advisors then calculated a range of implied equity values per share of Unicom with respect to Unicom's:

     "* stock price to estimated earnings per share in 1999,
     "* stock  price to estimated earnings per share in 2000, assuming Unicorn would retain the proceeds from the sale of its fossil generation assets,
     "* stock price to estimated earnings per share in 2000, assuming Unicom would distribute to shareholders the proceeds from the sale of its fossil generation assets,
     "* stock price to the September 30, 1999 book value of equity per share, adjusted to reflect a $700 million share repurchase by Unicorn, and
     "* firm  value to LTM EBITDA.

Based on this analysis, the financial advisors derived a range of implied equity values per share of Unicorn of $28.25 to $37.00. Based on the valuations derived for PECO Energy and Unicorn, the financial advisors calculated a range of implied exchange ratios for Unicorn common stock to PECO Energy common stock of 0.764x to 1.321x, with an exchange ratio of 1.004x based on the ratio of the average of the implied equity value for each of PECO Energy and Unicorn. For comparative purposes, Morgan Stanley and Salomon Smith Barney noted that based on a closing price of PECO Energy common stock of $35.31 on January 6, 2000 (the last business day before their joint presentation to the PECO Energy board of directors), the exchange ratio implied by the merger consideration was 0.96. No company utilized in the comparable public companies analysis is identical to PECO Energy or Unicorn. Accordingly, an analysis of the results of the foregoing necessarily involves complex considerations and judgments concerning differences in financial and operating characteristics of PECO Energy and Unicorn and other factors that could affect the public trading value of the companies to which they are being compared. In evaluating the comparable companies, the financial advisors made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of 37

which are beyond the control of PECO Energy or Unicorn, such as the impact of competition on PECO Energy or Unicorn and the industry generally, industry growth and the absence of any adverse material change in the financial conditions and prospects of PECO Energy or Unicorn or the industry or in the financial markets in general. Mathematical analysis, such as determining the mean, median or average, is not in itself a meaningful method of using comparable company data. Discounted Cash Flow Analyses. The financial advisors performed discounted cash flow analyses on PECO Energy and Unicorn using financial projections provided by the companies' respective managements for the period from December 31, 1999 through December 31, 2003. For the PECO Energy discounted cash flow analysis, the financial advisors calculated terminal values by applying a range of terminal multiples of projected price to earnings per share of 10.00x to 12.00x, which implies a range of terminal multiples of projected EBITDA of 6.79x to 7.59x, to PECO Energy's earnings per share in 2003. The cash flow streams and terminal values were discounted to present values using a discount rate of 7.5%, based on the weighted average cost of capital. From this analysis, the financial advisors calculated a range of implied estimated equity value per share of PECO Energy as of December 31, 1999 of $36.00 to $43.00. The financial advisors performed separate discounted cash flow analyses for Unicorn assuming (1) that Unicorn would distribute to its shareholders the proceeds from the sale of its fossil generation assets and (2) that Unicorn would retain the proceeds from the sale of its fossil generation assets. For the Unicom discounted cash flow analysis assuming distribution of the proceeds, the financial advisors calculated terminal values by applying a range of terminal multiples of estimated price to earnings per share of 10.00x to 12.00x, which implies a range of terminal multiples of projected EBITDA of 5.25x to 5.85x, to Unicorn's earnings per share in 2003. For the Unicorn discounted cash flow analysis assuming retention of the proceeds, terminal values were calculated using a range of terminal multiples of estimated price to earnings per share of I0.00x to 12.00x, which implies a range of terminal multiples of projected EBITDA of 5.7 1x to 6.27x. For both analyses, the cash flow streams and terminal values were discounted to present values using a discount rate of 7.5%, based on the weighted average cost of capital. From these analyses, the financial advisors calculated ranges of implied equity value per share of Unicorn as of December 31, 1999 of $39.25 to $46.00 assuming distribution of proceeds and $37.75 to $44.50 assuming retention of proceeds. Based on the ranges of values calculated in the discounted cash flow analyses assuming Unicorn would distribute the proceeds from the sale of its fossil generation assets, the financial advisors calculated a range of implied exchange ratios for Unicom common stock to PECO Energy common stock of 0.913x to 1.278x, with an exchange ratio of 1.079x, based on the ratio of the average of the implied equity value for each of PECO Energy and Unicorn. Assuming Unicom would retain the proceeds from the sale of its fossil generation assets, the financial advisors calculated a range of implied exchange ratios for Unicom common stock to PECO Energy common stock of 0.878x to 1.236x, with an exchange ratio of 1.041x, based on the ratio of the average of the implied equity value for each of PECO Energy and Unicorn. For comparative purposes, Morgan Stanley and Salomon Smith Barney noted that based on a closing price of PECO Energy common stock of $35.31 on January 6, 2000 (the last business day before their joint presentation to the PECO Energy board of directors), the exchange ratio implied by the merger consideration was 0.96. Historical Trading Ratio Analysis. The financial advisors reviewed the ratio of daily closing share prices of Unicorn common stock to PECO Energy common stock for the three-year, one-year and five-day periods ended September 17, 1999. The following table reflects the results of the analysis: Average Ratio Historical Period of Closing Prices Three-year historical period ................................ 1.088x One-year historical period ................................. 0.925x Five-day historical period .................................. 0.947x Septem ber 17, 1999 ...................................... 0.938x 38

The financial advisors reviewed the ratio of volume-weighted average prices of Unicorn common stock to PECO Energy common stock for the ten-day and five-day periods ended September 17, 1999. The following table reflects the results of the analysis: Volume Weighted Average Trading Historical Period Ratio Ten-day historical period .................................. 0.946x Five-day historical period .................................. 0.950x Septem ber 17, 1999 ...................................... 0.953x The financial advisors reviewed the ratio of daily closing share prices of Unicorn common stock to PECO Energy common stock for the three-year, one-year and five-day periods ended January 5, 2000. The following table reflects the results of the analysis: Average Ratio Historical Period of Closing Prices Three-year historical period ................................ 1.081 x One-year historical period ................................. 0.930x Five-day historical period .................................. 0.960x January 5, 2000 ......................................... 0.957x ContributionAnalyses. The financial advisors reviewed selected historical and estimated future financial information for PECO Energy and Unicom to determine PECO Energy's and Unicorn's relative contribution to the combined company after the merger. The financial advisors analyzed PECO Energy's and Unicom's relative contribution to EBITDA, net income and cash flow from operations for the years 2000 and 2001. The financial advisors analyzed estimated net income and cash flow from operations based on

     "* PECO Energy and Unicorn management projections and
     "* Unicorn management projections adjusted to assume a $1.5 billion repurchase of shares of Unicorn common stock in 2000 using a price of 10% over the closing price of Unicorn common stock on January 5, 2000.

In performing this analysis, the financial advisors did not take into account certain estimates of strategic, financial and operational benefits from the merger provided to the financial advisors by management of PECO Energy and Unicorn. Based on the relative contributions of PECO Energy and Unicorn to the combined company calculated in the contribution analysis, the financial advisors determined a range of implied exchange ratios for Unicorn common stock to PECO Energy common stock. The following table reflects the results of the analysis: Implied Exchange Ratio Based on Contributions to the Combined Company 2000 2001 EBITD A ............................................. 1.918x 2.115x Net Income-Management projections ........................ 0.872x 0.902x Net Income-Assuming share repurchase ...................... 1.009x 1.052x Cash Flow-Management projections ......................... 1.252x 1.290x Cash Flow-Assuming share repurchase ....................... 1.522x 1.577x For comparative purposes, Morgan Stanley and Salomon Smith Barney noted that based on a closing price of PECO Energy common stock of $35.31 on January 6, 2000 (the last business day before their joint presentation to the PECO Energy board of directors), the exchange ratio implied by the merger consideration was 0.96. Pro Forma TransactionAnalysis. Using financial projections provided by PECO Energy's and Unicom's managements and taking into account certain estimates of cost synergies (but not potential revenue enhancements or other strategic, financial or operational benefits) provided to the financial advisors by 39

I managements of PECO Energy and Unicorn, the financial advisors reviewed the pro forma impact of the merger on PECO Energy's and Unicom's earnings per share and cash flow per share for the years 2001, 2002 and 2003. The financial advisors assumed that, among other things:

    "* PECO Energy would be the acquirer for purchase accounting purposes,
    "* goodwill would be amortized over 40 years,
    "* the estimated cost synergies applicable to the combined company's businesses               would be as provided by management of PECO Energy and Unicorn,
    "* the combined company's initial dividend would be $1.69 per share,
    "* the merger would be tax-free to shareholders except to the extent of cash received,
    "* the merger would close on December 31, 2000,
    " the  $1.0 billion repurchase by Unicorn of shares of Unicom common stock and the $500 million repurchase by PECO Energy of shares of PECO Energy common stock provided for in the merger agreement would be completed using prices of 10% over Unicorn's January 5, 2000 closing price of
       $33.75 per share of common stock and PECO Energy's January 5, 2000 closing price of $35.25 per share of common stock, respectively, and
     " in addition to the $1.5 billion repurchase provided for in the merger agreement, a further $900 million of available cash would be used for the repurchase of Exelon shares using a price of 10% over PECO Energy's January 5, 2000 closing price of $35.25 per share of common stock or would be used for other purposes having an equivalent economic effect (this assumption was based on discussions with management of PECO Energy with respect to the proposed uses of the proceeds from the sale of Unicom's fossil generation assets). A second scenario was also considered in which there was a
       $1.5 billion share repurchase but not the additional $900 million share repurchase or economic equivalent.

The table below reflects the results of the analysis. The Unicorn statistics are adjusted to reflect cash its shareholders receive in the merger. Accretion (Dilution) 2001 2002 2003

                                                           $1.5 Billion                $1.5 Billion                $1.5 Billion Share                       Share                       Share Repurchase/                  Repurchase/                 Repurchase/
                                           $1.5 Billion   $900 Million  $1.5 Billion   $900 Million $1.5 Billion $900 Million Share           Share        Share          Share         Share         Share Repurchase      Repurchase   Repurchase     Repurchase Repurchase Repurchase PECO Energy Earnings Per Share ...                3.6 %          9.6 %       (0.2)%          3.6 %         4.7 %         9.0 %

PECO Energy Cash Flow Per Share.. 30.2 % 39.4 % 24.4 % 32.0 % 18.9 % 26.1 % Unicorn Earnings Per Share ........ (1.9)% 3.8 % 2.1 % 6.0 % 0.2 % 4.3 % Unicorn Cash Flow Per Share ...... (14.2)% (8.1)% (11.5)% (6.1)% (7.3)% (1.7)% In performing their analyses, the financial advisors made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of PECO Energy or Unicorn. Any estimates contained in the financial advisors' analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by the estimates. The analyses performed were performed solely as part of the financial advisors' analysis of the fairness from a financial point of view of the consideration to be received by the holders of shares of PECO Energy common stock pursuant to the merger agreement and were conducted in connection with the delivery of the financial advisors' opinions to PECO Energy's board of directors. The analyses do not purport to be appraisals or to reflect the prices at which PECO Energy common stock or Unicorn common stock might actually trade. The consideration to be received by the shareholders of PECO Energy common stock pursuant to the merger agreement and other terms of the merger agreement were 40

determined through arm's length negotiations between PECO Energy and Unicorn and were approved by PECO Energy's board of directors. The financial advisors provided advice to PECO Energy during the negotiations. The financial advisors' opinions dated January 7, 2000 were one of a number of factors taken into consideration by PECO Energy's board of directors in making its decision to approve the merger agreement and the transactions contemplated by the merger agreement. Consequently, the financial advisors' analyses described above should not be viewed as determinative of the opinion of PECO Energy's board of directors with respect to the value of PECO Energy. See "The Merger-PECO Energy Board of Directors Recommendation" in this Chapter I. Morgan Stanley and Salomon Smith Barney, as part of their investment banking businesses, are continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. PECO Energy selected the financial advisors based upon their qualifications, experience and expertise and because they are internationally recognized investment banking firms that have substantial experience in transactions similar to the merger. Pursuant to the terms of its engagement, PECO Energy agreed to pay Morgan Stanley an advisory fee of

$75,000 per month commencing June 15, 1999. PECO Energy also has agreed to pay Morgan Stanley a transaction fee equal to approximately one-quarter of one percent of the equity value of Unicorn. The fee, which is payable in three installments, varies depending on the equity value of Unicorn as of the dates the installment payments are due: 2 5 % upon the signing of the merger agreement ($4.3 million), 25% upon approval of the merger agreement by PECO Energy shareholders ($4.3 million, assuming the equity value of Unicorn is equal to its equity value as of the signing of the original merger agreement on September 22, 1999) and 50% upon completion of the merger ($8.6 million, assuming the equity value of Unicorn is equal to its equity value as of the signing of the original merger agreement September 22, 1999). The transaction fee is reduced by the amount of advisory fees paid.

Pursuant to the terms of its engagement, PECO Energy agreed to pay Salomon Smith Barney an advisory fee of $100,000 per month (reduced to $75,000 per month during any period of substantive negotiations regarding any potential transaction) commencing May 15, 1998. PECO Energy also has agreed to pay Salomon Smith Barney a transaction fee equal to approximately one-quarter of one percent of the equity value of Unicorn. The fee, which is payable in three installments, varies depending on the equity value of Unicom as of the dates the installment payments are due: 25% upon the signing of the merger agreement ($4.3 million), 25% upon approval of the merger agreement by PECO Energy shareholders ($4.3 million, assuming the equity value of Unicorn is equal to its equity value as of the signing of the original merger agreement on September 22, 1999) and 50% upon completion of the merger ($8.6 million, assuming the equity value of Unicorn is equal to its equity value as of the signing of the original merger agreement on September 22, 1999). PECO Energy has also agreed to reimburse Morgan Stanley and Salomon Smith Barney for certain expenses incurred by them, including fees of outside legal counsel, and to indemnify Morgan Stanley and Salomon Smith Barney and related parties against liabilities, including liabilities under federal securities laws, arising out of their engagement. Unicorn Board of DirectorsRecommendation At its meeting on September 22, 1999, after due consideration, the members of the Unicorn board of directors present at the meeting unanimously:

     "* approved  the original merger agreement and the second step merger and the other transactions contemplated by the original merger agreement, and
     "* determined that the second step merger and the other transactions contemplated by the original merger agreement were fair to and in the best interests of Unicorn and its shareholders.

All members were present at this meeting except Mr. Carlos Cantu, who was unable to attend. 41

1/2 At a special meeting held on September 22, 1999, after determining that the merger is fair to and in the best interests of Unicorn and its shareholders, the Unicorn board of directors approved and adopted the merger agreement. At its meeting on January 6, 2000, after due consideration, the Unicom board of directors:

     "* approved the amendment to the merger agreement and the second step merger and the other transactions contemplated by the merger agreement.
     "* determined that the second step merger and the other transactions contemplated by the merger agreement were fair to and in the best interests of Unicorn and its shareholders, and

• recommended that Unicorn shareholders vote for the approval of the merger agreement.

In approving the merger agreement and the transactions involving Unicom and in reaching its recommendation, the Unicorn board of directors consulted with and relied upon information and reports prepared or presented by Unicom's management and Unicom's legal and financial advisors. The following are the material factors that the Unicom board of directors considered, some of which contain both positive and negative elements:

     "* all the benefits of the merger described under "Reasons for the Merger" above,

• the Unicorn board of directors' understanding of the present and anticipated environment in the utility industry, and how possible consolidation within the utility industry could affect Unicom's competitive position in the industry,

     " the risks and potential rewards associated with, as an alternative to the merger, continuing to execute Unicorn's strategic plan as an independent entity. These risks include, among others, the risks associated with remaining independent amidst industry-wide restructuring and consolidation, and the rewards include, among others, the ability of existing Unicorn shareholders to partake in the potential future growth and profitability of Unicorn,
      " the possibility of pursuing, as an alternative to the merger, an acquisition of or a business combination or joint venture with an entity other than PECO and the conclusion of the Unicorn board of directors that a transaction with PECO is more feasible, and is expected to yield greater benefits, than the likely alternatives. The Unicorn board of directors reached this conclusion for reasons including PECO Energy's interest in pursuing a transaction with Unicorn, Unicom's view that the merger could be acceptably completed from a timing and regulatory standpoint, and Unicorn management's assessment of the alternatives to, and the expected benefits of, the merger and the compatibility of the companies as described under "--Reasons for the Merger-Strategic Fit and Compatibility" above,
      " the Unicorn board of directors' consideration of the financial condition, results of operations, prospects and businesses of Unicom and PECO, including the revenues of the companies, their complementary businesses, the financial exposure of each company to nuclear operations, the ability of each company to recover investments in generation under the applicable state deregulation legislation, the stock price performance of Unicorn shares and PECO shares prior to signing the merger agreement and the percentage of the combined company to be owned by Unicorn shareholders following the merger,
      " the fixed exchange ratio for the stock portion of the consideration to be received by Unicom shareholders and the $3.00 per share cash portion of the consideration,
      " the repurchases by Unicorn of its common stock expected to be completed prior to the completion of the merger,
      " current industry, economic and market conditions and the prospects of further restructuring and consolidation in the electric and gas utility industries,
      "* the fact that the corporate headquarters of Exelon will be in Chicago, Illinois; 42

" the corporate governance aspects of the merger including that Mr. Rowe will be co-chief executive officer during the transition period and chairman of the executive committee in the first half of the transition period, chairman of the Exelon board of directors in the second half of the transition period and chairman and sole chief executive officer following the transition period, " the beneficial effects of the merger on the municipalities served resulting from the creation of a strong combined company with headquarters in Illinois and with a continued commitment to charitable and other community concerns, "* the financial and business prospects for the combined company, "* while the Unicom board of directors did not view the specific levels of potential accretion to be determinative, it did consider management's presentation showing that the merger would be accretive to Unicom shareholders in the first three years following the merger. Management's accretion analysis was based on a number of assumptions regarding share repurchase levels, anticipated activities of Exelon following the merger and competitive and other factors outside the control of Exelon. Actual events may differ materially from management's expectations and these differences may result in Exelon's earnings per share being significantly different-positively or negatively-than the anticipated earnings levels shown in management's analysis. The management accretion analysis showed possible annual accretion ranging from approximately 35 cents to 55 cents per share over the three calendar years following the merger. This range of possible accretion is a forward looking statement and is subject to the factors set out under "Special Note Regarding Forward-Looking Statements" above, " the favorable impact that a further reduction in outstanding shares would have on earnings per share of Exelon common stock following the merger, " that management expected that revising the merger consideration would not result in a change to the anticipated date of completion of the merger, " that the revisions to the merger would constitute a modification for accounting purposes that could lead to a reduction in goodwill for accounting purposes and a commensurate further enhancement of Exelon's earnings per share, " that, overall, the revised merger consideration was intended to be comparable to that provided for in the original merger agreement, " the fact that the basic features of the merger of equals transaction were not changed, including provisions regarding governance, senior management and headquarters, "* the expectation that Exelon will pay an annual dividend of $1.69 per share, "* the ability to complete the merger as a tax-free transaction for U.S. federal income tax purposes and have the conversion of shares of Unicorn common stock be tax-free to shareholders to the extent their shares are converted into Exelon common stock, " the accounting treatment of the merger as an acquisition of Unicorn by PECO and the impact that accounting would likely have on Exelon, including the creation of goodwill, " the terms and conditions of the merger agreement, including the conditions to closing and the termination fees payable under certain circumstances (see "The Merger Agreement-Conditions to the Completion of the Merger", "The Merger Agreement-Termination" and "The Merger Agreement Termination Fees; Reimbursement of Expenses" in this Chapter I), "* the interests of certain persons in the merger, including Mr. Rowe, "* the opinion of Wasserstein Perella that, as of January 6, 2000, and subject to the assumptions and limitations described therein, the consideration to be received by the Unicom shareholders was fair from a financial point of view to the Unicom shareholders, 43

" the other advice from Unicorn management and the Unicorn board of directors' financial and legal advisors over an extended period, and the discussions of the Unicom board of directors concerning the proposed merger agreement, " the impact of the merger on Unicorn's customers, employees and suppliers, including likely efficiencies resulting in better service to customers, reductions in the number of employees in administrative functions, likely better opportunities for employees in a larger, more competitive company, and the possible reduction in the number of suppliers resulting from consolidation in business operations as well as opportunities for suppliers to sell to a larger organization, " that while the merger is likely to be completed, there are risks associated with obtaining necessary regulatory approvals. First, it is possible that regulatory authorities or other third parties could seek to impose unfavorable terms or conditions in the required approvals. Secondly, if a required approval is not obtained, it is possible that the merger may not be completed even if approved by shareholders (see "Regulatory Matters" and "The Merger Agreement-Conditions to the Completion of the Merger" in this Chapter 1), " the impact of regulations under various state and federal laws, including the additional regulatory oversight that would result from the addition of public utility operations in Pennsylvania, and the issues involved in the registration of Exelon as a holding company, and the regulation of PECO and CornEd as subsidiaries of a registered holding company, under the Public Utility Holding Company Act (see "Regulatory Matters" in this Chapter I), " that although Unicorn's relationships with regulators, customers, governments and partners might be negatively affected because of uncertainty surrounding Unicorn's future status and direction pending completion of the merger, the Unicorn board of directors believed that any potential negative effect would cease once the merger was completed, " the problems inherent in merging the operations of two large and geographically separated companies, including the potential diversion of management resources, and " the requirement for a supermajority vote of the Exelon board of directors required to alter certain arrangements regarding the management of Exelon, including the composition of Exelon's board of directors and board committees, the identity of Exelon's chairman of the board of directors, chairman of the executive committee of the board of directors, co-chief executive officers, president and other senior officers and the location of Exelon's corporate headquarters and other principal offices. The Unicorn board of directors also considered: " that if the merger is not completed but Unicorn has repurchased $1,000,000,000 of its common stock, the debt portion of Unicorn's capitalization would have increased to 56% from the current 52%, " the fact that the $3.00 cash portion of the merger consideration payable to all Unicorn's shareholders will be subject to federal income tax whereas the transaction would be tax free to shareholders who received only Exelon stock under the original merger agreement, " the fact that Unicom shareholders will be affected to a lesser degree by increases or decreases in the market price of PECO Energy or Exelon shares than they would be if the merger consideration to Unicorn shareholders were all stock rather than stock and cash, "* the risk that the benefits sought in the merger would not be obtained,

• the risk that the merger would not be completed,

"* the effect of the public announcement of the merger on Unicorn's sales, customer, supplier and creditor relationships, operating results and ability to retain employees and the trading price of Unicorn shares, "* the substantial management time and effort that will be required to complete the merger and integrate the operations of the two companies, 44

      "* the impact of the merger on Unicom employees, including likely reductions in administrative staff,
      "* the possibility that various provisions of the merger agreement might have the effect of discouraging other persons potentially interested in a combination with Unicom from pursuing such an opportunity, and
      "   other matters described under "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements."

The following section, "Opinion of Unicorn's Financial Advisor," summarizes the various analyses performed by Wasserstein Perella in support of its opinion regarding the fairness, from a financial point of view, of the aggregate number of shares of Exelon common stock to be issued, together with the aggregate cash distributed, to Unicorn shareholders pursuant to the merger of Unicorn with and into Exelon, which analyses were summarized by Wasserstein Perella for the Unicorn board at its January 6, 2000 meeting. Wasserstein Perella made available to the Unicorn board supporting information describing these analyses, but the Unicorn board members relied on the Wasserstein Perella summary and did not find it necessary to request these materials. This discussion of the information and factors considered by the Unicom board of directors is not intended to be exhaustive. In view of the wide variety of factors considered in connection with its evaluation of the merger, including the amendments to the merger agreement, the Unicom board of directors did not assign relative weights to the factors discussed above or determine that any factor was of particular importance nor did it evaluate any of these factors individually, but rather evaluated them as a whole. Rather, the Unicorn board of directors based its recommendation upon the totality of the information presented. The Unicorn board of directors did not consider the voting control of Exelon by PECO Energy shareholders in connection with the merger to be a positive or negative factor. The Unicom board of directors considered the approximate ownership of shares by Unicom shareholders and PECO Energy shareholders, together with social issues agreed to by the parties, to result in a merger-of-equals. Therefore, the voting control of Exelon by PECO Energy shareholders was viewed by the Unicorn board of directors as a neutral factor in determining whether to approve the merger agreement. Opinion of Unicom's FinancialAdvisor The Unicorn board of directors retained Wasserstein Perella to provide investment banking advice and services in connection with a possible business combination between Unicom and PECO Energy, including rendering its opinion as to the fairness, from a financial point of view, to the shareholders of Unicom of the aggregate consideration to be received by the shareholders of Unicorn pursuant to the merger agreement. The merger agreement provides as follows:

      "* for PECO Energy and Exelon to effect a mandatory share exchange in which each share of PECO Energy common stock will be acquired by Exelon in exchange for one share of Exelon common stock,
      "* immediately after the share exchange, for the merger of Unicom into Exelon, pursuant to which each share of Unicom common stock will be converted into the right to receive 0.875 shares of Exelon common stock plus $3.00 in cash, and
     "* prior to the effective time of the merger, for Unicorn to repurchase shares of Unicorn common stock and PECO Energy to repurchase shares of PECO Energy common stock.

The aggregate number of shares of Exelon common stock to be issued pursuant to the share exchange between PECO Energy and Exelon are referred to in this section as the "Aggregate PECO Energy Consideration." The aggregate number of shares of Exelon common stock to be issued, together with the aggregate cash to be distributed, pursuant to the merger of Unicom with and into Exelon are referred to in this section as the "Aggregate Unicorn Consideration." Wasserstein Perella was not requested to recommend the composition of consideration to be received by shareholders of Unicorn pursuant to the merger agreement; it 45

I was requested to evaluate, among other things, the fairness from a financial point of view to the shareholders of Unicorn of the Aggregate Unicorn Consideration negotiated by Unicorn and PECO Energy. On January 6, 2000, Wasserstein Perella orally delivered its opinion to the Unicorn board of directors, which it later confirmed in a written opinion dated January 6, 2000, to the effect that, as of the date of the opinion and based upon and subject to various assumptions and limitations set forth in the opinion, the Aggregate Unicorn Consideration provided for pursuant to the merger agreement was fair to the shareholders of Unicorn from a financial point of view. Wasserstein Perella also presented to the Unicom board of directors the analyses described below. The full text of Wasserstein Perella's opinion is attached as Annex D to this proxy statement/prospectus and is incorporated by reference. Shareholders of Unicom are urged to, and should, read the Wasserstein Perella opinion carefully in its entirety for information with respect to the procedures followed, assumptions made, matters considered and limits on the review undertaken by Wasserstein Perella in rendering its opinion. References to Wasserstein Perella's opinion in this proxy statement/prospectus and the summary of Wasserstein Perella's opinion in this section of the proxy statement/prospectus are qualified in their entirety by reference to Annex D. Wasserstein Perella's opinion addressed only the fairness from a financial point of view to the shareholders of Unicom of the Aggregate Unicom Consideration provided for pursuant to the merger agreement. Wasserstein Perella did not express any view on any other aspect of the merger or any other terms of the merger agreement. Specifically, the opinion did not address Unicom's repurchase of its common stock prior to completion of the merger, PECO Energy's repurchase of its common stock in connection with the merger, or Unicom's underlying business decision to enter into the amendments reflected in the merger agreement or to effect the transactions contemplated by the merger agreement, nor did Wasserstein Perella's opinion address any alternative transaction or business strategy that may have been available to Unicorn. Wasserstein Perella's opinion does not constitute a recommendation to any shareholder of Unicorn as to how such shareholder should

    "*vote with respect to the merger,
    "* act in respect of Unicorn's repurchase of its common stock or
    "* otherwise act in respect of the merger, and shareholders should not rely upon it as such.

The following summary does not purport to be a complete description of the analyses performed by Wasserstein Perella. In arriving at its opinion, Wasserstein Perella reviewed, among other things:

    "* publicly available business and financial information relating to Unicorn and PECO Energy that Wasserstein Perella deemed to be relevant,
    "* internal financial information, including financial projections, forecasts and analyses relating to the business, earnings, cash flow, assets, liabilities and prospects of Unicorn and PECO Energy, in each case prepared and furnished to it by Unicorn or PECO Energy,
     "* the expected dividend policy for Exelon furnished to it by Unicorn and PECO Energy,
     "* market prices and valuation multiples of Unicorn common stock and PECO Energy common stock and similar data of certain publicly traded companies that Wasserstein Perella deemed to be relevant,
     "* the results of operations for recent periods of Unicorn and PECO Energy and for certain other publicly traded companies that Wasserstein Perella deemed to be relevant,
     "* the financial terms of the merger compared with those of certain other business combination transactions that Wasserstein Perella deemed to be reasonably comparable to the merger or otherwise relevant, and
     "* the pro forma financial impact of the merger.

Wasserstein Perella had discussions with members of senior management and representatives of Unicorn and PECO Energy concerning certain publicly available business and financial information relating to Unicorn 46

and PECO Energy and certain internal financial information, including financial projections, forecasts and analyses relating to the business, earnings, cash flow, assets, liabilities and prospects of Unicorn and PECO Energy described above, as well as the respective businesses, regulatory environments and prospects of Unicorn and PECO Energy before and after giving effect to the merger. Wasserstein Perella also performed such other financial studies, analyses and investigations and reviewed such other information as it considered appropriate for purposes of its opinion. In conducting its review and analysis and formulating its opinion, Wasserstein Perella assumed and relied upon the accuracy and completeness of all the financial and other information that was provided to or discussed with it or was publicly available, and did not assume any responsibility for independently verifying this information. Wasserstein Perella also assumed and relied upon the reasonableness and accuracy of the financial projections, forecasts and analyses provided to it and assumed that all of these projections, forecasts and analyses were reasonably prepared in good faith and on bases reflecting the best currently available judgments and estimates of the managements of Unicorn and PECO Energy. Wasserstein Perella also, with the consent of Unicom, factored in an assumed level of financial synergies from the merger that management of Unicorn provided to it. Wasserstein Perella did not express any opinion with respect to the projections, forecasts, analyses and assumed level of financial synergies or the assumptions upon which they were based. In addition, Wasserstein Perella did not review any of the books and records of Unicorn or PECO Energy, or assume any responsibility for conducting a physical inspection of the properties or facilities of Unicom or PECO Energy, or for making or obtaining an independent valuation or appraisal of the assets or liabilities of Unicorn or PECO Energy, and Wasserstein Perella was not provided with any such independent valuation or appraisal. Wasserstein Perella noted that

    "* the merger is intended to qualify as a tax free reorganization for United States federal income tax purposes in which gain (if any) will be recognized only to the extent of the aggregate cash to be distributed to Unicom shareholders in the merger and Wasserstein Perella assumed that the merger will so qualify and
    "* the merger is intended to be accounted for as a purchase of Unicom by PECO Energy and Wasserstein Perella assumed that the merger will be so accounted for.

Wasserstein Perella also assumed that obtaining all regulatory and other approvals and third-party consents required for consummation of the merger would not have an adverse impact on Unicorn or PECO Energy or on the anticipated benefits of the merger, and assumed that the transactions described in the merger agreement would be consummated without waiver or modification of any material term or condition by any party thereto. Wasserstein Perella's opinion was necessarily based on economic and market conditions and other circumstances as they existed and could be evaluated by Wasserstein Perella on the date of its opinion. In addition, Wasserstein Perella did not express any opinion as to the prices at which any securities of Unicorn, PECO Energy or Exelon would actually trade at any time. Summary and Analysis of the Merger During a meeting with the Unicorn board of directors on January 6, 2000, and supported by materials presented to the Unicorn board of directors, Wasserstein Perella reviewed with the members of the Unicorn board of directors certain financial, industry and market information with respect to Unicorn and PECO Energy, and the procedures used in arriving at, and the analyses underlying, Wasserstein Perella's opinion. Wasserstein Perella also presented a summary of the material terms of the merger, including: the proposed structure of the merger, the effect of which would be a stock-for-stock merger, which would involve the following steps:

       ". PECO Energy would be acquired by Exelon in exchange for one share of common stock of Exelon per PECO Energy share,
       "* immediately thereafter, Unicom would merge with and into Exelon and the Unicorn shareholders would receive in exchange for one share of common stock of Unicorn, 0.875 shares of common stock of Exelon and $3.00 in cash, and 47

        "* prior to the closing, PECO Energy would repurchase $500 million of its common stock and Unicorn would repurchase $1.0 billion of its common stock,
        "* the expected tax treatment to Unicorn, PECO Energy and their shareholders        of the merger,
     "* the expected accounting treatment of the merger,
     "* the anticipated dividend policy of Exelon,
     "* regulatory approvals and customary conditions to closing,
     "* certain aspects of the management of Exelon,
     "* the structure of the board of directors of Exelon, and
     "* the termination fees, non-solicitation provisions and termination rights.

Unicorn and PECO Energy HistoricalStock Price Ratios and Trading Analysis Wasserstein Perella performed an analysis of the market trading multiples as of January 5, 2000, for Unicorn and PECO Energy based on their (1) enterprise values as a multiple of 1999 estimated, 2000 projected and 2001 projected earnings before interest and taxes ("EBIT") and (2) equity values as a multiple of 1999 estimated, 2000 projected and 2001 projected net income and book value. The results of this analysis are summarized below. Summary of Market Trading Multiples Estimated Projected Projected 1999 2000 2001 Unicom Enterprise Value as a Multiple of EBIT ............................. 8.2x 8.lx 7.7x Equity Value as a Multiple of Net Income ........................... 10.1 x I l.Ox 0.Ox Equity Value as a Multiple of Book Value ........................... 1.3x 1.5x l.4x PECO Energy Enterprise Value as a Multiple of EBIT ............................. 9.Ox 8.3x 7.4x Equity Value as a Multiple of Net Income ........................... 12.5x 10.4x 9.2x Equity Value as a Multiple of Book Value ........................... 4.1 x 3.2x 2.5x Wasserstein Perella also reviewed the ratio of the closing price per share of Unicorn common stock to the closing price per share of PECO Energy common stock over the periods described below. Wasserstein Perella noted that the means of the ratios of the closing price per share of Unicorn common stock to the closing price per share of the PECO Energy common stock for these periods were as follows: Summary of Historical Closing Price Ratios Period Ending January 5, 2000 Mean Ratio 10 Calendar Days .......................................... 0.970x 30 Calendar Days .......................................... 0.972x 60 Calendar Days .......................................... 0.994x 90 Calendar Days .......................................... 0.986x Since September 22, 1999 .................................... 0.993x Wasserstein Perella also analyzed the daily closing prices of Unicorn and PECO Energy common stock and the Standard and Poor's index of electric utilities over the period January 5, 1999 to January 5, 2000 and noted that the closing prices of Unicorn and PECO Energy common stock had decreased 15.6% and 17.9%, respectively, over the period and that Standard and Poor's index of electric utilities had decreased by 14.8% over the same period. Wasserstein Perella noted that, during this period, closing prices for Unicom common stock ranged from $30.94 to $42.81 and closing prices for PECO Energy common stock ranged from $30.75 to $50.50. 48

Wasserstein Perella analyzed the foregoing historical daily ratios, daily closing prices and market trading multiples of Unicorn and PECO Energy as part of its analysis of the fairness, from a financial point of view, to the shareholders of Unicorn of the Aggregate Unicorn Consideration provided for pursuant to the merger agreement. Wasserstein Perella did not determine a range of implied public market equity values for either Unicom or PECO Energy based on these analyses. Wasserstein Perella also noted that the merger consideration to be received by Unicorn shareholders of 0.875 shares of Exelon common stock plus $3.00 in cash for each share of Unicorn common stock would be equivalent to an exchange ratio of 0.961 if the price of PECO Energy common stock were $35.00 at the closing, 0.950 if it were $40.00 and 0.942 if it were $45.00. Selected Power Utility Company Trading Analysis To analyze the relative public market valuations of selected comparable utility companies, Wasserstein Perella analyzed the stock price performance and operating performance of a group of publicly traded power utility companies considered by Wasserstein Perella to be relevant. The following companies were included in the comparable company analyses: Allegheny Energy, Inc. FPL Group, Inc. American Electric Power Company, Inc. GPU, Inc. Constellation Energy Group, Inc. Northern States Power Company CMS Energy Corp. PECO Energy Carolina Power & Light Company PG&E Corporation Cinergy Corp. Public Service Enterprise Group Incorporated Consolidated Edison, Inc. PP&L Resources, Inc. DTE Energy Company Reliant Energy, Incorporated Dominion Resources, Inc. The Southern Company Duke Energy Corporation Sempra Energy Edison International Texas Utilities Company Entergy Corporation Unicorn FirstEnergy Corp. Wasserstein Perella calculated market trading multiples for each of these companies based on their (1) enterprise values as a multiple of the LTM EBIT, 1999 estimated EBIT and 2000 estimated EBIT and (2) equity values as a multiple of LTM net income, 1999 estimated net income and 2000 estimated net income. Based on these calculations, Wasserstein Perella noted that the ranges of and median enterprise value market multiples and equity value market multiples were as summarized in the following table: Multiple Range Median Enterprise Value as a M ultiple of LTM EBIT ............................... 7.lx to 12.3x 10.3x Enterprise Value as a Multiple of 1999 estimated EBIT ....................... 6.3x to 14.4x 9.5x Enterprise Value as a Multiple of 2000 estimated EBIT ....................... 5.2x to 13.3x 9.2x Equity Value as a Multiple of LTM net income ............................. 5.8x to 14.4x 10.9x Equity Value as a Multiple of 1999 estimated net income ...................... 7.6x to 13.8x 1L.Ox Equity Value as a Multiple of 2000 estimated net income ...................... 8.4x to 13.2x 10.2x Based on the median enterprise value market multiples for 2000 and 2001 estimated EBIT and the median equity value market multiples for 2000 and 2001 estimated net income (after applying an assumed average annual growth rate for EBIT and net income to the 2000 median enterprise and equity values), Wasserstein Perella determined a range of implied effective exchange ratios of 0.762 to 1.200 and noted that these analyses supported a determination that the Aggregate Unicorn Consideration provided for pursuant to the merger agreement was fair to the shareholders of Unicorn from a financial point of view. 49

Contribution Analysis Wasserstein Perella compared the relative contributions of the implied equity value of Unicorn and PECO Energy to the combined entity based on the 2000 and 2001 projected net income and EBIT of the two companies. Based on the financial data for 2000 and the median 2000 estimated comparable companies trading multiples for net income and EBIT, Wasserstein Perella derived total implied equity values for the combined entity based on 2000 projected net income and EBIT and determined that Unicom's relative contributions to those equity values were 48.9% and 52.2%, respectively. Based on the financial data for 2001 and the median 2001 estimated comparable companies trading multiples for net income and EBIT, Wasserstein Perella derived total implied equity values for the combined entity based on 2001 projected net income and EBIT and determined that Unicom's relative contributions to those equity values were 48.1% and 49.8%, respectively. Based on these analyses, Wasserstein Perella determined a range of implied effective exchange ratios of 0.876 to 1.036 and noted that these analyses supported a determination that the Aggregate Unicorn Consideration provided for pursuant to the merger agreement was fair to the shareholders of Unicorn from a financial point of view. Review of Selected Electric Utility Company Acquisitions Wasserstein Perella reviewed certain publicly available financial and other information relating to the following business combinations or proposed combinations in the electric utility industry considered reasonably comparable to the merger or otherwise relevant by Wasserstein Perella:

• Consolidated Edison, Inc./Northeast
• Sierra Pacific Resources/ Nevada Power Utilities System Company
• PECO Energy/Unicorn (under the original
• American Electric Power Company, merger agreement) Inc./Central and South West Corporation
• Carolina Power & Light
• CalEnergy Company, Inc./ New York Company/Florida Progress Corporation Electric & Gas
• Energy East Corp./CMP Group Inc.
• LG&E Energy Corp./KU Energy
• Dynegy Inc./Illinova Corporation Corporation
• Private Investor Group/TNP Enterprises,
• Allegheny Power System Inc./DQE, Inc.

Inc.

• Ohio Edison Company/ Centerior Energy
• Northern States Power Company/New Corporation Century Energies, Inc.
• Enron Corp./Portland General
• New England Electric System/Eastern Corporation Utilities Associates
• Western Resources, Inc./ Kansas City
• The National Grid Group plc/New Power & Light Company England Electric System
• Baltimore Gas and Electric
• BEC Energy/Commonwealth Energy Company/Potomac Electric Power System Company
• Scottish Power plc/Pacificorp
• PECO Energy/PP&L Resources, Inc.
• CalEnergy Company, Inc./ MidAmerican
• Wisconsin Energy Corporation/Northern Energy Company States Power Company In conducting its review of each of these transactions, Wasserstein Perella calculated the enterprise value of the target company as a multiple of EBIT and the equity value of the target company as a multiple of net income, in each case for the four most recent fiscal quarters ending prior to the date on which the applicable transaction was announced. Based on these calculations, Wasserstein Perella noted that the ranges of and median implied enterprise value market multiples and equity value market multiples of the target company were as summarized in the following table:

Multiple Range Median Enterprise Value as a M ultiple of EBIT ................................... 7.4x to 27.2x 12.4x Equity Value as a Multiple of net income .................................. 9.9x to 19. 1x 14.9x 50

Based on these median multiples as applied to the 2000 and 2001 projected net income (after applying an assumed average annual growth rate for net income to the median implied equity value market multiple) and the 2000 projected EBIT of each of Unicom and PECO Energy, Wasserstein Perella determined a range of implied effective exchange ratios of 0.697 to 1.275 and noted that these analyses supported a determination that the Aggregate Unicom Consideration provided for pursuant to the merger agreement was fair to the shareholders of Unicorn from a financial point of view. Discounted Cash Flow Analysis Wasserstein Perella performed discounted cash flow analyses for Unicorn and PECO Energy using financial projections for fiscal years 2000 through 2003 provided by the managements of Unicom and PECO Energy. Unicorn's and PECO Energy's management each prepared a set of financial projections, which were based on each management's base assumptions for future performance. Wasserstein Perella aggregated the present value of the cash flows from 2000 through 2003 with the present value of a range of terminal values. All cash flows were discounted at rates ranging from 9.0% to 11.0%. The terminal values were computed using multiples ranging from 8.Ox to 9.5x for fiscal year 2003 EBIT. Wasserstein Perella arrived at these discount rates based on its judgment of the weighted average cost of capital of selected publicly traded utility companies, and arrived at these terminal values based on its review of the trading characteristics of the common stock of selected utility companies. This analysis indicated a range of values for the Unicom common stock of $33.00 to $38.00 per share, and a range of values for the PECO Energy common stock of $38.00 to

$44.00 per share. Based on this range of implied share prices, Wasserstein Perella determined a range of implied effective exchange ratios of 0.750 to 1.000 and noted that these analyses supported a determination that the Aggregate Unicom Consideration provided for pursuant to the merger agreement was fair to the shareholders of Unicorn from a financial point of view.

Pro Forma Transaction Analysis Wasserstein Perella analyzed the potential pro forma effect of the merger on earnings per share with respect to the shareholders of PECO Energy for the fiscal years 2001 through 2003, using I/B/E/S median earnings estimates, assuming merger consideration to Unicom shareholders of 0.875 shares of Exelon common stock plus $3.00 in cash, an Exelon dividend of $1.69, the repurchase of $500 million of PECO Energy common stock and $1.0 billion of Unicorn common stock prior to the completion of the merger and that goodwill would be based on the PECO Energy stock price around the time the amended merger agreement was announced. Wasserstein Perella analyzed the pro forma effect on earnings per share assuming that a level of financial synergies provided by Unicorn management to Wasserstein Perella were achieved. This analysis suggested that, with respect to PECO Energy's shareholders, the merger would be accretive to earnings per share in fiscal years 2001, 2002 and 2003. The actual results that the combined company achieves may, however, vary from projected results and these variations may be material. In conducting the analysis of the pro forma effect of the merger on the Aggregate Unicorn Consideration, Wasserstein Perella determined that the analysis relevant to its opinion was that in respect of PECO Energy earnings per share for the fiscal years 2001 through 2003 because of the assumption that PECO Energy would be the acquiring company for accounting purposes. Wasserstein Perella concluded that whether the merger would be accretive or dilutive in respect of PECO Energy earnings per share would impact the value of Exelon common stock more so than would accretion or dilution in respect of the Unicorn common stock. The preceding summary is not a complete description of the analyses performed by Wasserstein Perella or its presentations to the Unicorn board of directors. The preparation of a fairness opinion is a complex process that is not purely mathematical and is not necessarily susceptible to partial analyses or summary description. Wasserstein Perella believes that its analyses must be considered as a whole and that selecting portions of its analyses and the factors considered by it, without considering all factors and analyses taken as a whole, could create an incomplete view of the process underlying its analyses set forth in its opinion. In addition, Wasserstein Perella considered the results of all of the analyses and did not assign relative weights to any of 51

I__ the analyses, so the ranges of valuations resulting from any particular analysis described above should not be taken to be Wasserstein Perella's view of the actual value of Unicorn or a combination of Unicorn and PECO Energy. In performing its analyses, Wasserstein Perella made numerous macroeconomic, operating and financial assumptions with respect to industry performance, general business, regulatory and economic conditions and other matters, many of which are beyond the control of Unicorn and PECO Energy. Any estimates incorporated in the analyses performed by Wasserstein Perella are not necessarily indicative of actual values or future results that might be achieved, all of which may be significantly more or less favorable than those suggested by the estimates. Estimated values do not purport to be appraisals or to reflect the prices at which utility companies might be sold. Since these estimates are inherently subject to uncertainty, Wasserstein Perella does not assume any responsibility for their accuracy. No company analyzed for comparative purposes is identical to Unicom or PECO Energy. Accordingly, an analysis of comparative companies and comparative business combinations is not simply mathematical, but rather involves complex considerations and judgments concerning financial and operating characteristics of the companies involved and other factors that affect value. In addition to the analyses outlined above, Wasserstein Perella considered other factors that it deemed appropriate in determining the fairness, from a financial point of view, to the shareholders of Unicorn of the Aggregate Unicorn Consideration provided for pursuant to the merger agreement. Wasserstein Perella concluded that, in its judgment, including the full range of its analyses described above and the various assumptions and limitations set forth in the opinion, the Aggregate Unicorn Consideration provided for pursuant to the merger agreement was fair to the shareholders of Unicorn from a financial point of view. Wasserstein Perella is an investment banking firm engaged in, among other things, the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. The Unicorn board of directors selected Wasserstein Perella as its financial advisor in connection with the merger because Wasserstein Perella is an internationally recognized investment banking firm and members of Wasserstein Perella have substantial experience in transactions similar to the merger and in the valuation of companies. Under the terms of Wasserstein Perella's engagement, Unicorn has agreed to pay Wasserstein Perella a fee of $35 million for providing financial advisory services in connection with the merger, including providing the opinion described above. The fee is payable as follows: 8% upon the public announcement of the merger agreement, 17% upon approval of the merger agreement by the Unicorn shareholders and 75% upon completion of the merger. In addition, Unicom agreed to reimburse Wasserstein Perella for its reasonable out-of-pocket expenses related to its engagement, including the reasonable fees and expenses of counsel, whether or not the merger is consummated. Unicorn also has agreed to indemnify Wasserstein Perella and certain related persons against certain liabilities relating to or arising out of its engagement, including certain liabilities under the federal securities laws. In the ordinary course of its business, Wasserstein Perella may, actively trade the debt and equity securities of Unicorn and PECO Energy for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in these securities. Board of Directors, Management and Operations of Exelon After the Merger Pursuant to an amendment to the by-laws of Exelon to be effective upon completion of the merger, PECO Energy and Unicorn have agreed to certain arrangements relating to the board of directors and management of Exelon during a transition period lasting from the completion of the merger until December 31, 2003. These arrangements may not be changed without the affirmative vote of at least two-thirds of the board of directors of Exelon. Exelon Board of Directors Upon completion of the merger, Exelon's board of directors will have 16 members, eight designated by PECO Energy and eight designated by Unicorn. The Exelon board of directors will be staggered, with three-52

year terms for directors (6 directors in first class, 5 in second and 5 in third), and each class of directors will be divided in as nearly equal numbers as possible between the directors designated by each of PECO Energy and Unicom. During the transition period, the Exelon board of directors will take all action necessary to ensure that any vacancy of a position on the Exelon board of directors will be filled by a majority of the remaining directors designated by the company that designated the member to which the vacancy relates. With respect to each election of directors by shareholders during the transition period, the Exelon board of directors will nominate for election a PECO Energy-designated director to fill any position held prior to the election by a PECO Energy-designated director and a Unicorn-designated director to fill any position held prior to the election by a Unicorn director. During the transition period, the Exelon board of directors will meet six to eight times annually, with at least two meetings each year being held in each of Pennsylvania and Illinois. Chairman of the Board; Co-ChiefExecutive Officers: President From the completion of the merger until the end of the transition period, Corbin A. McNeill, Jr. and John W. Rowe will be co-chief executive officers of Exelon. During the first half of the transition period, Mr. McNeill will be chairman of the Exelon board of directors, Mr. Rowe will serve as chairman of the executive committee of the Exelon board of directors and Mr. Rowe will be president of Exelon. During the second half of the transition period, Mr. Rowe will serve as chairman of the Exelon board of directors and Mr. McNeill will serve as chairman of the executive committee of the Exelon board of directors. At the end of the transition period, Mr. Rowe will become chairman of the Exelon board of directors and sole chief executive officer of Exelon. Mr. McNeill will remain on the Exelon board of directors. If at any, time either Mr. McNeill or Mr. Rowe is unwilling or unable to hold any of these positions, the other, if he is still a co-chief executive officer of Exelon, will succeed to the position. At any time during the transition period when Messrs. McNeill and Rowe are co-chief executive officers of Exelon, each of them will receive the same salary. bonus and other compensation (including option grants and other incentive awards and all other forms of compensation) and enjoy the same other benefits and the same employment security arrangements as the other. See "The Merger Interests of Unicorn's Directors and Management in the Merger-Employment Agreement with John W. Rowe" in this Chapter I. Mr. McNeill will retire as an executive of Exelon at the end of the transition period and will no longer serve as chairman of the executive committee of the Exelon board of directors, but will continue as a member of the Exelon board of directors. Mr. Rowe will become the sole chief executive officer of Exelon immediately prior to the end of the transition period, and at that time will be the chairman of the Exelon board of directors, if immediately prior to that time he holds the position of co-chief executive officer. The Exelon board of directors or its nominating committee will nominate for election Messrs. McNeill and Rowe as part of management's slate of candidates at each meeting of the shareholders (if at the time of the meeting Messrs. McNeill or Rowe, as applicable, is a member of the Exelon board of directors) at which members of the Exelon board of directors are elected as shall be necessary in order that Messrs. McNeill or Rowe, as applicable, serves as a director of Exelon from the end of the transition period until the election of directors following December 31, 2005. During the transition period, Mr. McNeill will have the responsibility for overseeing the generation and power marketing operations of Exelon and Mr. Rowe will have the responsibility for overseeing transmission and distribution operations, as well as unregulated retail enterprises. 53

Senior Officers In addition, the following individuals will serve as senior officers of Exelon: Name Company Exelon Position Michael J. Egan ................ PECO Energy Chief Financial Officer and Chief Transition/Integration Officer Ruth Ann M. Gillis ............. Unicorn Senior Vice President, Finance Oliver D. Kingsley, Jr ............ Unicorn Chief Nuclear Officer Gerald R. Rainey ............... PECO Energy Nuclear Operations Officer Pamela B. Strobel ............... Unicorn Executive Vice President and Exelon Energy Delivery President Kenneth G. Lawrence ............ PECO Energy PECO Energy Distribution President Carl J. Croskey ................ Unicorn Commonwealth Edison Distribution President Paul A. Elbert ................. Unicorn Unregulated Retail/New Business President S. Gary Snodgrass .............. Unicorn Senior Vice President, Human Resources None of these senior offices may be removed, replaced or demoted prior to the end of the transition period without either the consent of both Messrs. McNeill and Rowe or the affirmative vote of two-thirds of the board of directors of Exelon. Corporate Offices At least for the duration of the transition period, the corporate headquarters of Exelon will be in Chicago, Illinois and the headquarters of its generation and power marketing businesses will be in southeastern Pennsylvania. PECO Energy's and Unicom's electric and gas utilities will remain separate subsidiaries of Exelon and will continue to operate under the names PECO Energy Company and Commonwealth Edison Company. PECO Energy will maintain its headquarters in southeastern Pennsylvania and CoinEd will maintain its headquarters in Chicago. Corporate Restructuring Subject to receipt of necessary regulatory approvals, PECO Energy and CoinEd intend to pursue a restructuring of their corporate organizations simultaneously with and after the completion of the merger. In general, this restructuring will involve separating PECO Energy's and ComEd's regulated and unregulated businesses into a number of separate corporate entities. We expect that all of the generation assets of PECO Energy and CornEd will be consolidated into a single generation company, which may have subsidiaries and will contain Exelon's power marketing and trading business. This generation company will be a direct subsidiary of Exelon. We also intend to organize the other unregulated businesses of PECO Energy and Unicorn into one or more groups of companies that will be direct and indirect subsidiaries of Exelon. PECO Energy and CornEd will be separate direct subsidiaries of Exelon and will continue to be regulated public utilities. PECO Energy will continue to own and operate its electricity distribution business and will continue to own its transmission facilities subject to participation in the Pennsylvania-New Jersey-Maryland Interconnection. Likewise, CoinEd will continue its electricity distribution business. CornEd is reviewing plans for its transmission business in light of developments in the region, possibly resulting in the formation of an "independent transmission company" or regional transmission organization. The Companies may modify these restructuring plans to adapt to changing regulatory and competitive conditions. Completion of the merger is not conditioned on the consummation of, or receipt of regulatory approval for, any portion of these corporate restructuring plans. 54

Interests of PECO Energy's Directors and Management in the Merger Continuing Board Positions As provided in the merger agreement, as of the completion of the merger, the Exelon board of directors will consist of 16 members, with eight to be recommended by PECO Energy and eight to be recommended by Unicorn. The Corporate Governance Committee of PECO Energy's board of directors currently is responsible for considering and recommending nominees for election as directors. As a result, the Chairman of the Corporate Governance Committee, after consultation with each of the directors, will recommend to the full PECO Energy board of directors eight nominees to serve on the Exelon board of directors. The board of directors of PECO Energy will vote on the nominees and, upon their approval, designate the eight PECO Energy directors to serve on the Exelon board. Employment Arrangements with Corbin A. McNeill, Jr.and Certain Other PECO Energy Personnel Although neither PECO Energy nor Exelon has entered into an employment agreement with Mr. McNeill, the merger agreement provides that at any time during the transition period when Messrs. McNeill and Rowe are co-chief executive officers, each of them will receive the same salary, bonus and other compensation (including option grants and other incentive awards and all other forms of compensation) and enjoy the same other benefits and the same employment security arrangements as the other. Unicom has entered into an amended employment agreement with Mr. Rowe. See "--Interests of Unicom's Directors and Management in the Merger-Employment Agreement with John W. Rowe" below. The merger agreement contains other provisions relating to the employment of Mr. McNeill and other PECO Energy personnel by Exelon after the completion of the merger. See "--Board of Directors, Management and Operations of Exelon After the Merger' above. Changes to PECO Energy Employee Plans and Arrangements PECO Energy intends to make certain changes to its employee benefit plans and arrangements prior to the completion of the merger, including (1) entering into severance agreements for up to 100 officers and key employees in the four highest generic salary categories of PECO Energy, which agreements would contain change in control and other terms similar to those currently in effect for comparable Unicom employees under its change in control agreements or Key Management Severance Plan, as applicable, and (2) adopting amendments to certain benefit plans to maintain the comparability of such plans with competitive benefits structures. On October 26, 1999, the PECO Energy board of directors authorized PECO Energy to enter into agreements as described in clause (1) of the preceding sentence, including with each of Messrs. Egan, Durham, Lawrence and Rainey. No determination has been made by PECO Energy as of the date hereof with respect to the matters described in clause (2) of the first sentence of this paragraph. The merger agreement permits PECO Energy to make the changes and take the actions described above. PECO Energy also intends to continue to fund its grantor trust (which is used to finance certain of PECO Energy's executive compensation plans) in accordance with its terms. Change in Control Under PECO Energy Employee Plans and Severance Arrangements PECO Energy has entered into change in control agreements with approximately 100 officers and key employees in the four highest generic salary categories of PECO Energy. These agreements contain terms similar to those currently in effect for comparable Unicom employees under Unicom change in control agreements or the Key Management Severance Plan, as applicable. These agreements provide severance payments and benefits in the event of termination of these employees for reasons other than cause, or in the event of their resignation for good reason, within 24 months following a change in control of PECO Energy. Approval of the merger by PECO Energy shareholders will constitute a change in control of PECO Energy for purposes of the agreements. The severance payments and benefits provided under the agreements include:

• Severance payments (prorated and paid monthly) equal to either three, two or one and one-half.

depending on the employee's position with PECO Energy, multiplied by the sum of: 55

          . the employee's annual base salary, plus
          . an amount equal to the average of the annual incentive awards paid to the employee for the two years preceding the year of termination or, if greater, the target award under the annual incentive award program in which the employee participates for the year in which termination occurs.
       "* A prorated annual incentive award for the year in which termination occurs.
       "* Continuation of life, disability, accident, health and other welfare benefit coverage. For each employee, the benefits will continue for a number of years equal to the multiple of base salary and annual incentive award (i.e., three, two or one and one-half) applicable to that employee's severance payment described above.
       "* Outplacement services.
       "* All of a terminated employee's exercisable options would remain exercisable until the applicable option expiration date, and all unvested options would become fully exercisable and remain so until the applicable option expiration date.
       " Any deferred stock units, restricted stock, or restricted share units would become fully vested and any other long-term incentive plan award which is unvested would vest.
      "   For purposes of determining benefits under the supplemental retirement plan or arrangement, if any, in which the employee participates, the employee will be credited with additional years of credited service, age and compensation. The additional years will be equal to the multiple of base salary and annual incentive award (i.e., three, two or one and one-half) applicable to that employee's severance payment described above.
      " For purposes of determining eligibility for retiree welfare benefits, the employee will be deemed to have additional years of service and age. The additional years will be equal to the multiple of base salary and annual incentive award applicable to that employee's severance payment described above.
      "  All compensation earned through the date of termination as well as all coverage and benefits under all benefit plans to which the employee is entitled.

Pursuant to the terms of offers of employment or employment agreements, certain employees are also entitled to additional service credits for purposes of retiree health care eligibility and for determining benefits under the supplemental retirement plan or arrangement in which they participate. In connection with the severance benefits described above, each employee is subject to a non-compete agreement for 24 months from the applicable termination date. Although a participating employee does not have a duty to mitigate the amounts due from the company, continued welfare benefit coverage would be offset during the applicable continuation period by comparable coverage provided under welfare plans of another employer. Those participating employees who are senior vice-presidents will receive an additional payment to cover excise taxes imposed under Section 4999 of the Internal Revenue Code on "excess parachute payments" or under similar state or local law if the after-tax amount of payments and benefits subject to these taxes exceeds 110% of the "safe harbor" amount that would not subject the employee to these excise taxes. If the after-tax amount, however, is less than 110% of the safe harbor amount, payments and benefits subject to these taxes would be reduced or eliminated to equal the safe harbor amount. Benefits payable to other employees subject to the excise taxes imposed under Section 4999 of the Code will be reduced to the employees's safe harbor amount. PECO Energy's Long-Term Incentive Plan does not contain provisions relating to change in control. As a result, unless an employee has entered into a change in control agreement outlined above, grants under PECO Energy's Long-Term Incentive Plan are not subject to accelerated vesting due to a change in control. 56

Interests of Unicorn's Directors and Management in the Merger Continuing Board Positions As provided in the merger agreement, upon the completion of the merger, the Exelon board of directors will consist of 16 members, with eight to be recommended by PECO Energy and eight to be recommended by Unicorn. The Governance and Nominating Committee of Unicorn's board of directors currently recommends to the Unicorn board of directors candidates for election to the Unicom board of directors. As a result, the Governance and Nominating Committee will develop a selection process and criteria for recommending nominees to serve on the Exelon board. The Governance and Nominating Committee will then consider and recommend to the Unicorn board of directors eight nominees to serve on the Exelon board of directors. The board of directors of Unicorn will vote on the nominees and, upon their approval, designate the eight Unicorn directors to serve on the Exelon board. Employment Agreement with John IV. Rowe Unicorn has entered into an amended employment agreement with Mr. Rowe, which will be effective only upon the completion of the merger and will be binding on Exelon at that time. Under this agreement, Mr. Rowe will serve as:

     "  co-chief executive officer and president of Exelon. chairman of the executive committee of the Exelon board of directors and a member of the Exelon board of directors during the first half of the transition period,
     "  co-chief executive officer of Exelon, chairman of the Exelon board of directors and a member of the Exelon board of directors during the second half of the transition period, and
     "  chief executive officer of Exelon, chairman of the Exelon board of directors and a member of the Exelon board of directors after the transition period.

Mr. Rowe will succeed to the position of sole chief executive officer of Exelon or chairman of the Exelon board of directors if:

     "* prior to the end of the transition period, Mr. McNeill should cease to be a co-chief executive officer of Exelon or the chairman of the Exelon board of directors, and
     "* Mr. Rowe    is still a co-chief executive officer of Exelon at that time.

Mr. Rowe will receive an annual base salary of:

     "* at least $900,000 through March 15, 2001, but not less than his base salary immediately prior to the completion of the merger (currently $975,000), or
     "* Mr. McNeill's base salary, whichever is higher.

After March 15, 2001, Mr. Rowe's base salary will be determined by Exelon's compensation committee. Mr. Rowe will be eligible to participate in annual incentive award programs, long-term incentive plans and stock option plans on the same basis as other senior executives of Exelon. A grant of options will be considered for the co-chief executive officers at the time of the completion of the merger. Mr. Rowe will be entitled to participate in all savings, deferred compensation, retirement and other employee benefit plans generally available to other senior executives of Exelon. During the transition period, Mr. Rowe's base salary and participation in the plans and awards described in this paragraph will be on a basis that is not less than that of Mr. McNeill's or on which Mr. McNeill participates. Under his amended employment agreement, Mr. Rowe will receive a special supplemental executive retirement plan, or SERP, benefit if:

• he terminates due to normal retirement, early retirement, termination without cause, termination for good reason, death or disability, or 57
• he voluntarily terminates on or after the first anniversary of the completion of the merger for any other reason.

The term "good reason" includes the failure to appoint Mr. Rowe to the management and Exelon board of director positions described above. The special SERP benefit will equal the SERP benefit that Mr. Rowe would have received:

    "* if he had  attained age 60 (or his actual age, if greater), and
    "* if he had  earned 20 years of service on March 16, 1998 and one additional year of service on each anniversary after that date and prior to termination.

Except as provided in the next paragraph, if Exelon terminates Mr. Rowe's employment for reasons other than cause, death or disability or if he should terminate employment for good reason, he would be entitled to the following benefits:

    "* a prorated   annual incentive award for the year in which termination occurs,
     "  severance payments equal to his base salary for two years after termination, and for each year during such period an amount equal to the average of the annual incentive awards paid to him with respect to the three years preceding the year of termination or, if greater, his annual incentive award for the year before termination,
    "* for the two-year   period, continuation of his life, disability, accident, health and other welfare benefits, plus the retirement benefits described above and post-retirement health care coverage,
    "* all of his exercisable options would   remain exercisable until the applicable option expiration date,
     "* unvested options would continue to    become exercisable during the two-year continuation period and thereafter remain exercisable until the applicable option expiration date, and
     "* all compensation earned through the date of termination and coverage and benefits under all benefit plans to which he is entitled.

Mr. Rowe will receive the termination benefits described in "Change in Control Under Employee Plans and Severance Arrangements" below, rather than the benefits described in the previous paragraph, if Exelon terminates Mr. Rowe without cause or he terminates with good reason and

     "* the termination  is within 24 months after a change in control of Exelon, or
     "* the termination is at any other time prior to the earlier of normal retirement or December 31, 2004, or
     "* the termination is for good reason at any other time on or after the completion of the merger and before normal retirement because of the failure to appoint or elect Mr. Rowe to the management or Exelon board of director positions described above.

Change in Control Under Unicorn Employee Plans and Severance Arrangements Unicom has entered into an employment agreement with Mr. Rowe and change in control agreements with 10 other senior executive officers and has also established the Key Management Severance Plan covering other eligible executive officers and key employees. These agreements, and the Key Management Severance Plan, provide severance payments and benefits in the event of termination of these executives for reasons other than cause, or in the event of their resignation for good reason, within 24 months following a change in control of Unicorn. Approval of the merger by Unicom shareholders will constitute a change in control of Unicorn for purposes of the agreements and Key Management Severance Plan. Mr. Rowe's amended employment agreement described above will replace his current employment agreement at the completion of the merger. 58

Thus, if the merger is completed and his employment is later terminated, Mr. Rowe will not be entitled to payments and benefits provided under his current employment agreement and will be entitled to payments and benefits only under his amended employment agreement. The severance payments and benefits provided under the agreements and Key Management Severance Plan include: A lump sum severance payment equal to either three, two or one and one-half, depending on the executive's position with Unicorn, multiplied by the sum of:

• the executive's annual base salary, plus

        . an amount equal to the average of the annual incentive awards paid to the executive for the two years preceding the year of termination or, if greater, the target award under the annual incentive award program in which the executive participates for the year in which termination occurs or, for Mr.

Rowe, a benefit calculated based on a formula incentive award amount as defined in his agreement.

     "* A prorated annual incentive award for the year in which termination occurs.
     "* Continuation of life, disability, accident, health and other welfare benefit coverage. For each executive, the benefits will continue for a number of years equal to the multiple of base salary and annual incentive award (i.e., three, two or one and one-half) applicable to that executive's severance payment described above.
     "* Outplacement services.
     "* All of a terminated executive's exercisable options would remain exercisable until the applicable option expiration date, and all unvested options would become fully exercisable and remain so until the applicable option expiration date.
     " Any deferred stock units, restricted stock, or restricted share units would become fully vested and any other long-term incentive plan award which is unvested would vest.
     " For purposes of determining benefits under the supplemental retirement plan or arrangement, if any, in which the executive participates, the executive will be credited with additional years of credited service, age and compensation. The additional years will be equal to the multiple of base salary and annual incentive award (i.e., three, two or one and one-half) applicable to that executive's severance payment described above.
     " For purposes of determining eligibility for retiree welfare benefits, the executive will be deemed to have additional years of service and age. The additional years will be equal to the multiple of base salary and annual incentive award applicable to that executive's severance payment described above.
     " All compensation earned through the date of termination as well as all coverage and benefits under all benefit plans to which the executive is entitled.

Pursuant to the terms of offers of employment or employment agreements, certain executives are also entitled to additional service credits for purposes of retiree health care eligibility and for determining benefits under the supplemental retirement plan or arrangement in which they participate. In connection with the severance benefits described above, a participating executive does not have a duty to mitigate the amounts due from the company. However, continued welfare benefit coverage would be offset during the applicable continuation period by comparable coverage provided under welfare plans of another employer. 59

I . Officers will receive an additional payment to cover excise taxes imposed under Section 4999 of the Internal Revenue Code on "excess parachute payments" or under similar state or local law if the after-tax amount of payments and benefits subject to these taxes exceeds 110% of the "safe harbor" amount that would not subject the executive to these excise taxes. If the after-tax amount, however, is less than 110% of the safe harbor amount, payments and benefits subject to these taxes would be reduced or eliminated to equal the safe harbor amount. Benefits payable to other executives subject to the excise taxes imposed under Section 4999 of the Code will be reduced to the executive's safe harbor amount. Stock options and certain shares of restricted stock granted to eligible executives, including executive officers, under the Unicorn Corporation Long-Term Incentive Plan contain provisions relating to change in control. Outstanding options granted prior to July 22, 1998 provide that on the occurrence of a change in control such options become fully exercisable. Most of these options will have, in any event, become fully exercisable through the passage of time by January 1, 2001. Options granted under the Long-Term Incentive Plan on or after July 22, 1998 provide that if within 24 months following a change in control the optionee's employment is terminated other than for cause, or the optionee resigns for good reason, the optionee's options would become fully exercisable. Grants of approximately 55,000 shares of restricted stock made under the Long-Term Incentive Plan to certain executive officers provide that upon the occurrence of a change in control restrictions on such shares will lapse. Approval of the merger by Unicom shareholders will constitute a change in control for purposes of these provisions. Unicorn estimates that, if all executives, including executive officers, covered under the agreements and plans described above, were terminated immediately after the consummation of the merger, based on currently effective compensation levels. valuation factors, interest rates and a Unicorn common stock price of $43.75, the aggregate after-tax cost of additional benefits payable to executive officers under the plans and agreements as a result of the merger and subsequent termination would be approximately S 110.5 million. Treatment of Unicorn Employee Stock Options Under the merger agreement, options to purchase Unicom common stock that have been awarded to officers and employees of Unicorn will be modified to take the merger transaction into account. The merger agreement calls for these options to be converted into options for Exelon common stock. The number of shares into which the options are exercisable, and the option price, will be adjusted as if the exchange ratio for Unicorn common stock were 0.95, instead of the 0.875 applicable to the exchange of outstanding shares, and the $3.00 per share cash consideration will be disregarded. This adjustment is intended to give the holders of options value substantially equivalent to that received by holders of outstanding shares in the merger. As a result of this method of adjusting outstanding options, holders of options will be affected to a greater degree by increases or decreases in the market price of PECO Energy or Exelon shares than they would be if the options were adjusted only by a conversion factor of 0.875 and the option holders received S3.00 per share in cash. Stock Options and Related Benefits Issued by Exelon Exelon will assume and continue the amended and restated 1989 Long Term Incentive Plan of PECO Energy, effective as of the date of the merger, and succeed to all of PECO Energy's rights, powers and obligations under the plan. Under this plan, Exelon will be able to award performance-based grants to key employees of Exelon and its subsidiaries, including key employees who are officers or members of the Exelon board of directors. Members of the board of directors who are not employees will not be eligible to participate in the plan. Awards may be made under the plan in the form of incentive stock options, nonqualified stock options, restricted stock, stock appreciation rights, performance units, performance shares, phantom stock and dividend equivalents. The business criteria to be used for purposes of establishing performance goals, the attainment of which may be used to determine the amount and/or vesting of grants under the plan, will be 60

selected from among the following alternatives, each of which may be based on absolute standards or peer industry group corporations and may be applied at various organizational levels (e.g., corporate, business unit, division).

1. Total shareholder return 11. Earnings per share

2. Stock price increase 12. Revenue

3. Dividend payout as percentage of net 13. Workforce diversity income 14. Safety

4. Return on equity 15. Personal performance

5. Return on capital 16. Productivity measures

6. Cash flow, including operating cash flows, 17. Diversification of business opportunities free cash flow, discounted cash flow, return 18. Price to earnings ratio on investment, and cash flow in excess of 19. Expense ratios cost of capital 20. Total expenditures

7. Economic value added 21. Completion of key projects

8. Cost per kilowatt hour

9. Market share

10. Customer/employee satisfaction as measured by survey instruments The aggregate number of shares of common stock of PECO Energy that may be issued or transferred under the plan as approved by shareholders of PECO Energy in 1997 was 16 million shares. By virtue of its assumption of the plan by Exelon upon the merger. it is anticipated that approximately 10.8 million shares of Exelon common stock will remain available to be issued or transferred under the plan following the merger.

Following the merger, during a single calendar year, no individual may be granted options or other grants based on the fair market value of Exelon common stock that, in the aggregate, would require delivery of more than 500,000 shares of Exelon common stock or other assets with an equivalent fair market value. With respect to grants the value of which is not based on the fair market value of common stock, no individual may receive during any calendar year cash or shares of Exelon common stock with a fair market value, in the aggregate, exceeding $2 million. The aggregate share and individual limits may be adjusted under the plan to reflect stock splits and other changes that may affect Exelon common stock. The amended and restated plan was approved by the shareholders of PECO Energy in 1997 such that applicable awards under the plan to a "covered employee" within the meaning of Section 162(m) of the Code would constitute qualified performance-based compensation eligible to be deducted for federal income tax purposes without regard to the limits of Section 162(m) of the Code. Based on applicable interpretations, when the plan is assumed by Exelon following the merger, it is expected to be considered to have received shareholder approval for purposes of Section 162(m), and PECO Energy and Unicom do not believe additional shareholder approval is required. Accordingly, neither PECO Energy nor Unicorn is seeking in this prospectus/proxy statement a vote of shareholders with respect to the plan. Because the plan will be assumed by Exelon upon the completion of the merger, a vote in favor of the merger will have the effect of approving the plan and the continued operation of the plan by Exelon. Indemnification and Insurance Under the merger agreement and subject to certain limitations, Exelon has agreed that it will assume the same obligations with respect to indemnification of current and former directors and officers of PECO Energy or Unicorn as were contained in the articles of incorporation or certificate of incorporation or by-laws of PECO Energy or Unicom and any indemnification or other agreements at the date of signing the merger agreement. In addition, Exelon will maintain, with certain limitations, the directors' and officers' liability insurance policies currently maintained by PECO Energy and Unicorn, or substantially comparable policies as in effect upon the completion of the merger for a period of six years following the completion of the merger. 61

Form of the Merger; Merger Consideration;Conversion of Shares The merger involves two transactions, a first step share exchange between PECO Energy and its wholly owned subsidiary Exelon, after which PECO Energy will be a wholly owned subsidiary of Exelon, and a second step merger of Unicorn into Exelon. Subject to the terms and conditions of the merger agreement and in accordance with Pennsylvania law, at the completion of the first step exchange, each share of PECO Energy common stock (other than shares owned by PECO Energy, which will be automatically canceled) will automatically be converted into the right to receive one share of Exelon common stock. At the completion of the second step merger, which will occur immediately after the completion of the first step exchange. subject to the terms and conditions of the merger agreement and in accordance with Illinois law and Pennsvlvania law, Unicorn will be merged with and into Exelon, and each share of Unicorn common stock (other than shares owned by Unicom or Exelon, which will be automatically canceled), will automatically be converted into the right to receive 0.875 shares of Exelon common stock and $3.00 in cash. Upon completion of the first step exchange and the second step merger, PECO Energy and CornEd will be wholly owned subsidiaries of Exelon. Unicorn's separate corporate existence will end upon completion of the second step merger and its subsidiaries, including ComEd, will be subsidiaries of Exelon. Based upon the number of shares of PECO Energy common stock and Unicorn common stock outstanding on May 12, 2000, and assuming the pre-closing share repurchases by PECO Energy and Unicorn contemplated by the merger agreement are completed, upon completion of the merger approximately 54% of Exelon common stock will be owned by former PECO Energy shareholders and approximately 46% of Exelon common stock will be owned by former Unicorn shareholders. Proceduresfor Exchange of Certificates;FractionalShares Promptly after completion of the merger, an exchange agent selected by PECO Energy and Unicorn will mail the following materials to each shareholder of record of PECO Energy common stock or Unicorn common stock:

      "* a letter of transmittal for use in submitting these shares to the exchange agent for exchange, and
      "* instructions explaining what the shareholder must do to effect    the surrender of PECO Energy certificates or Unicorn certificates in exchange for the merger    consideration.

Shareholders should not return stock certificates with the enclosed proxy card. After the merger, each certificate that previously represented shares of PECO Energy or Unicorn common stock will represent only the right to receive the merger consideration. Holders of certificates previously representing PECO Energy or Unicorn common stock will not be paid dividends or distributions on the Exelon common stock into which their stock has been converted with a record date after the merger, and will not be paid cash for any fractional shares of Exelon common stock, until their certificates are surrendered to the exchange agent for exchange. When their certificates are surrendered, any unpaid dividends and any cash instead of fractional shares will be paid without interest. In the event of a transfer of ownership of PECO Energy common stock or Unicorn common stock which is not registered in the records of the transfer agent of PECO Energy or Unicorn, a certificate representing the proper number of shares of Exelon common stock may be issued to a person other than the person in whose name the surrendered certificate is registered if:

      "* the certificate is properly endorsed or otherwise is in  proper form for transfer, and
      "* the person requesting payment and issuance will:

62

         " pay any transfer or other taxes resulting from the issuance of shares of Exelon common stock to a person other than the registered holder of the certificate, or
         "  establish to the satisfaction of Exelon that any taxes have been paid or are not applicable.

All cash paid and shares of Exelon common stock issued upon surrender of certificates representing shares of PECO Energy common stock or Unicorn common stock, including any cash paid instead of any fractional shares of Exelon common stock, will be deemed to have been issued and paid in full satisfaction of all rights relating to those shares of PECO Energy common stock or Unicorn common stock, as the case may be. Exelon will remain obligated, however, to pay or provide for the rights of dissenting Unicorn shareholders and to pay any dividends or make any other distributions declared or made by PECO Energy or Unicorn in accordance with the merger agreement on shares of PECO Energy common stock or Unicorn common stock with a record date before the completion of the merger and which remain unpaid at the completion of the merger. If certificates are presented to Exelon or the exchange agent after the completion of the merger, they will be canceled and exchanged as described above. Unless Unicorn and PECO Energy agree prior to the completion of the merger to establish a direct share registration program for Exelon common stock, no fractional shares of Exelon common stock will be issued upon the conversion of Unicorn common stock and shares of Exelon common stock representing fractional share interests will be sold on the New York Stock Exchange after the completion of the second step merger and the cash from these sales (less transfer taxes) will be allocated pro rata among those holders with fractional share interests. If Unicorn and PECO Energy agree to establish a direct share registration program for Exelon common stock, Unicorn shareholders would receive a book entry credit for fractional shares of Exelon common stock instead of receiving cash as described in the previous sentence. Exelon will not in any event issue certificates or scrip for fractional shares. PECO Energy common stock will be converted into Exelon common stock at the rate of one share of Exelon common stock for each share of PECO Energy common stock, and therefore no fractional shares will result from the first step exchange. Effective Time of the Merger The effective time of the first step exchange will be the time of the filing of the articles of exchange with the Pennsylvania Department of State or at a later time agreed to by Exelon and PECO Energy and specified in the articles of exchange. The effective time of the second step merger will be the time when the Illinois articles of merger are filed with the Illinois Secretary of State and the Illinois Secretary of State has issued a certificate of merger for the second step merger or at a later time agreed to by Exelon and Unicorn pursuant to applicable law. Listing of Exelon Capital Stock It is a condition to the completion of the merger that Exelon common stock issuable to PECO Energy and Unicom shareholders pursuant to the merger agreement and under certain PECO Energy and Unicorn stock plans be approved for listing on the New York Stock Exchange, subject to official notice of issuance. Dividends PECO Energy currently pays annual dividends on PECO Energy common stock of $1.00 per share, and Unicom currently pays annual dividends on Unicom common stock of $1.60 per share. We expect that, after the merger, Exelon will pay annual dividends of $1.69 per share. The payment of dividends by PECO Energy, Unicorn and Exelon, however, is subject to approval and declaration by their respective boards of directors and will depend on a variety of factors, including business conditions and financial condition, earnings and cash requirements. 63

Material United States FederalIncome Tax Consequences of the Merger The following summary discusses the material U.S. federal income tax consequences to PECO Energy and Unicorn shareholders of the merger. This discussion is based upon the United States Internal Revenue Code of 1986, Treasury regulations, administrative rulings and judicial decisions currently in effect, all of which are subject to change, possibly with retroactive effect. The discussion assumes that PECO Energy shareholders hold their PECO Energy common stock and will hold their Exelon common stock, and that Unicorn shareholders hold their Unicorn common stock and will hold their Exelon common stock, as a capital asset within the meaning of Section 1221 of the Internal Revenue Code. Further, the discussion does not address all aspects of U.S. federal income taxation that may be relevant to a particular shareholder in light of his, her or its personal investment circumstances or to shareholders subject to special treatment under the U.S. federal income tax laws. including:

     "* insurance companies,
     "* tax-exempt organizations,
     "* dealers in securities or foreign currency,
     "* banks or trusts,
     "* persons that hold their PECO Energy common          stock or Unicorn common stock as part of a straddle, a hedge against currency risk, a constructive sale or conversion transaction,
     "* persons that have a functional currency other than the U.S. dollar,
     "* investors in pass-through entities,
     "* shareholders who acquired their PECO Energy common stock or Unicorn            common stock through the exercise of options or otherwise as compensation or through a tax-qualified retirement plan, or
     "* holders  of options granted under any PECO Energy or Unicorn benefit plan.
     "* Furthermore. this discussion does not consider the potential effects of any state. local or foreign tax laws.

None of PECO Energy, Unicorn or Exelon has requested a ruling from the United States Internal Revenue Service with respect to any of the U.S. federal income tax consequences of the merger and, as a result, there can be no assurance that the Internal Revenue Service will not disagree with or challenge any of the conclusions described below. Holders of PECO Energy common stock and Unicom common stock are urged to consult their own tax advisors regarding the specific tax consequences to them of the merger, including the applicability and effect of federal, state, local and foreign income and other tax laws in their particular circumstances. For purposes of this discussion, "U.S. Holder" means:

     "* an individual   citizen or resident of the United States,
     "* a corporation    or other entity taxable as a corporation created or organized under the laws of the United States or any of its political subdivisions,
     "* a trust if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. fiduciaries have the authority to control all substantial decisions of the trust, or
     "* an  estate that is subject to U.S. federal income tax on its income regardless of its source.

Cravath, Swaine & Moore, counsel to PECO Energy, has delivered its opinion to PECO Energy as to the U.S. federal income tax consequences to PECO Energy shareholders of the merger. Jones, Day, Reavis & Pogue. counsel to Unicorn, has delivered its opinion to Unicorn as to the U.S. federal income tax consequences 64

to Unicorn shareholders of the second step merger. The Cravath tax opinion and the Jones, Day tax opinion are subject to qualifications and are based on currently applicable law, certain factual representations made by PECO Energy. Unicorn and Exelon and certain assumptions. Any change in currently applicable law, which may or may not be retroactive, or failure of any of the factual representations or assumptions to be true, correct and complete in all material respects. could affect the continuing validity of the Cravath tax opinion and the Jones, Day tax opinion. The Cravath tax opinion and the Jones, Day tax opinion are attached as Exhibits 8.1 and 8.2 to the registration statement, on Form S-4, filed with the Securities and Exchange Commission, which includes this proxy statement/prospectus. PECO Energy and Unicorn shareholders should read the Cravath tax opinion and the Jones, Day tax opinion in their entirety. The conclusions reached in the Cravath tax opinion with respect to the merger are:

• The merger will be treated as a transaction described in Section 351 of the Internal Revenue Code.

     "* No gain or loss will be recognized by U.S. Holders of PECO Energy common stock on the exchange of their PECO Energy common stock for Exelon common stock.
     "* The aggregate adjusted tax basis of the Exelon common stock received in the merger by a U.S. Holder of PECO Energy common stock will be equal to the aggregate adjusted tax basis of the U.S. Holder's PECO Energy common stock exchanged for that Exelon common stock.

• The holding period of Exelon common stock received in the merger by a U.S. Holder of PECO Energy common stock will include the holding period of the U.S. Holder's PECO Energy common stock exchanged for that Exelon common stock.

    " While the matter is not free from doubt, and there is no directly authoritative precedent, it is more likely than not that the pre-closing share repurchases by PECO Energy referred to in the merger agreement will be independent of and will not be integrated with the merger.
    " The Internal Revenue Service, however, may not agree with the conclusion that the pre-closing share repurchases by PECO Energy referred to in the merger agreement are independent of the merger and, therefore, should not be integrated with the merger. If the Internal Revenue Service were successful in asserting this contrary view, this would not be likely to have a material effect on U.S. Holders of PECO Energy common stock. The U.S. federal income tax treatment of amounts received with respect to the share repurchases by PECO Energy referred to in the merger agreement by a U.S. Holder of PECO Energy common stock who is not described in the next sentence should not change. However, in unusual circumstances, involving a U.S. Holder of PECO Energy common stock who is also a substantial holder of Unicorn common stock immediately prior to the merger, the amounts received by such U.S. Holder with respect to the share repurchases by PECO Energy referred to in the merger agreement that would otherwise have been taxed as capital gain or loss could be taxed as a dividend.

The conclusions reached in the Jones, Day tax opinion are:

    "* The second step merger will be treated as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code.
    "* Exelon and Unicorn will each be a party to that reorganization within the meaning of Section 368(b) of the Internal Revenue Code.
    " A U.S. Holder of Unicorn common stock who exchanges that common stock for both cash consideration (including any cash received instead of a fractional share of Exelon common stock) and Exelon common stock pursuant to the second step merger will realize gain or loss with respect to the Unicorn common stock surrendered in an amount equal to the difference between (1) the sum of the cash and the fair market value of the Exelon common stock received and (2) the U.S. Holder's aggregate adjusted tax basis in the Unicorn common stock surrendered. The U.S. Holder's gain, if any, will be recognized, however, only to the extent of the amount of cash consideration received. Any loss will not be recognized.

65

While the matter is not free from doubt, and there is no directly authoritative precedent, it is more likely than not that the pre-closing share repurchases by Unicorn and PECO Energy referred to in the merger agreement will be independent of and will not be integrated with the second step merger for purposes of determining the character of any gain recognized by a U.S. Holder of Unicom common stock. It is therefore more likely than not that any gain recognized by a U.S. Holder who receives both cash and Exelon common stock pursuant to the second step merger will be treated as capital gain except as described below. Any capital gain recognized will be long-term capital gain if the U.S. Holder's holding period for the Unicorn common stock surrendered exceeds one year and, with respect to certain non corporate U.S. Holders, will be eligible for a maximum U.S. federal income tax rate of 20%. There are, however, circumstances in which all or part of the gain recognized by a U.S. Holder, other than gain recognized with respect to cash received instead of fractional shares of Exelon common stock, might be treated as a dividend rather than capital gain. Those circumstances involve U.S. Holders who would have owned, either directly or constructively under the applicable attribution rules of the Internal Revenue Code, 1% or more of the Exelon common stock if they had exchanged all of their Unicom common stock solely for Exelon common stock or who exercise control over Exelon corporate affairs. In that case, the amount of gain recognized by the U.S. Holder could be taxable as ordinary dividend income to the extent of the U.S. Holder's ratable share of the accumulated earnings and profits of Unicorn and thereafter would be treated as capital gain.

• The Internal Revenue Service, however, may not agree with the conclusions that the pre-closing share repurchases by Unicorn and PECO Energy referred to in the merger agreement are independent of the second step merger and, therefore, should not be integrated with the second step merger for purposes of determining the character of any gain recognized by a U.S. Holder of Unicorn common stock. If the Internal Revenue Service were successful in asserting this contrary view, any gain recognized by a U.S.

Holder who receives both cash and Exelon common stock pursuant to the second step merger, other than gain recognized with respect to cash received instead of fractional shares of Exelon common stock, would be treated as a dividend rather than capital gain, to the extent of the U.S. Holder's ratable share of the accumulated earnings and profits of Unicorn, except as described below. Any gain recognized by that U.S. Holder as a result of the second step merger could still be treated as capital gain if the U.S. Holder had effected other sales or dispositions of Unicorn common stock prior to the second step merger or of Exelon common stock subsequent to the second step merger, in each case, as part of an overall plan to reduce or terminate the holder's proportionate ownership interest in Exelon, and the other sales or dispositions of Unicom or Exelon common stock could, for federal income tax purposes, be integrated with the U.S. Holder's exchange of Unicorn common stock pursuant to the second step merger. Moreover, amounts received by a U.S. Holder of Unicorn common stock with respect to the share repurchases by Unicom should be taxed as capital gain or loss, and not as a dividend. In unusual circumstances, however, involving U.S. Holders of Unicorn common stock who sell a relatively small portion of their holdings, amounts received by a U.S. Holder with respect to the Unicorn share repurchases could be taxed as a dividend if it could be determined that the holder's shares had been purchased by Unicorn. Because all of the share repurchases are being undertaken in the open market in transactions effected through a broker in which Unicorn will not know the identity of any particular seller of Unicorn common stock and any seller of Unicorn common stock will not know that Unicorn is the purchaser of that stock, it is unlikely that those unusual circumstances could arise.

• The aggregate adjusted tax basis of the Exelon common stock (including any fractional interest for which cash is received) received by a U.S. Holder of Unicorn common stock in the second step merger will be equal to the U.S. Holder's aggregate adjusted tax basis in the Unicorn common stock exchanged for that Exelon common stock, decreased by the amount of cash consideration received by the U.S.

Holder and increased by the amount of gain, if any, recognized by the U.S. Holder (including any gain treated as a dividend). The holding period of the Exelon common stock received by a U.S. Holder of Unicorn common stock pursuant to the second step merger will include the holding period of the U.S. Holder's Unicorn common stock exchanged for that Exelon common stock. 66

A U.S. Holder of Unicorn common stock who exercises Illinois dissenters' rights with respect to the second step merger and receives solely cash in respect of dissenting shares of Unicom common stock will generally recognize capital gain or loss in an amount equal to the difference between the amount of cash received and the U.S. Holder's aggregate adjusted tax basis in the dissenting shares of Unicorn common stock. Any capital gain or loss recognized will be long-term capital gain or loss if the U.S. Holder's holding period for the dissenting shares of Unicorn common stock surrendered exceeds one year, and, with respect to certain non-corporate U.S. Holders, will be eligible for a maximum U.S. federal income tax rate of 20%. U.S. Holders of Unicorn common stock should consult their own tax advisors regarding the character of any gain recognized in the second step merger because the application of capital gain or dividend treatment depends on each U.S. Holder's particular circumstances, including the application of certain constructive ownership rules. Certain non-corporate Unicorn shareholders may be subject to backup withholding at a 31% rate on cash payments received in connection with the merger (including cash paid instead of fractional shares of Exelon common stock) or in respect of dissenting shares of Unicorn common stock. Backup withholding will not apply, however, to a Unicorn shareholder who or that (1) furnishes a correct taxpayer identification number and certifies that he, she or it is not subject to backup withholding on the substitute Internal Revenue Service Form W-9 or successor form included in the letter of transmittal to be delivered to Unicorn shareholders following the date of the merger, (2) provides a certification of foreign status on Internal Revenue Service Form W-8 or successor form or (3) is otherwise exempt from backup withholding. Accounting Treatment The merger is expected to be accounted for using purchase accounting with PECO Energy being deemed to have acquired Unicorn. Dissenters' Rights PECO Energy Shareholders Under Pennsylvania corporate law, PECO Energy shareholders have no dissenters' rights in the merger because PECO Energy common stock is listed on a national securities exchange and is being exchanged solely for Exelon common stock. Unicom Shareholders Illinois law provides that if you hold Unicorn common stock and do not wish to accept the merger consideration, then Sections 11.65 and 11.70 of the Illinois Business Corporation Act, copies of which are attached as Annex E to this proxy statement/prospectus, provide you with an alternative. Under these sections, you may object to the merger and may demand payment from Exelon for the fair value of your shares. Set forth below is a summary of the procedures relating to the exercise of your rights as a dissenter to the merger. This summary does not purport to be a complete statement of your dissenters' rights and is qualified in its entirety by reference to Sections 11.65 and 11.70 of the Illinois Business Corporation Act which are set forth in Annex E to this proxy statement/prospectus and to any amendments to such provisions as may be adopted after the date of this joint proxy statement/prospectus. If you wish to exercise your rights to dissent from the merger you should carefully review Annex E and seek advice of legal counsel. Illinois Dissenters' Rights Procedures In order to perfect your Illinois dissenters' rights, you must do the following: deliver to Unicorn at the office of the Corporate Secretary, 10 South

Dearborn Street,

Chicago, Illinois 60603, prior to the taking of the vote of the shareholders upon the approval of the merger agreement a written demand for payment for your shares if the merger agreement is approved, and 67

      . you must not vote your shares in favor of the merger agreement.

In perfecting your right to dissent, neither a vote against the merger agreement nor a proxy directing a vote against the merger agreement will be deemed to satisfy the requirement that a written demand for payment be delivered to Unicorn prior to the taking of the vote. However, if you have delivered the written demand before the taking of the vote, you will not be deemed to have waived your right to dissent either by failing to vote against the merger agreement or by failing to furnish a proxy directing a vote against the merger agreement. Payment of Fair Value by Exelon Within ten days after the completion of the merger or 30 days after delivery of the written demand for payment, whichever is later, Exelon will advise you, if you dissent to the merger, of Exelon's estimate of the fair value of your shares (which will have been converted to Exelon common stock). At this time, Exelon must elect to (1) make a commitment to purchase your shares at Exelon's estimated fair value or (2) instruct you to sell your shares within ten days of Exelon's election. Exelon may instruct you to sell your shares only if there is a public market at which the shares may be readily sold. Such a market will exist for the Exelon common stock because it will be listed on the New York Stock Exchange immediately following the completion of the merger. If Exelon elects to direct you to sell and you do not sell within that ten-day period, you will be deemed to have sold your shares at the average closing price of the Exelon common stock on the New York Stock Exchange during that ten-day period. "Fair value" means the value of the shares immediately before the completion of the merger excluding any appreciation or depreciation in anticipation of the Unicorn merger, unless exclusion would be inequitable. If you have made a written demand for payment as described above you will retain all other rights of a shareholder until those rights are canceled or modified by the completion of the merger. At the completion of the merger, Exelon will pay to you if you transmit to Exelon your stock certificates the amount Exelon estimates to be the fair value of the shares, plus accrued interest, less the amount of the proceeds of sale, or amount deemed to be proceeds of sale, if Exelon has directed you to sell your shares as described above. Any payment will be accompanied by a written explanation of how the interest was calculated. Interest will accrue from the completion of the merger to the date of payment at the average rate currently paid by Exelon on its principal bank loans, or, if none, at a rate that is fair and equitable under all the circumstances. Dissenting Shareholders' Estimate of Fair Value If you do not agree with Exelon's estimated fair value or the amount of interest due, within 30 days after deliver), of Exelon's statement of fair value you must notify Exelon in writing of your estimate of the fair value of your shares and the amount of interest due and demand payment of the difference between your estimate of fair value and interest due and (1) the amount of payment by Exelon or (2) the proceeds (or the amount deemed to be proceeds) of the sale by you, which is applicable because of the option selected by Exelon, as described above. Appeal to Circuit Court If, within 60 days after delivery to Exelon of your notification of estimated fair value, Exelon and you have not agreed in writing on the fair value of the shares and interest due, Exelon must either pay you the difference in the estimated fair values, with interest, or file a petition in the circuit court for the county in which Exelon has its registered office or principal office, requesting the court to determine the fair value of the shares and interest due. If the court determines that the fair value of the shares, plus interest, exceeds the amount paid by Exelon or the proceeds of the sale of shares, as the case may be, you will be entitled to judgment for the amount of the excess. The court may also allow the costs of the proceeding, including fees and expenses of counsel and experts, to be assessed against Exelon or against you based on criteria set forth in the Illinois Business Corporation Act. 68

In connection with the merger, Exelon intends to reserve the right to elect (1) to offer to pay to dissenting shareholders Exelon' original estimate of the fair value of the shares and to pay any additional amount agreed upon by Exelon and the shareholder or ordered by the court to be paid by Exelon to the shareholder as provided in the Illinois Business Corporation Act, or (2) to direct a dissenting shareholder to sell his or her shares and to pay only that amount, if any, in excess of the proceeds of the sale (or the amount of proceeds deemed to have been received) as may be agreed upon by Exelon and the shareholder or ordered by the court to be paid by Exelon to the shareholder as provided in the Illinois Business Corporation Act. Workforce and Employee Benefit Matters Continuationof Agreements After completion of the merger, Exelon and its subsidiaries will honor and perform in accordance with their terms any collective bargaining agreements of PECO Energy, Unicorn or their subsidiaries then in effect (subject to any reserved right contained in any collective bargaining agreement to amend, modify, suspend, revoke or terminate the agreement). Employee Benefit Plans Under the merger agreement, and subject to applicable law and collective bargaining agreements, employee benefit plans and employment arrangements of PECO Energy, Unicorn and their subsidiaries will be treated in the following manner:

     "* Each  employee benefit plan and employment arrangement of PECO Energy, Unicorn and their subsidiaries with respect to the current and former employees, officers or directors of PECO Energy and Unicom and their respective subsidiaries will be maintained in effect by Exelon and its subsidiaries until Exelon determines otherwise and shall be honored and performed in accordance with its terms (subject to any reserved right contained in the plan or arrangement to amend, modify, suspend, revoke or terminate the plan or arrangement).
     "* Each  employee benefit plan and employment arrangement of PECO Energy or Unicorn will be assumed, performed, sponsored and administered by Exelon in the same manner and to the same extent that PECO Energy or Unicorn, as the case may be, would be required to perform, sponsor and administer the plan or arrangement.
     "* Each  participant in an employee benefit plan of PECO Energy, Unicorn and their subsidiaries will be credited for purposes of eligibility to participate, vesting and eligibility to receive benefits under any employee benefit plan of Exelon or its subsidiaries for service credited for the corresponding purposes under the applicable plans of PECO Energy, Unicorn and their subsidiaries, except for benefit accrual purposes and unless providing credit would result in a duplication of benefits.
     "* Each  medical, dental or health benefit plan of Exelon or its subsidiaries will take into account for purposes of determining a participant's deductibles and out-of-pocket limits, the expenses previously incurred by the participant during the same year under any other plan and will waive restrictions for pre-existing conditions not applicable to the participant under the other plan in which the participant participated prior to participation in that plan.
     "* Each  cafeteria plan of Exelon or its subsidiaries under the Internal Revenue Code will cause credits and debits in respect of any participant to be transferred to and maintained in any corresponding plan in which the participant may subsequently participate during the same year.

Workforce Reductions Subject to applicable law and collective bargaining agreements, it is the intention of PECO Energy and Unicorn that following the merger:

• Any workforce reductions will be made on a fair and equitable basis, in light of the circumstances and the objectives to be achieved, as determined by Exelon, and without regard to whether the affected 69

individuals were employed by PECO Energy, Unicom or their subsidiaries, before the merger and with due consideration to work history, prior experience and skills and Exelon's business needs. Any employee whose employment is terminated or whose job is eliminated will be entitled to participate on a fair and equitable basis as determined by Exelon in the job opportunity and placement programs offered by Exelon or its subsidiaries. Effect on Awards Outstanding Under Stock Plans PECO Energy Under the merger agreement, upon completion of the merger, Exelon will assume each PECO Energy employee stock option plan and outstanding PECO Energy employee stock option. Under the merger agreement, prior to the merger, PECO Energy will adjust the terms of all outstanding PECO Energy employee stock options to acquire shares of PECO Energy common stock to provide that the options will constitute options to acquire, on the same terms and conditions as under the PECO Energy employee stock option plan, the same number of shares of Exelon common stock as the holder of the option would have received in the merger had the holder exercised the option in full immediately prior to the merger. The amount of the exercise price per share of Exelon common stock under any option will be equal to the aggregate amount of the exercise price for the shares of PECO Energy common stock subject to the PECO Energy option divided by the total number of shares of Exelon common stock to be subject to the option (rounded up to the nearest w'hole cent). As of April 30, 2000, the number of shares of PECO Energy common stock reserved for issuance under such plans was approximately 10.9 million. Unicorn Under the merger agreement, upon completion of the merger, Exelon will assume each Unicorn employee stock option plan and outstanding Unicom employee stock option. Under the merger agreement, prior to the merger, Unicorn will adjust the terms of all outstanding Unicom employee stock options to acquire shares of Unicorn common stock to provide that the options will constitute options to acquire, on the same terms and conditions as under the Unicom employee stock option, 0.95 shares of Exelon common stock for each share of Unicorn common stock subject to the option. The $3.00 per share cash consideration to be received by Unicorn shareholders will be disregarded in making this adjustment which results in a slightly different exchange ratio from that which is applicable to Unicorn shareholders (see "--Interests of Unicorn Directors and Management in the Merger-Treatment of Unicorn Employee Stock Options"). The amount of the exercise price per share of Exelon common stock under any option will be equal to the aggregate amount of the exercise price for the shares of Unicorn common stock subject to the Unicorn option divided by the total number of shares of Exelon common stock to be subject to the option (rounded up to the nearest whole cent). As of May 12, 2000, the number of shares of Unicorn common stock reserved for issuance under such plan was approximately 8.6 million. Resale of Exelon Common Stock Exelon common stock issued in the merger will not be subject to any restrictions on transfer arising under the Securities Act of 1933, except for shares issued to any PECO Energy or Unicom shareholder who is, or is expected to be, an "affiliate" of PECO Energy or Unicorn, as applicable, for purposes of Rule 145 under the Securities Act. It is expected that these shareholders will agree not to transfer any Exelon common stock received in the merger except pursuant to an effective registration statement under the Securities Act or in a transaction that is not required to be registered under the Securities Act. The merger agreement requires each of PECO Energy and Unicorn to use reasonable efforts to cause its shareholders who are, or who are expected to be, affiliates to enter into these agreements. This proxy statement/prospectus does not cover resales of Exelon common stock received by any person upon completion of the merger, and no person is authorized to make any use of this proxy statement/prospectus in connection with any resale. 70

REGULATORY MATTERS General A summary of the material regulatory requirements affecting the merger is set forth below. Additional immaterial consents from or notifications to governmental agencies may be necessary or appropriate in connection with the merger. While we believe that we will receive the requisite regulatory approvals and clearances for the merger that are summarized below, there can be no assurance as to the timing of these approvals and clearances or our ability to obtain these approvals and clearances on satisfactory terms or otherwise. Consummation of the merger is conditioned upon receipt of final orders from the various federal and state commissions described below. There can be no assurance that any of these approvals will be obtained or, if obtained, will not contain terms or conditions that could reasonably be expected to have a material adverse effect on Exelon and its prospective subsidiaries. PECO and Unicorn intend to pursue a restructuring of their corporate organizations simultaneously with and after completion of the merger. This restructuring will require additional regulatory approvals. See "The Merger-Corporate Restructuring" in this Chapter I. State Approvals PennsylvaniaPublic Utility Commission PECO Energy is subject to the jurisdiction of the Pennsylvania Public Utility Commission. The issuance of a certificate of public convenience and necessity is required in connection with the first step exchange and the second step merger. The standard for approval is whether the transaction is necessary and proper for the service, accommodation, convenience or safety of the public. This standard has been applied by the Pennsylvania Public Utility Commission (PaPUC) to require that applicants demonstrate that the transaction will affirmatively promote the service, accommodation, convenience or safety of the public in some substantial way. In addition, under provisions enacted as part of Pennsylvania's electric and natural gas restructuring legislation, the PaPUC must consider whether a proposed transaction is likely to result in anticompetitive or discriminatory conduct, including the unlawful exercise of market power, which would prevent retail electric or natural gas customers in Pennsylvania from obtaining the benefits of a properly functioning and workable competitive retail electric or natural gas market. Illinois Commerce Commission Under Illinois law, CornEd, as an electric utility, is required to file notice with respect to the second step merger with the Illinois Commerce Commission. The notice must be accompanied by certain information relating to the second step merger. CornEd has filed the required notice. Formal approval by the Illinois Commerce Commission of the second step merger is not required for electric utilities. Public Utility Holding Company Act PECO Energy is currently a holding company exempt from most provisions of the Public Utility Holding Company Act under Section 3(a)(2) of the Act pursuant to Rule 2 of the Securities and Exchange Commission regulations implementing the Act. Unicorn is currently a holding company exempt from most provisions of the Public Utility Holding Company Act under Section 3(a)(1) pursuant to an order of the Securities and Exchange Commission. PECO Energy and Unicorn are required to obtain Securities and Exchange Commission approval under Sections 9(a)(2) and 10 of the Public Utility Holding Company Act in connection with the merger. Section 9(a)(2) requires an entity owning, directly or indirectly, 5% or more of the outstanding voting securities of a public utility company (as defined in the Public Utility Holding Company Act) to obtain the approval of the Securities and Exchange Commission under Section 10 prior to acquiring a direct or indirect interest in 5% or more of the voting securities of any additional public utility company. Exelon will acquire in excess of 5% 71

of the voting securities of each of PECO Energy and ComEd, both of which are public utility companies within the meaning of the Public Utility Holding Company Act, and therefore approval of the merger by the Securities and Exchange Commission is required. Under the applicable standards of the Public Utility Holding Company Act, the Securities and Exchange Commission is directed to approve the merger unless it finds that

• the merger would tend towards detrimental interlocking relations or a detrimental concentration of control,
• the consideration to be paid in connection with the merger is not reasonable,
• the merger would unduly complicate the capital structure of Exelon's holding company system or would be detrimental to the proper functioning of Exelon's holding company system or
• the merger would violate applicable state law.

To approve the merger, the Securities and Exchange Commission must also find that the merger would tend towards the development of an economical and efficient integrated public utility system. Based on the most recent information available, following consummation of the merger, PECO Energy and Unicorn believe that Exelon would not qualify for an exemption from registration under the Public Utility Holding Company Act and would be required to register under Section 5 of the Act. In that event, Exelon will become subject to the restrictions that the Public Utility Holding Company Act imposes on registered holding company systems. Among these are requirements that certain securities issuances as well as sales and acquisitions of utility assets or of securities of utility companies and acquisitions of interests of any other business be approved by the Securities and Exchange Commission. The Public Utility Holding Company Act also limits the ability of registered holding companies to engage in nonutility ventures and regulates any holding company system service company and the rendering of services by holding company affiliates to the system's utilities. Although pursuant to the Public Utility Holding Company Act the Securities and Exchange Commission may require the divestiture of any business of the combined company that is not energy-related as a condition to approval of the merger, PECO Energy and Unicom believe that all of their material non-utility activities after completion of the merger will meet the requirements for retention by a registered holding company. In conjunction with the registration of Exelon as a holding company under the Public Utility Holding Company Act, the Securities and Exchange Commission will review the question of whether the system can retain both gas and electric utility operations. PECO Energy and Unicorn do not believe that these restrictions or requirements placed on Exelon as a result of becoming a registered holding company will have any material adverse impact on Exelon's business. Nriclear RegulatorY Comm117hi.Ss ion PECO Energy and CornEd each hold Nuclear Regulatory Commission operating licenses for certain of their nuclear generating facilities. These licenses authorize each of PECO Energy and Unicorn to own and/or operate its nuclear facilities. The Atomic Energy Act provides that a license may not be transferred or in any manner disposed of, directly or indirectly, through transfer of control of any license unless the Nuclear Regulatory Commission finds that the transfer complies with the Atomic Energy Act and consents to the transfer. Therefore, the consent of the Nuclear Regulatory Commission is required for the transfer of control pursuant to the merger of the licenses held by each of PECO Energy and CoinEd. FederalEnergy Regulatory Commission Section 203 of the Federal Power Act provides that no public utility may sell or otherwise dispose of its jurisdictional facilities, directly or indirectly merge or consolidate its facilities with those of any other person, or acquire any security of any other public utility, without first having obtained authorization from the Federal Energy Regulatory Commission. PECO Energy and Unicorn have filed an application seeking this approval of the Federal Energy Regulatory Commission under Section 203. 72

The Federal Energy Regulatory Commission has stated in its 1996 utility merger policy statement that, in analyzing a merger under Section 203, it will evaluate the following criteria:

        "* the effect of the merger on competition in wholesale electric power markets, utilizing an initial screening  approach derived from the Department of Justice/Federal Trade Commission-Initial Merger Guidelines to determine if a merger will result in an increase in an applicant's market power,
        "* the effect of the merger on the applicants' Federal Energy Regulatory Commission jurisdictional ratepayers, and
        "* the effect of the merger on state and federal regulation of the applicants.

United States Antitrust The Hart-Scott-Rodino Antitrust Improvements Act and the related rules and regulations prohibit us from completing the merger until we submit required information to the Antitrust Division of the Department of Justice and the Federal Trade Commission and certain waiting period requirements have been satisfied. The HSR Act provides for an initial 30 calendar day waiting period following the filing with the Antitrust Division and the Federal Trade Commission of certain Notification and Report Forms by the parties to the merger agreement. The HSR Act further provides that, if, within the initial 30 calendar day waiting period, the Antitrust Division or the Federal Trade Commission issues a request for additional information or documents, the waiting period will be extended until the 20th day after the date of substantial compliance by both filing parties with such request. Even after the Hart-Scott-Rodino waiting period expires or terminates, the Antitrust Division or the Federal Trade Commission may later challenge the merger on antitrust grounds. We do not believe that the merger will violate federal antitrust laws. Once the HSR waiting period expires or terminates, the parties have 12 months to complete the merger. If the merger is not completed within 12 months, the parties must make a new HSR filing with new waiting periods. Status of Regulatory Approvals As of the date of this proxy statement/prospectus, PECO Energy, Unicom, CoinEd and Exelon have made all required filings for approvals of the merger with each of the regulatory authorities described above. Proceedings are pending before each of these authorities. As of the date of this proxy statement/prospectus:

• On March 23, 2000, PECO Energy reached a comprehensive settlement with the various parties who had intervened in the proceeding before the PaPUC. The comprehensive settlement agreement includes rate reductions of $200 million for the period from January 2002 through December 2005, extended rate caps, electric reliability and customer service standards and mechanisms to enhance competition and customer choice. The settlement is subject to the approval of the PaPUC.

On April 12, 2000, the Federal Energy Regulatory Commission approved the merger without condition and as proposed by the companies. Parties to the proceeding may seek a rehearing prior to May 12, 2000.

• No further action by the Illinois Commerce Commission is required to complete the merger.
• The waiting period under the HSR Act expired in April 2000.

While we cannot predict when all necessary regulatory approvals will be in place, Exelon hopes to complete the merger in the second half of 2000. 73

THE MERGER AGREEMENT You are urged to The following description summarizes the materialprovisions of the merger agreement. read carefully the merger agreement, which is attached as Annex A to this proxy statement/prospectus. Conditions to the Completion of the Merger of various Each party's obligation to complete the merger is subject to the satisfaction or waiver conditions, which include, in addition to other customary closing conditions, the following:

     "* adoption of the merger agreement by holders of at least a majority of the votes cast by all holders of of all PECO PECO Energy common stock entitled to vote, assuming that holders of at least a majority Energy common stock entitled       to vote   are present,
     "* approval of the merger agreement by holders of at least two-thirds of the outstanding shares of Unicorn common stock,
     "* approval for listing on the New York Stock Exchange of the shares of Exelon common stock issuable to Unicom's stock PECO Energy and Unicorn shareholders in the merger and under PECO Energy's and plans, subject to official notice of issuance,
     "* expiration or termination of the waiting period applicable to the merger under the Hart-Scott- Rodino Antitrust Improvements Act,
     "* receipt of all approvals by the Federal Energy Regulatory Commission, the Nuclear Regulatory Utility Commission, the Securities and Exchange Commission and the Pennsylvania Public Commission,
      "* delivery of notice to the Illinois Commerce Commission,
      "* absence of any order or injunction of any court and absence of other legal restraints or prohibitions that each of the parties would prevent the completion of the merger, but prior to asserting this condition, injunction  or  order  and to appeal it as must have used all reasonable efforts to prevent the entry of an promptly as possible, proxy
      "* effectiveness under the Securities Act of the registration statement on Form S-4, of whichofthis        any   stop the  subject statement/prospectus forms a part, and the registration statement must not be under   state order or proceeding seeking a stop order, and receipt by Exelon of the authorizations securities or "blue sky" laws to issue its common stock pursuant to the merger, and
      "* receipt of the approval of each person whose approval is required in order to consummate the merger obtained, could not and the transactions contemplated by the merger, except for approvals which, if not subsidiaries reasonably be expected to have a material adverse effect on Exelon and its prospective of  PECO   Energy  or Unicorn   to complete   the  merger    and the taken as a whole or on the ability transactions contemplated     by the merger.

satisfaction or waiver In addition, each party's obligation to complete the merger is further subject to the of the following additional conditions: must

       "* the representations and warranties of PECO Energy and Unicomr set forth in the merger agreement agreement   and  as  of the  date   on which   the be true and correct as of the date of the original merger expressly merger is completed as though made on that date, or, if the representations and warranties case, without  giving  effect  to any   materiality relate to an earlier date, then as of that date, in each correct that have not qualifiers in the representation or warranty, other than for failures to be true and material  adverse  effect  on  the  party making the had and could not reasonably be expected to have a representation and   warranty, be
        "* performance by PECO Energy and Unicorn in all material respects of all obligations required to performed under the merger agreement on or prior to the date on which the merger             is  completed, 74

receipt of letters from each person identified as an "affiliate" of either PECO Energy or Unicom for purposes of Rule 145 under the Securities Act, receipt by PECO Energy of a tax opinion of counsel to PECO Energy, dated as of the date on which the merger is completed, and

• receipt by Unicorn of an opinion of counsel to Unicorn, dated as of the date on which the merger is completed, to the effect that the second step merger will constitute a tax-free reorganization.

The merger agreement provides that a "material adverse effect" means, when used in respect of any person, a material adverse effect on

       "* the business, assets, condition (financial or otherwise), prospects or results of operations of that person and its subsidiaries, taken as a whole, or
       "* the ability of that person to perform its obligations under the merger agreement or on the ability of that person to consummate the merger        and the other transactions contemplated by the merger agreement.

However, with respect to the representations and warranties by the parties as to the absence of a material adverse effect as of the date of the original merger agreement and as of the date the merger is completed, any events, changes, effects and developments relating to the economy in general or to PECO Energy's or Unicom's,industry in general, and not specifically relating to PECO Energy or Unicorn, are deemed not to cause a material adverse effect. No Solicitation In the merger agreement, each of PECO Energy and Unicorn has agreed that it will not, nor will it authorize or permit any of its subsidiaries or any directors, officers, employees, agents or representatives of it or any of its subsidiaries to, directly or indirectly:

      "* solicit, initiate, encourage or facilitate, or furnish or disclose non-public information in furtherance of, any inquiries or the making of any      competing proposal involving it, as described below, or
      "*participate in any discussions or negotiations regarding any competing proposal involving it.

The merger agreement provides that the term "competing proposal" means any recapitalization, merger, consolidation or other business combination involving either PECO Energy or Unicorn, or acquisition of any material portion of the capital stock or assets of PECO Energy or Unicorn, except for acquisitions of assets in the ordinary course and acquisitions permitted by the merger agreement that do not and could not reasonably be expected to impede the merger. None of the board of directors of PECO Energy or Unicom or any committee thereof will:

     "* withdraw or modify, or propose to withdraw or modify, in a manner adverse to the other party, the approval or recommendation by that board of directors or that committee of the merger and the merger agreement,
     " approve, or permit or cause that party to enter into, any definitive agreement providing for the implementation of any competing proposal involving that party, or
     " approve or recommend, or propose to approve or recommend, any competing proposal involving that party.

However, the merger agreement provides that, prior to either shareholders of the merger agreement, PECO Energy or Unicorn party receiving the approval of its may, only to the extent that its board of directors concludes in good faith, based upon the advice of its outside counsel, that failure to do so could reasonably be expected to constitute a breach of its fiduciary obligations, participate in discussions or 75

with, an unsolicited proposal for a negotiations relating to, and furnish non-public information in connection competing transaction involving it that is:

    "* for cash or marketable securities only and not conditioned on financing,
    "* on terms which the party's board of directors determines to be superior from a financial point of view and more favorable generally, and or
     "* reasonably capable of being completed within 18 months of the termination of the merger agreement by March 31, 2001, whichever is later.

advise the other of the receipt of any The merger agreement also provides that each party will immediately to the other party a copy of the proposal or inquiry regarding a competing proposal, and promptly furnish of the person making the proposal or inquiry and if the proposal or inquiry is not in writing, the identity inquiry. Termination completion of the merger: The merger agreement may be terminated at any time prior to the

1. by mutual written consent of PECO Energy and Unicom, not been completed by March 31,

2. by PECO Energy or Unicorn, if the second step merger has is the result of a breach of the merger 2001, unless the failure of the merger to be completed by that date agreement by the party seeking to terminate, any order which has become final

3. by PECO Energy or Unicorn, if a governmental entity issues the merger, and nonappealable permanently enjoining, restraining or otherwise prohibiting of that party to complete the

4. by PECO Energy or Unicom, if any condition only to the obligation 2001, unless the failure of the condition to be merger becomes incapable of satisfaction prior to March 31, seeking to terminate, met is the result of a material breach of the merger agreement by the party have not approved the merger

5. by PECO Energy or Unicorn, if the Unicorn shareholders agreement at a Unicorn shareholders meeting, have not adopted the merger

6. by PECO Energy or Unicorn, if the PECO Energy shareholders agreement at a PECO Energy shareholders meeting, to perform in any material respect any

7. by PECO Energy or Unicorn, if the other breaches or fails merger agreement, which breach or failure of its representations, warranties or covenants contained in the relating to representations or warranties or to perform would give rise to the failure of a closing condition cured within 30 days of notice of the breach, the performance of obligations and has not been or cannot be directors or any committee thereof

8. by PECO Energy or Unicorn, if the other party's board of or recommendation or approves or withdraws or modifies, or publicly proposes to do so, its approval otherwise breaches the covenant described recommends, or proposes to do so, any competing proposal, or in "--No Solicitation" above in any material respect, or approval of the merger

9. by PECO Energy or Unicorn, if prior to obtaining its shareholder agreement:

described in

                  "* the party received an unsolicited superior proposal satisfying the conditions
                      "--No Solicitation" above, the advice of outside
                   "* the board of directors of the party determines in good faith, based upon  constitute  a breach of its to counsel, that failure to take action could reasonably be expected (a) withdraw    or modify its fiduciary obligations under applicable law and therefore it must                              the merger the merger,    (b) terminate approval or recommendation of the merger agreement and proposal, agreement and (c) enter into a definitive agreement for the competing 76

                "* the party has complied with its covenants described in -- No Solicitation" above,
                "* the party has paid in advance the required termination fee described in "--Termination Fees; Reimbursement of Expenses" below, and
               "* the  board of directors of the party approves and the party enters into an agreement providing for the implementation of the superior proposal.

Termination Fees; Reimbursement of Expenses PECO Energy PECO Energy must pay to Unicorn a termination fee of S250 million and reimburse Unicorn for its out-of pocket expenses actually incurred in connection with the merger agreement and the transactions contemplated by the merger agreement up to a limit of $15 million, if any of the following occur:

     "* PECO    Energy terminates the merger agreement as described above in paragraph 9 under
        "-Termination" above,
     "* Unicorn   terminates the merger agreement as described above in paragraph 8 under "--Termination" above, or
     "  any competing proposal for PECO Energy has been proposed or publicly disclosed and
        "  the merger agreement is terminated by (a) PECO Energy as described above in paragraph 2 under
           "-Termination" above, (b) either PECO Energy or Unicorn as described above in paragraph 6 under "-Termination" above or (c) Unicorn as described above in paragraph 7 under
           "-Termination" above for a willful breach or failure to perform, and
        "* within   18 months of termination PECO Energy enters into a definitive agreement to consummate or consummates any competing proposal.

In addition, PECO Energy must reimburse Unicorn (whether or not a termination fee-triggering event occurs) for its out-of-pocket expenses actually incurred in connection with the merger agreement and the transactions contemplated by the merger agreement up to a limit of $15 million, if

    "* either  PECO Energy or Unicom terminates the merger agreement as described above in paragraph 6 under "-Termination" above, or
    "* Unicorn    terminates the merger agreement as described above in paragraph 7 under "-Termination" above.

Unicorn Unicorn must pay to PECO Energy a termination fee of $250 million and reimburse PECO Energy for its out-of-pocket expenses actually incurred in connection with the merger agreement and the transactions contemplated by the merger agreement up to a limit of $15 million, if any of the following occur:

    "* Unicorn   terminates the merger agreement as described above in paragraph 9 under "-Termination" above,
    "* PECO    Energy terminates the merger agreement as described above in paragraph 8 under
       "-Termination" above, or
    "  any competing proposal for Unicorn has been proposed or publicly disclosed and the merger agreement is terminated by (a) Unicorn as described above in paragraph 2 under
          "-Termination" above, (b) either Unicorn or PECO Energy as described above in paragraph 6 under "-Termination" above, or (c) PECO Energy as described above in paragraph 7 under
          "-Termination" above for a willful breach or failure to perform, and 77

L__

• within 18 months of termination Unicorn enters into a definitive agreement to consummate or consummates any competing proposal.

In addition, Unicom must reimburse PECO Energy (whether or not a termination fee-triggering event occurs) for its out-of-pocket expenses actually incurred in connection with the merger agreement and the transactions contemplated by the merger agreement up to a limit of $15 million, if:

     "* either  PECO Energy or Unicom terminates the merger agreement as described above in paragraph 6 under "-Termination" above, or
     "* PECO     Energy terminates the merger agreement as described above in paragraph 7 under
        "-Termination" above.

Conduct of Business Pending the Merger Under the merger agreement, each of PECO Energy and Unicom has agreed that, prior to the completion of the merger, it will, and will cause its subsidiaries to, conduct its business in all material respects in the usual, regular and ordinary course in substantially the same manner as previously conducted and use all reasonable efforts to preserve intact its current business organization in all material respects, subject to prudent management of workforce and business needs, keep available the services of its current officers and key employees and keep its relationships to the end that its goodwill and ongoing business will be unimpaired in all material respects at the completion of the merger. In addition, each of PECO Energy and Unicom has agreed that, subject to certain exceptions, prior to the completion of the merger it and its subsidiaries will not, without the prior written consent of the other party, among other things: Dividends

• declare, set aside or pay any dividends on, or make any other distributions in respect of, any of its capital stock, other than dividends and distributions by a wholly owned subsidiary or regular quarterly cash dividends in accordance with past dividend policy Capital Stock

     "   split, combine or reclassify any of its capital stock or issue any other securities in respect of shares of its capital stock or acquire any shares of capital stock of it or its subsidiaries or any other of their securities or any rights, warrants or options to acquire any of these securities
      "  issue, deliver, sell or grant any shares of its capital stock, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any of these securities, or any "phantom" stock, "phantom" stock rights, stock appreciation rights or stock-based performance units, other than pursuant to existing options and plans Amendments to Governing Documents

• amend its certificate of incorporation, by-laws or other comparable charter or organizational documents Acquisitions

      "* acquire   or agree to acquire by merging or consolidating with, or by purchasing a substantial equity interest in or portion of the assets of, any business or any person
      "* acquire   or agree to acquire any material assets, except PECO Energy or its subsidiaries may acquire or otherwise invest in any assets, other than nuclear plants, so long as PECO Energy consults with Unicom concerning acquisitions or investments that involve an expenditure that, individually, is in excess of
         $50 million, or in the aggregate during this period, are in excess of $250 million
      "* in  the case of PECO Energy only, acquire or agree to acquire any nuclear plants (whether through AmerGen Energy Company LLC or otherwise) other than those nuclear plants in respect of which 78

PECO Energy or AmerGen has made written offers or has signed agreements as of the date of the merger agreement unless PECO Energy involves Unicorn for the purpose of ensuring that an acquisition will be consistent with a rate of nuclear generation acquisitions and growth that will not impair Exelon's ability to provide and maintain adequate resources and performance focus for the entire Exelon nuclear fleet and has obtained the express written consent of Unicorn, which consent shall not be unreasonably withheld Dispositions

• sell, lease, license or otherwise dispose of or subject to any lien any material properties or assets, other than sales of inventory and excess or obsolete assets in the ordinary course Indebtedness except in the ordinary course of business consistent with prior practice and other than in connection with a refinancing on commercially reasonable terms

    "* incur any indebtedness for borrowed money or guarantee any indebtedness of another person
    "* issue or sell any debt securities or warrants or other rights to acquire any debt securities
    "* guarantee any debt securities of another person
    "* enter into any "keep well" or other agreement     to maintain any financial statement condition of another person or enter into any arrangement having the economic effect of any of the foregoing
    "* make any   loans, advances or capital contributions to, or investments in, any other person Capital Expenditures make or agree to make any new capital expenditures that, individually, is in excess of $50 million or, in the aggregate, are in excess of $250 million, except to the extent made in order to ensure compliance with the rules and regulations or an order of the Nuclear Regulatory Commission or any other governmental entity or to ensure compliance with the terms of any permit Employee Matters
 "  except as required by law or contemplated by the terms of any benefit plan, employment arrangement or collective bargaining agreement, enter into, adopt or amend in any material respect or terminate any benefit plan, employment arrangement or collective bargaining agreement
 " except in the ordinary course of business consistent with past practice or as contemplated in the merger agreement or by the terms of any contract the existence of which does not violate the merger agreement, increase the compensation or benefits of any current or former employee, officer or director or pay any benefit or amount not required by a plan or arrangement as in effect on the date of the merger agreement to any such person Taxes
 . make any material tax election or settle or compromise any material tax liability or refund Accounting

• make any material change in accounting methods, principles or practices, except as required by a change in generally accepted accounting principles Public Utility Holding Company Act engage in any activities which would cause a change in its status under the Public Utility Holding Company Act, or that would impair its ability to claim an exemption as of right under Rule 2 of the Securities and Exchange Commission regulations implementing the Act, other than the application to the Securities and Exchange Commission under the Act contemplated by the merger agreement 79

Power PurchaseAgreements enter into or commit to any power purchase agreement which requires the prior approval of the board of directors or a committee thereof of PECO Energy Oth er Actions

• authorize any of, or commit or agree to take any of, the foregoing actions PECO Energy Transition Bonds Notwithstanding any of the foregoing, PECO Energy is not restricted from:

     "  issuing through PECO Energy Transition Trust, a subsidiary of PECO Energy, or through any other special purpose entity which is a subsidiary of PECO Energy, transition bonds in accordance with Pennsylvania's electric and natural gas restructuring legislation in an aggregate principal amount of up to $1 .000,000,000,
     "* selling, in connection with the issuance of transition bonds, all or any part of the property or rights necessary to secure the transition bonds, and
     "  using the proceeds from the transition bonds to:
        "* repurchase  of up to $500,000,000 of PECO Energy common stock as contemplated by the merger agreement,
        "* repay  outstanding debt of PECO Energy, or
        "* purchase  PECO Energy preferred stock.

Other Agreements Each of PECO Energy and Unicorn has made certain additional agreements in the merger agreement. The following summarizes the more significant of these agreements: Regulator3y Approvals PECO Energy and Unicorn have agreed to use reasonable best efforts to obtain all necessary consents of all governmental entities necessary or advisable to complete the merger. W'orkforce Matters; Stock Plans PECO Energy and Unicorn have made various agreements relating to workforce matters, employee benefits and existing stock plans. See "The Merger-Workforce and Employee Benefit Matters" and "The Merger-Effect on Awards Outstanding Under Stock Plans" in this Chapter I. Indemnnification Exelon has agreed to honor all of PECO Energy's and Unicom's obligations to indemnify the current and former directors and officers of PECO Energy or Unicorn and to maintain their current directors' and officers' liability insurance policies. See "The Merger-Indemnification and Insurance" in this Chapter 1. Stock Exchange Listing PECO Energy and Unicorn have agreed to use all reasonable efforts to cause the Exelon common stock to be issued in the merger and under the stock plans to be approved for listing on the New York Stock Exchange. 80

Rights Agreement Unicom's board of directors has agreed to take all action requested by PECO Energy in order to render Unicorn's shareholder rights plan inapplicable to the merger and the other transactions contemplated by the merger agreement. Tax Treatment Each of PECO Energy, Unicorn and Exelon has agreed not to take any action that would prevent, or would be reasonably likely to prevent, the merger or the second step merger from constituting a tax-free transaction. Reorganizationand Amendment PECO Energy and Unicorn have agreed to negotiate in good faith and enter into an amendment providing for necessary changes to the merger agreement if PECO Energy decides to implement, prior to the completion of the merger, a reorganization creating a holding company to hold PECO Energy's businesses. Common Stock Repurchase PECO Energy and Unicorn have each agreed to use commercially reasonable best efforts to repurchase specified amounts of their common stock prior to the completion of the merger at prevailing market prices to the extent possible and to consult on a regular basis and cooperate in connection with these repurchases. Unicorn intends to repurchase $1.0 billion of its common stock, and PECO Energy intends to repurchase $500 million of its common stock. These repurchases will be in addition to other repurchases permitted by the merger agreement (other than repurchases described in the next paragraph). Neither PECO Energy nor Unicorn shall make these repurchases if they are reasonably likely to result in the failure of PECO Energy and Unicorn to receive the required tax opinions or in the failure of the merger to be treated as a purchase of Unicorn by PECO Energy under generally accepted accounting principles. Prior to the completion of the merger, Unicorn will purchase the minimum number of shares of Unicorn common stock necessary in order that, after giving effect to the repurchases described in the previous paragraph, the merger and the other transactions contemplated by the merger agreement are treated as a purchase of Unicom by PECO Energy under generally accepted accounting principles. No Solicitation PECO Energy and Unicorn have agreed not to take action to solicit or encourage an offer for an alternative acquisition transaction involving either company of a nature defined in the merger agreement. See "--No Solicitation" above. Amendment; Extension and Waiver Subject to applicable law:

    "* the merger agreement may be amended by the parties at any time before or after the merger agreement has been adopted by the PECO Energy shareholders or Unicorn shareholders, except that after the merger agreement has been adopted by PECO Energy shareholders or Unicorn shareholders, no amendment may be made that by law requires further approval by PECO Energy shareholders or Unicorn shareholders without further approval of those shareholders, and
    " at any time prior to the completion of the merger, a party may, by written instrument signed on behalf of that party, extend the time for performance of the obligations of any other party to the merger agreement, waive inaccuracies in representations and warranties of any other party contained in the merger agreement or in any related document and except as provided in the previous paragraph, waive compliance by any other party with any agreements or conditions in the merger agreement.

81

PECO Energy and Unicomr will promptly notify their shareholders of any amendment to the merger agreement or of any waiver of the merger agreement through a press release and the filing of a Current Report on Form 8-K with the Securities and Exchange Commission. In addition, in the case of a material amendment or waiver prior to adoption of this agreement by the shareholders, Exelon will file with the Securities and Exchange Commission a post-effective amendment to the registration statement in which this joint proxy statement/prospectus is included and PECO Energy and Unicorn will distribute to shareholders a copy of the amendment or waiver. Expenses Except as described in "--Termination Fees; Reimbursement of Expenses" above, whether or not the merger is completed, all fees and expenses incurred in connection with the merger and the other transactions contemplated by the merger agreement will be paid by the party incurring the fees or expenses, except that PECO Energy and Unicom will share equally the expenses incurred in connection with filing, printing and mailing of this proxy statement/prospectus and the registration statement of which it is a part. Representationsand Warranties The merger agreement contains customary representations and warranties by each of PECO Energy and Unicorn relating to, among other things:

    "* corporate organization and similar corporate matters,
    "* subsidiaries and equity interests,
    "* capital structure,
    "* authorization, execution, delivery, performance and enforceability of the merger agreement,
     "* required shareholder vote,
     "* satisfaction of certain state takeover statutes' requirements,
     "* amendment of its shareholder rights agreement (Unicorn only),
     "* no conflicts relating to the merger agreement and the transactions contemplated thereby,
     "* required consents, approvals, orders and authorizations of governmental authorities relating to the merger agreement and the transactions contemplated thereby,
     "* documents filed with the Securities and Exchange Commission, the accuracy of information contained therein and the absence of undisclosed liabilities,
     "* the accuracy of information supplied in connection with this proxy statement/prospectus and the registration statement of which it is a part,
     "* absence of material changes or events,
     "* filing of tax returns and payment of taxes,
     "* absence of changes in benefit plans,
     "* matters relating to the Employee Retirement Income Security Act of 1974 and excess parachute payments,
     "* pending or threatened material litigation,
     "* compliance with applicable laws,
     "* payment of fees of brokers, investment bankers and financial advisors, 82

     "* receipt of fairness opinions from financial advisors,
     "* year 2000 matters,
     "* environmental matters,
     "* labor and employee relations matters,
     "* operations of nuclear power plants,
    "* ownership of shares of other party,
     "* regulation as a utility,
    "* certain contracts and no defaults,
    "* title to properties,
    "* intellectual property,
    "* hedging, and
    "* regulatory proceedings.

Exelon Articles of Incorporation Upon the completion of the merger, the articles of incorporation of Exelon will be the articles of incorporation of the surviving corporation. For a summary of certain provisions of the Exelon articles of incorporation and the associated rights of Exelon shareholders, see "Comparison of Rights of Shareholders" in this Chapter I. Exelon By-laws Upon the completion of the merger, the by-laws of Exelon will, until changed or amended, be the by-laws of the surviving corporation and will be amended as described in "The Merger-Board of Directors and Management of Exelon After the Merger" in this Chapter I. For a summary of certain provisions of the Exelon by-laws and the associated rights of Exelon shareholders, see "Comparison of Rights of Shareholders" in this Chapter I. 83

COMPARATIVE STOCK PRICES AND DIVIDENDS PECO Energy common stock is listed for trading on the New York Stock Exchange under the symbol "PE" and Unicorn common stock is listed for trading on the New York Stock Exchange under the symbol "UCM." The following table sets forth, for the periods indicated, dividends and the high and low sales prices per share of PECO Energy common stock and Unicorn common stock on the New York Stock Exchange Composite Transaction reporting system. For current price information, you are urged to consult publicly available sources. PECO Energy Common Stock Unicom Common Stock Dividends Dividends Calendar Period High Low Declared High Low Declared 1997 First Quarter .................... $26.375 $20.000 $0.45 $28.250 $19.250 $0.40 Second Quarter .................. 21.125 18.750 0.45 24.250 18.500 0.40 Third Quarter ................... 24.313 20.750 0.45 25.625 21.000 0.40 Fourth Quarter ................... 25.125 21.438 0.45 30.750 18.500 0.40 1998 First Quarter .................... 24.688 18.875 0.25 35.813 30.000 $0.40 Second Quarter .................. 30.625 21.188 0.25 36.938 32.563 0.40 Third Quarter ................... 36.750 28.500 0.25 38.000 33.375 0.40 Fourth Quarter ................... 42.188 36.500 0.25 41.188 36.813 0.40 1999 First Quarter .................... 46.438 35.250 0.25 39.250 33.563 0.40 Second Quarter .................. 50.500 41.875 0.25 42.813 35.500 0.40 Third Quarter ................... 44.188 35.875 0.25 42.188 35.625 0.40 Fourth Quarter ................... 38.813 31.500 0.25 39.563 30.938 0.40 2000 First Quarter .................... 43.688 33.000 0.25 41.688 32.000 0.40 Second Quarter (through May 11, 2000) ................. 45.750 36.563 0.25 42.813 36.250 0.40 N/A-Not Applicable The following table sets forth the high and low sales prices per share of PECO Energy common stock and Unicorn common stock on the New York Stock Exchange Composite Transaction reporting system on September 22, 1999, the last full trading day before the public announcement of the merger agreement, on January 6, 2000, the last full trading day prior to the public announcement of the amendment of the merger agreement, and on May 11, 2000, the latest trading day before the date of this proxy statement/prospectus: High Low High Low PECO Energy Unicom CommonStock CommonStock September 22, 1999 ................................... $39.000 $35.500 $37.250 $36.563 January 6, 2000 ...................................... 36.000 34.375 34.000 33.375 M ay 11, 2000 ....................................... 45.750 44.375 42.813 41.250 84

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS The historical consolidated financial statements of Unicorn have been adjusted to give effect to the annualized continuing impacts of the sale of ComEd's fossil generating plants and the annualized effects of Unicorn's issuance of securitization notes and related use of proceeds. CornEd completed the sale of its fossil generating plants on December 15, 1999. The historical consolidated financial statements of PECO Energy have been adjusted to give effect to its use of the proceeds from its securitization of stranded costs. The unaudited pro forma financial statements do not give effect to the estimated cost savings and revenue enhancements as a result of the merger or the costs to achieve these savings and revenue enhancements or one-time merger-related costs. The Unicorn and PECO Energy pro forma adjustments and the merger are reflected in the unaudited combined condensed pro forma balance sheet as if they occurred on March 31, 2000. The unaudited pro forma combined condensed statement of income for the three months ended March 31, 2000 and for the year ended December 31, 1999 assume that these transactions were completed on January 1, 1999. The following unaudited pro forma combined condensed financial statements have been prepared to reflect the acquisition of Unicorn by PECO Energy under the purchase method of accounting. Under the purchase method of accounting, tangible and identifiable intangible assets acquired and liabilities assumed are recorded at their current fair values. The excess of the purchase price, including estimated fees and expenses related to the merger, over the net assets acquired is classified as goodwill on the accompanying unaudited pro forma combined condensed balance sheet. For pro forma adjustment purposes, the estimated fair values of the assets acquired and liabilities assumed are equal to book value and are subject to final valuation adjustments which may cause certain of the intangibles to be amortized over a shorter life than the goodwill amortization period of 40 years. The unaudited pro forma combined condensed financial statements do not reflect potential adjustments to Unicorn's assets and liabilities to reflect fair value, as will be required upon consummation of the merger under purchase accounting. These adjustments to the book value of assets and liabilities could be significant, particularly with respect to Unicorn's nuclear generating stations. The fair value of the nuclear generating stations is expected to be determined considering, among other things, independent appraisals or expected cash flows. To the extent the fair value of Unicorn's nuclear generating stations is ultimately determined to be less than the March 31, 2000 book value of $6.9 billion, additional goodwill and/or an identifiable intangible asset will be recorded. The results of the fair value determination are not currently known. However, the ultimate determination is not expected to have a dilutive effect on results of operations. The following unaudited pro forma financial statements should be read in conjunction with the consolidated historical financial statements and related notes of PECO Energy and Unicorn, which are included in the PECO Energy and Unicorn Quarterly Reports on Form 10-Q for the quarter ended March 31, 2000 and Annual Reports on Form 10-K for the year ended December 31, 1999. PECO Energy has provided all the information included below regarding PECO Energy and its subsidiaries. Unicorn has provided all the information included below regarding Unicorn and its subsidiaries. Neither PECO Energy nor Unicorn assumes any responsibility for the accuracy or completeness of the information provided by the other party. The following unaudited pro forma financial statements are for illustrative purposes only. They are not necessarily indicative of the financial position or operating results that would have occurred had these transactions been completed on January 1, 1999 or March 31, 2000, as assumed above; nor is the information necessarily indicative of future financial position or operating results. Results of operations and financial position in the first year after consummation could differ significantly from the unaudited pro forma combined condensed financial statements, which are based on past operations. Future operations will be affected by various factors including operating performance, energy market developments and other matters. The historical financial statements of PECO Energy included in the accompanying pro forma combined condensed financial statements for the three months ended March 31, 2000 are unaudited. The December 31, 1999 historical financial statements of PECO Energy and Unicorn and the March 31, 2000 historical financial statements of Unicorn were derived from audited financial statements but do not include all disclosures required by GAAP. You should read the financial information in this section along with PECO Energy's and Unicorn's historical consolidated financial statements and accompanying notes incorporated by reference in this proxy statement/prospectus. See "Where You Can Find More Information" on page 154. 85

Unaudited Pro Forma Condensed Statement of Income (Millions Except Per Share Data) For the Three Month Period Ended March 31, 2000 PECO Energy PECO Energy Prior to PECO Transition Bond Merger Energy Pro Forma Pro As Filed Adjustments(I) Forma Operating Revenues ........................................ $1,343 $- $1,343 Operating Expenses Fuel and Energy Interchange ............................. $ 457 $- $ 457 Operation and Maintenance .............................. 390 - 390 Depreciation and Amortization ............................ 79 - 79 Goodwill Amortization .................................. 1 - 1 Taxes Other Than Income Taxes ........................... 67 - 67 Total Operating Expenses ............................ $ 994 $- $ 994 Operating Income ......................................... $ 349 $- $ 349 Other Income and Deductions Interest Expense ....................................... $ (104) $ (24) $ (128) Preferred and Preference Stock Dividends .................... (2) - (2) O ther, net ........................................... 19 - 19 Total Other Income and Deductions ..................... $ (87) $(24) $ (111) Income Before Income Taxes and Extraordinary Item ............... $ 262 $ (24) $ 238 Income Tax Expense ....................................... 97 (10) 87 Income Before Extraordinary Item ............................. $ 165 $ (14) $ 151 Preferred Stock Dividends ................................... $ 3 $- $ 3 Income Before Extraordinary Item per Share ...................... $ 0.89 Income Before Extraordinary Item per Share-Diluted .............. $ 0.89 Average Basic Shares Outstanding ............................. 181.4 Average Diluted Shares Outstanding ........................... 182.6 86

Unaudited Pro Forma Combined Condensed Statement of Income (Millions Except Per Share Data) For the Three Month Period Ended March 31, 2000 PECO Energy Prior to Merger Merger Unicorn ProForma Exelon ProForma as filed Adjustments ProForma Operating Revenues ................................ $1,343 $1,658 $ (14)(7) $2,987 Operating Expenses Fuel and Energy Interchange ...................... $ 457 $ 326 $ (14)(7) $ 769 Operation and Maintenance ....................... 390 549 - 939 Depreciation and Amortization ..................... 79 374 - 453 Goodwill Amortization .......................... 1 1 14 (8) 16 Taxes Other Than Income Taxes ................... 67 138 - 205 Total Operating Expenses ..................... $ 994 $1,388 $- $2,382 Operating Income .................................. $ 349 $ 270 $(14) $ 605 Other Income and Deductions Interest Expense ............................... $ (128) $ (135) $- $ (263) Preferred and Preference Stock Dividends ............ (2) (9) (3)(9) (14) Other, net ..................................... 19 103 - 122 Total Other Income and Deductions ............. $ (111) $ (41) $ (3) $ (155) Income Before Income Taxes and Extraordinary Item ........ $ 238 $ 229 $ (17) $ 450 Income Tax Expense ................................ 87 34 - 121 Income Before Extraordinary Item ...................... $ 151 $ 195 $ (17) $ 329 Preferred Stock Dividends ............................ $ 3 $ (3)(9) $ Income Before Extraordinary Item per Share .............. $ 1.02 $ 1.04 Income Before Extraordinary Item per Share-Diluted ....... $ 1.01 $ 1.04 Average Basic Shares Outstanding ...................... 191.0 315.1 Average Diluted Shares Outstanding .................... 191.8 317.1 87

Unaudited Pro Forma Condensed Statement of Income (Millions Except Per Share Data) For the Year Ended December 31, 1999 PECO Energy PECO PriorEnergy to Securitization Pro Forma Merger PECO Energy Pro Forma As Filed Adjustments(l)

                                                                                  $5,437                     $5,437 Operating Revenues ................................

Operating Expenses 2,145 2,145 Fuel and Energy Interchange ...................... 1,384 1,384 Operation and Maintenance ....................... 237 237 Depreciation and Amortization ..................... Goodwill Amortization ........................... 262 262 Taxes Other Than Income Taxes ................... 4,028 4,028 Total Operating Expenses ..................... 1,409 1,409 Operating Income .................................. Other Income and Deductions (504) (396) (108) Interest Expense ............................... 12 (24) (36) Other, net .................................... (432) (96) (528) Total Other Income and Deductions ............. 977 (96) 881 Income Before Income Taxes and Extraordinary Item ........ 320 358 (38) Income Tax Expense ................................

                                                                                   $ 619         $(58)        $ 561 Income Before Extraordinary Item ......................
                                                                                   $     12      $ (1)        $     11 Preferred Stock Dividends ............................
                                                                                   $ 3.10 Income Before Extraordinary Item per Share ..............
                                                                                   $ 3.08 Income Before Extraordinary Item per Share-Diluted .......

196.3 Average Basic Shares Outstanding ...................... 197.6 Average Diluted Shares Outstanding .................... See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements. 88

I Unaudited Pro Forma Condensed Statement of Income (Millions Except Per Share Data) For the Year Ended December 31, 1999 Unicom Unicorn Unieom Fossil Sale Securitization Prior to Unicorn Pro Forma Pro Forma Merger As Filed Adjustments(2) Adjustments(3) Pro Forma Operating Revenues $6,848 $6,848 Operating Expenses Fuel and Energy Interchange .................. 1,549 257 1,806 Operation and Maintenance ................... 2,428 (271) 2,157 Depreciation and Amortization ................ 843 26 113 982 Goodwill Amortization ...................... Taxes Other Than Income Taxes ............... 508 (16) 492 5,328 (4) 113 Total Operating Expenses ................ Operating Income ............................. 4 (113) Other Income and Deductions Interest Expense ........................... (564) 20 (544) Preferred and Preference Stock Dividends ........ (53) 10 (43) O ther, net ................................ 1 1 Total Other Income and Deductions ......... (616) 30 30 (L86) Income Before Income Taxes and Extraordinary Item ... 904 4 (83) 825 Income Tax Expense ........................... 307 4 (37) 274 Income Before Extraordinary Item ................. $ 597 $ (46) $ 551 Income Before Extraordinary Item per Share .......... $ 2.75 Income Before Extraordinary Item per Share-Diluted .. $ 2.74 Average Basic Shares Outstanding ................. 217.3 Average Diluted Shares Outstanding ................ 218.1 See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements. 89

Unaudited Pro Forma Combined Condensed Statement of Income (Millions Except Per Share Data) For the Year Ended December 31, 1999 PECO Energy Unicorn Prior to Prior to Merger Merger Merger Pro Forma Exelon Pro Forma Pro Forma Adjustments Pro Forma Operating Revenues ........................ $5,437 $6,848 $(60)(7) $12,225 Operating Expenses Fuel and Energy Interchange .............. 2,145 1,806 (60)(7) 3,891 1,384 2,157 3,541 Operation and Maintenance ............... Depreciation and Amortization ............. 237 982 (212)(6) 1,007 57 (8) 57 Goodwill Amortization ................... 262 492 - 754 Taxes Other Than Income Taxes ............ Total Operating Expenses ............. 4,028 5,437 (215) 9,250 Operating Income .......................... 1,409 1,411 155 2,975 Other Income and Deductions Interest Expense ........................ (504) (544) (1,048) (43) (18)(9) (61) Preferred and Preference Stock Dividends ..... (24) 1 7 (9) (16) O ther, net ............................ (528) (586) (11) (1,125) Total Other Income and Deductions ...... Income Before Income Taxes and Extraordinary 881 825 144 1,850 Item . . . . . . . . . . . . . .. .. . .. . .. . . . . . . . .. .. 320 274 84 678 Income Tax Expense ........................

                                                                            $ 561      $ 551         $ 60      $ 1,172 Income    Before Extraordinary Item ..............

Preferred Stock Dividends .................... $ 11 $(11)(9)

                                                                                                               $    3.72 Income Before Extraordinary Item per Share ......

Income Before Extraordinary Item per Share

                                                                                                               $    3.70 D iluted ................................

315.1 (5) Average Basic Shares Outstanding .............. 317.1 Average Diluted Shares Outstanding ............ See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements. 90

Unaudited Pro Forma Condensed Balance Sheet (In Millions) As of March 31, 2000 PECO PECO PECO Energy Energy Energy Securitization Prior to As Pro Forma Merger Filed Adjustments(l) Pro Forma ASSETS Utility Plant Plant ........................................... $ 7,918 $ - $ 7,918 Accumulated Provision for Depreciation ................. 3,125 - 3,125

                                                                                 $ 4,793      $    -        $ 4,793 Nuclear Fuel, net ..................................                             287         -             287
                                                                                 $ 5,080      $   -        $ 5,080 Current Assets Cash and Temporary Cash Investments ..................                      $     110    $1,000       $ 1,110 Accounts Receivable, net ............................                             594         -             594 Inventories, at average cost ..........................                           176        -              176 Other Current Assets ...............................                              204         -             204
                                                                                 $ 1,084     $1,000        $ 2,084 Deferred Debits and Other Assets Regulatory Assets .................................                         $ 6,050     $ -           $ 6,050 Goodwill .........................................                                117        -              117 Investments and Other Property, net ....................                          568        -              568 Other ...........................................                                 132        -              132
                                                                                 $ 6,867     $ -           $ 6,867 Total .......................................                          $13,031     $1,000        $14,031 CAPITALIZATION AND LIABILITIES Capitalization Common Stock Equity ..............................                         $ 1,895      $ -           $ 1,895 Preferred and Preference Stock ........................                          193        -               193 Company Obligated Mandatorily Redeemable Preferred Securities .....................                         128        -               128 Long-Term Debt ..................................                              5,895       1,000          6,895
                                                                                $ 8,111      $1,000       $ 9,111 Current Liabilities Notes Payable, Bank ...............................                         $     135   $ -           $     135 Accounts Payable .................................                                251        -              251 Other Current Liabilities ............................                           790        -               790
                                                                                $ 1,176     $ -           $ 1,176 Deferred Credits and Other Liabilities Deferred Income Taxes .............................                         $ 2,417     $ -           $ 2,417 Unamortized Investment Tax Credits ...................                           282        -               282 Nuclear Decommissioning Liab. For Retired Plants ...........-.

O ther .......................................... 1,045 - 1,045

                                                                                $ 3,744     $ -           $ 3,744 Total .......................................                          $13,031     $1,000        $14,031 See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements.

91

Unaudited Pro Forma Combined Condensed Balance Sheet (In millions) As of March 31, 2000 PECO Energy Prior to Merger Exelon Merger Pro Unicorn Pro Forma Pro Forma Forma As Filed Adjustments Balance ASSETS Utility Plant $19,220 Plant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,918 $25,290 $(13,988)(6) 3,125 13,988 (13,988)(6) 3,125 Accumulated Provision for Depreciation ..........

                                                                                      $ 4,793    $11,302     $     -          $16,095 287        797                        1,084 Nuclear Fuel, net ...........................                                                           $      --
                                                                                      $ 5,080    $12,099                      $17,179 Current Assets                                                                         $ 1,110    $    717    $    (500)(4)

Cash and Temporary Cash Investments ........... (500)(1) (466)(10) $ 361 594 1,223 1,817 Accounts Receivable, net ..................... 176 250 426 Inventories, at average cost .................... 204 1,905 2,109 Other Current Assets ......................... $ 4,713

                                                                                      $ 2,084    $ 4,095     $ (1,466)

Deferred Debits and Other Assets $ 6,050 $ 7,635 Regulatory Assets ........................... $ 1,585 2,453 117 43 2,293 (6) G oodw ill ................................. 568 3,289 3,857 Investments and Other Property, net ............. 132 45 177 O ther . .. .. . . .. .. . . . . .. . .. .. . . . . . . .. . .. . ..

                                                                                      $ 6,867     $ 4,962    $ 2,293           $14,122
                                                                                      $14,031     $21,156     $      827       $36,014 T otal . . .. .. . .. . .. . . . . . . . .. . .. .. . . . . .. .

CAPITALIZATION AND LIABILITIES Capitalization Common Stock Equity ....................... $ 1,895 $ 3,932 $ (500)(4) (500)(1) (466)(10) 2,293 (6) $ 6,654 195 Preferred and Preference Stock ................. 193 2 - Company Obligated Mandatorily 128 478 Redeemable Preferred Securities .............. 350 13,860 6,895 6,965 Long-Term Debt ............................ $21,187

                                                                                       $ 9,111    $11,249     $      827 Current Liabilities                                                                    $     135  $     445   $      -         $     580 Notes Payable, Bank .........................                                          251        478                          729 Accounts Payable ...........................                                           790      1,854                       2,644 Other Current Liabilities ......................                                                        $
                                                                                       $ 1,176    $ 2,777            -         $ 3,953 Deferred Credits and Other Liabilities                                                 $ 2,417     $ 2,464    $      --
                                                                                                                                $ 4,881 Deferred Income Taxes .......................                                          282        477                          759 Unamortized Investment Tax Credits .............

Nuclear Decommissioning Liability For Retired 1,275 1,275 Plants . .. . .. .. . .. . . . . . . . .. .. . .. . . . . .. .. . 1,045 2,914 3,959 O ther . .. .. . . . . . . . . . . .. .. . .. . . . . .. . .. . . . . .

                                                                                                   $ 7,130     $     -8         $10,874
                                                                                        $ 3,744
                                                                                        $14,031    $21,156     $      827       $36,014 Total .......          ...    ...........        ...........           .

See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements. 92

Notes to Unaudited Pro Forma Combined Condensed Financial Statements The effects of the use of proceeds from the securitization of stranded costs by PECO Energy on the pro forma combined condensed statements of income were as follows (in millions): Year Ended Three Months Ended December 31, 1999 March 31, 2000 Transition Bond Interest Expense ............ $318 $ 80 Interest Savings Associated with Higher Cost Debt that was Repurchased .............. (129) (32) Transition Bond Interest Expense Included In Historical Interest Expense ............... (179) (57) Interest Savings Included in Historical Interest Expense ............................ 98 33

                                                                                              $108                      $ 24 PECO Energy Obligated Mandatorily Redeemable Preferred Securities ($221 million
                 @ 9% ) .............................                                         $.(20)                   $ (5)

Interest Savings Included in Historical Financial Statem ents .......................... 8 5

                                                                                              $(12)

PECO Preferred Stock Dividends ($37 million @ 6.12%) ................. $ (2) $ (1) PECO Preferred Stock Dividend Savings Included in Historical Financial Statements. . . 1 1

                                                                                             $ (1)

In May 2000, PECO Energy, through a wholly owned subsidiary, issued an additional $1.0 billion of transition bonds. Approximately $500 million of these proceeds were used to settle a forward share repurchase agreement that resulted in the repurchase of approximately 12.0 million shares of PECO Energy common stock.

2. The Unicom fossil sale Pro Forma Adjustments for the Income Statement for the Year Ended December 31, 1999 reflect the continuing impact of the sale of ComEd's fossil generating plants which was completed in December 1999.

"  Fuel and Energy Interchange: Reflects the elimination of fossil fuel expense and the replacement impact of purchasing power under the power purchase agreements entered into with the purchaser of the fossil assets at the time of the fossil sale, as provided below (in millions):

Fossil Fuel Expense ............................................. $(616) Energy Interchange Expense ...................................... 873 Total ........................................................ $ 257 " Operation and Maintenance: Reflects the elimination of the fossil generating plants operation and maintenance expenses. " Depreciationand Amortization: Reflects the following (in millions): Elimination of Fossil Plant Depreciation ............................. (73) Additional Amortization of Regulatory Assets ......................... 99 Total ......... ... ............ .......... ... ... .......... . $ 26 93

The Unicorn pro forma adjustments reflecting the sale of ComEd's fossil generating plants include increased regulatory asset amortization because those adjustments on a prior-to-merger, pro forma basis would result in ComEd's earnings exceeding the earnings cap provision of the Illinois Public Utilities Act. Taxes Other Than Income Taxes: Reflects the elimination of real estate and payroll taxes related to the ownership of the fossil plants. The pro forma adjustments do not reflect the income effects of the reinvestment of cash proceeds received from the fossil sale.

3. Reflects Unicorn's purchase, at prevailing market prices, of approximately 26.3 million shares of Unicorn common stock that were subject to certain forward purchase contracts at December 31, 1999. During 1999, Unicorn entered into forward purchase arrangements with financial institutions for the repurchase of approximately 26.3 million shares of Unicorn common stock. The repurchase arrangements were settled in January 2000 on a physical (i.e. shares) basis. Effective January 2000, the share repurchases have reduced outstanding shares and common stock equity. Prior to the settlement, the repurchase arrangements were recorded as a receivable on the Consolidated Balance Sheet of Unicorn based on the aggregate market value of the shares deliverable under the arrangements.

In addition, reflects adjustments to net interest expense and preferred and preference stock dividends related to the use of securitization proceeds as follows (in millions): Pro forma adjustment to eliminate historical interest expense associated with higher cost debt that was repurchased ................................................. $(20) Pro forma adjustment to eliminate historical dividend provisions associated with higher cost preferred and preference stock that was repurchased .................... $(10) The Unicorn Securitization pro forma adjustments include increased regulatory asset amortization because the those adjustments on a prior-to-merger, pro forma basis would result in ComEd's earnings exceeding earnings cap provision of the Illinois Public Utilities Act.

4. Reflects the payment of the cash portion of the merger consideration to Unicom common shareholders.

5. Reflects issuance of Exclon shares in exchange for PECO Energy and Unicorn common stock net of shares which were repurchased by PECO Energy and Unicom as follows:

PECO Pro Forma Energy Unicorn Exelon (Shares in 000's) Actual shares outstanding at March 31, 2000 ........ 181,454 177,647 Shares repurchased-Notes (1) and (10) ............ (11,954) (11,247) Remaining shares to be exchanged ............... 169,500 166,400 Exchange factor ............................. 1.0 .875 Remaining shares to be exchanged ............... 169,500 145,600 315,100

6. A pro forma adjustment has been made to recognize estimated goodwill in connection with the merger.

The goodwill represents the excess of the purchase consideration of $5.8 billion, including PECO Energy's estimated transaction costs resulting from the merger, over the book value of Unicorn's assets and liabilities at March 31, 2000. The adjustment reflects the merger consideration including approximately 145.6 million shares of Exelon Common Stock at a price of $35.89 based on the average closing price of PECO Energy Common Stock between January 3 and 12, 2000. PECO Energy's transaction costs of approximately $32.5 million represent the estimated costs to be incurred for the merger that meet the requirements for inclusion in the purchase price. 94

For purposes of the pro forma financial statements the excess of cost over fair value of net assets acquired resulting from the preliminary purchase price is assumed to be as follows (in millions): Pro Forma Purchase Price ........................................

                                                                                                                 $5,759 Less: Pro Forma Historical Net Book Value of Assets Acquired (as of March 31, 2000) .........................

3,466 Excess of Purchase Price Over Net Book Value of Assets Acquired (Goodwill) ..................................

                                                                                                                 $2,293 Actual goodwill recorded upon consummation will consider the fair value of Unicom's assets and liabilities at that future date, including the fair value determination of nuclear generating stations, and may differ significantly from the amount recorded in these pro forma financial statements. The fair value analysis of Unicorn's assets and liabilities has not been completed. The following table sets forth preliminary estimates of potential additional purchase accounting adjustments (in millions):

Utility Plant .................................................

                                                                                                              $(5,300)

Pension Benefits ..............................................

                                                                                                                $.650 Post-retirement Benefits ........................................

250 Long-term Debt .............................................. Deferred Taxes .............................................. 150 1,700 Intangible A sset .............................................. 1,000 G oodw ill ................................................... 1,550 "UtilityPlant: Reflects the preliminary fair value analyses of ComEd's nuclear stations based on discounted cash flows. The preliminary analyses indicated fair value estimates ranging from $300 million to $3.0 billion. The analyses are significantly affected by assumptions made regarding nuclear plant capacity factors, operating costs and the expected market price for electricity. The $5.3 billion adjustment to utility plant reflects the difference between the $1.6 billion midpoint of the range and the $6.9 billion book value of the nuclear stations as of March 31, 2000. The $5.3 billion reduction to utility plant is estimated to reduce nuclear depreciation expense by approximately $225 million annually based on 1999 nuclear depreciation rates. The final allocation of the purchase price will be dependent on estimates of future capacity factors, operating costs and the expected market price for electricity at the time of the closing and may consider independent appraisals as well.

"   Pension Benefits and Post-Retirement Obligations: Reflects elimination of unrecognized net actuarial gains, prior service costs and transition obligations at March 31, 2000. Final allocation amounts may differ largely due to discount rates at the time of closing. The adjustments will increase pension benefits and post retirement benefit expense over average periods of 14 years and 4 years, respectively, based on actuarial estimates.
" Long-Term Debt: Represents the adjustment of long-term debt including transitional trust notes to fair value at March 31, 2000.         The final fair value determination will be based on prevailing market interest rates at the time of closing. The adjustment will be amortized over the remaining life of the individual debt issues, which average six years.

"* Intangible Asset: Represents the estimated recovery of above market plant costs through regulated cash flows over the period 2000-2006, pursuant to stranded cost recovery provisions of the Illinois Public Utilities Act. Preliminary estimates of above market regulated cash flows available for stranded cost recovery during the period range from $500 million to $1.5 billion, resulting in a midpoint estimate of $1 billion. The intangible asset will be amortized over the 2000-2006 revenue recovery period and amortization amounts will vary by year based on annual regulated cash flows. " Goodwill: Represents additional goodwill resulting from the preliminary adjustments reflected above, to be amortized over 40 years. 95

on Unicorn's books in This adjustment also includes the elimination of accumulated depreciation reflected accepted accounting principles. The Merger accordance with purchase accounting as prescribed by generally result of the the Year Ended December 31, 1999, as a Pro Forma Adjustments for the Income Statement for asset include a reversal of the increased regulatory increased merger pro forma common stock equity balance, discussed in Notes 2 and 3. amortization related to the Unicorn pro forma adjustments transactions between PECO Energy and

7. Reflects the elimination of purchased power and off-system sales Unicorn.

8. Reflects amortization of goodwill over a 40-year period.

dividends and interest on PECO Energy

9. Reflects the reclassification of PECO Energy preferred stock presentation.

obligated mandatorily redeemable preferred securities for consistent outstanding common shares and

10. Reflects the repurchase of approximately $466 million of Unicom's prior to closing. In the first approximately $500 million of PECO Energy's outstanding common shares the approximately $1.0 billion quarter of 2000, Unicorn repurchased approximately $534 million of common share repurchase required by the merger agreement.

96

DESCRIPTION OF EXELON CAPITAL STOCK The following summary of the capital stock of Exelon is subject in all respects to applicable provisions of the Business Corporation Law of the Commonwealth of Pennsylvania and the Exelon articles of incorporation. Exelon is a Pennsylvania corporation. See "Comparison of Rights of Shareholders" in this Chapter I and "Where You Can Find More Information" on page 154. General The total authorized shares of capital stock of Exelon consist of (1) 600,000,000 shares of common stock, no par value and (2) 100,000,000 shares of preferred stock, no par value. At the close of business on May 12, 2000, 100 shares of Exelon common stock were issued and outstanding, all of which were owned by PECO Energy, and no shares of Exelon preferred stock were issued and outstanding. Common Stock Each holder of common stock is entitled to cast one vote for each share held of record on all matters submitted to a vote of shareholders, including the election of directors. Holders of common stock are entitled to receive dividends or other distributions declared by the Exelon board of directors. The right of the Exelon board of directors to declare dividends, however, is subject to the rights, if any, of holders of preference stock of Exelon and certain requirements of Pennsylvania law. PreferredStock The Exelon board of directors has the full authority permitted by law to determine the voting rights, if any, and designations, preferences, limitations and special rights of any class or any series of any class of the preferred stock. COMPARISON OF RIGHTS OF SHAREHOLDERS Upon completion of the first step exchange, PECO Energy shareholders will receive shares of common stock of Exelon in exchange for their shares of PECO Energy common stock. On the effective date of the second step merger, Unicorn shareholders will receive shares of common stock of Exelon and cash in exchange for their shares of Unicom common stock. The following is a summary of the material differences with respect to the rights of holders of Unicorn common stock, PECO Energy common stock and Exelon common stock. These differences arise in part, in the case of Unicom shareholders, from the differences between various provisions of Illinois and Pennsylvania law, as well as differences between the governing instruments of PECO Energy, Unicorn and Exelon. The following description summarizes the material differences which may affect the rights of Exelon shareholders and PECO Energy shareholders and Unicom shareholders, but does not purport to be a complete statement of all of the differences, or a complete description of the specific provisions referred to in this summary. PECO Energy shareholders and Unicorn shareholders should read carefully the relevant provisions of Pennsylvania law and Illinois law, the Exelon articles of incorporation and by-laws, the PECO Energy articles of incorporation and by-laws and the Unicorn articles of incorporation and by-laws. Size of the Board of Directors Under Illinois law, the board of directors of a corporation consists of one or more members. The number of directors is fixed by the by-laws, except the number of the initial directors is fixed by the incorporators in the articles of incorporation or at the organizational meeting. In the absence of a by-law fixing the number of directors, the number of directors fixed by the incorporators governs. The Unicorn by-laws provide that the 97

number of directors of Unicorn will be not less than eight nor more than thirteen directors, and that directors are elected annually by the shareholders. Under Pennsylvania law, the by-laws or articles of incorporation govern the size of the board. If neither the articles of incorporation nor the by-laws provide for the size of the board, Pennsylvania law fixes the number of directors on the board at three. Under both the PECO Energy and Exelon articles of incorporation, vacancies the whole board (a majority of the total number of directors that Exelon would have if there were no as otherwise provided in the on the board of directors) determines the number of directors on the board, except express terms of any class or series of preferred or preference stock with respect to the election of directors upon the occurrence of a default in the payment of dividends or in the performance of another express requirement of the terms of the preferred or preference stock. Until the effective date of the first step exchange, of the the board of directors of Exelon will consist of three members. This proviso expires on the effective date first step exchange, after which the number of directors will be set at 16. Classificationof the Board of Directors Under Illinois law, if the board of directors consists of six or more members, the articles of incorporation of or by-laws may provide that the directors be divided into either two or three classes with staggered terms of incorporation and by-laws of office. Each class has to be as nearly equal in number as possible. The articles Unicorn are silent on this point. The Unicorn board of directors is not classified. Pennsylvania law provides that, unless otherwise specified in the articles of incorporation, a corporation's at board of directors may be divided into various classes with staggered terms of office. The term of office of of a class may not be elected for a period longer than least one class must expire in each year and the members the classification must be done in the articles of four years. If the directors are to be otherwise classified, incorporation. Under the PECO Energy articles of incorporation, each class will be as nearly equal in number in number. as possible and, under the Exelon articles of incorporation, each class will be approximately equal of incorporation the term of office of at least one class must Under the PECO Energy and Exelon articles in the articles of incorporation or in the express terms of any expire in each year. Except as otherwise provided the members of each class will be elected for a term of three years series of the preferred or preference stock, and until their respective successors have been elected and qualified, except in the event of their earlier death, office resignation or removal. However, in the case of Exelon, the initial classes and terms of directors taking with their unexpired terms as directors of PECO Energy and until upon the first step exchange will coincide resignation their respective successors have been elected and qualified, except in the event of their earlier death, at which time Exelon's board of directors will be constituted in or removal or until the merger is completed, accordance with the merger agreement. Cumulative Voting Under Illinois law, cumulative voting for directors exists unless a corporation's articles of incorporation a right to provide otherwise. Unicom's articles of incorporation provide shares of Unicorn common stock with by vote of shareholders. Unicorn's by-laws also provide for cumulative voting in all elections of directors cumulative voting for directors. Under Pennsylvania law, cumulative voting exists unless a corporation's articles of incorporation provide otherwise. Both PECO Energy and Exelon have eliminated cumulative voting. Vacancies on the Board of Illinois law provides that if there is an increase in the number of directors, any vacancy on the board a special directors and any directorship may be filled by election at an annual meeting of shareholders or at for that purpose. Under Illinois law, the by-laws may provide a method for meeting of shareholders called between meetings of shareholders by reason of an increase in the number of directors filling vacancies arising the board of or otherwise, by director or shareholder action. If such a provision does not exist in the by-laws, directors must fill the vacancy. 98

Unicorn's by-laws provide that any kind of vacancy occurring in the board of directors may be filled by election at an annual shareholders meeting or at a special meeting called for that purpose. Any vacancy arising between meetings of shareholders may be filled by the vote of a majority of the directors then in office, even if less than a quorum. Any director so elected will serve until the next annual meeting of the shareholders. Pennsylvania law provides that a majority of the directors then in office, even if less than a quorum, may fill newly created directorships and all vacancies, including vacancies resulting from an increase in the size of the board. In addition, when one or more directors resign from the board effective at a future date, the directors then in office, including those who have so resigned, may fill the vacancy or vacancies by a majority vote. Unless the by-laws specify otherwise, directors selected to fill newly created directorships and all vacancies serve the balance of the unexpired term. Both the PECO Energy and Exelon by-laws provide that a majority of directors in office, or a sole remaining director, may fill all vacancies and newly created directorships and those filling the vacancies will serve out the remaining terms of their predecessors. The Exelon by-laws provide that the size of the board of directors will be established by resolution adopted by a majority of the whole board (the total number of directors that Exelon would have if there were no vacancies on the board of directors). Removal of Directors With four exceptions under Illinois law, the holders of a majority of the outstanding shares entitled to vote at an election of directors may remove any director with or without cause. The four exceptions are as follows:

        "* if the notice of the shareholders meeting fails to mention that a purpose of the meeting is to vote upon the removal of one or more directors named in the notice,
        "* if in the case of cumulative voting, where less than the entire board is to be removed, the votes cast against the removal of a director would be sufficient to elect him or her by cumulative voting at an election of the entire board of directors,
        "* if a director is elected by a class or series of a class, he or she may be removed only by the shareholders of that class or series, and
        "* if, in the case of a corporation whose board is classified, the articles of incorporation provide that directors may be removed only for cause.

These exceptions are not applicable in cases where the circuit court of the county in which the corporation's registered office is located is asked to remove a director for engaging in fraudulent or dishonest conduct or for gross abuse of his or her position to the detriment of the corporation and the court determines that removal is in the best interest of the corporation. Unicorn's articles of incorporation and by-laws are silent with regard to the removal of directors. With two exceptions under Pennsylvania law, the holders of a majority of the shares entitled to vote at an election of directors may remove any director, with or without cause. Those two exceptions are as follows:

       "* if the corporation has a classified board, shareholders may remove a director only for cause, and
       "* if the corporation has cumulative voting, and less than the entire board of directors is to be removed, then no director may be removed without cause if the votes cast against his removal would be sufficient to elect him if cumulatively voted at an election of the entire board of directors, or if there are classes of directors, at an election of the class of directors of which he or she is a part.

Both the PECO Energy and Exelon by-laws provide that a majority of the shareholders may remove a director only for cause. 99

Special Meetings of Shareholders Under Illinois law, special meetings of shareholders may be called by:

     "* the president,
     "° the holders of not less than one-fifth of all outstanding shares entitled to vote on the matter for which the meeting is called, or
      "* other officers or persons as may be provided in the articles of incorporation or the by-laws.

be called by the chairman, by Unicorn's by-laws provide that a special meeting of the shareholders may holders of not less than one-fifth of the board of directors, by a majority of the directors individually or by the the total outstanding shares of capital stock of the company. be called by: Pennsylvania law provides that special meetings of the shareholders may

      "* the board of directors,
      "* shareholders entitled to cast at least 20% of the vote entitled to be cast at that meeting, or
      "* any person or persons as may be authorized by the by-laws.

of directors is not called and held In addition, under Pennsylvania law, if the annual meeting for election call the meeting at any time thereafter. within six months after the designated time, any shareholder may of the shareholders may be Both the PECO Energy and Exelon by-laws provide that special meetings both PECO Energy and Exelon are called at any time by the board of directors. As registered corporations, of shareholders to call a special subject to a provision of the Pennsylvania law which eliminates the right meeting. CorporateAction Without a ShareholderMeeting shareholders may take any Under Illinois law, unless otherwise provided in the articles of incorporation, meeting and without a vote, if a action which may be taken at a shareholders meeting without a shareholders (1) the holders of outstanding shares consent in writing, setting forth the action to be taken, is signed by either at which all shareholders that would be sufficient to vote in favor of the action at a shareholders meeting or (2) by all shareholders entitled to vote with regard to the subject entitled to vote would be present and vote, entitled to vote, then the action matter thereof. If the action is consented to by fewer than all the shareholders in writing of the subject matter at least becomes effective only if all shareholders entitled to vote were notified notified that the corporate action was five days prior to the vote and subsequent to the consent were promptly taken with less than unanimous written consent. unanimous consent in writing of Under Illinois law, dissolution of a corporation may be authorized by the the holders of all outstanding shares. corporate action without a Unicom's articles of incorporation and by-laws are silent with regard to taking shareholder meeting. may act without a Under Pennsylvania law, unless otherwise provided in the by-laws, shareholders they have the written consent of the holders of all meeting on any action requiring a shareholder vote, provided and Exelon by-laws provide that, except as outstanding shares entitled to vote thereon. Both the PECO Energy act by or preference stock or when shareholders may otherwise be provided in the terms of any preferred or special action must be taken at an annual unanimous consent to remove a director or directors, shareholder meeting of shareholders. CharterAmendments at any time to add new Under Illinois law, a corporation may amend its articles of incorporation amended articles contain only provisions as provisions or to change or remove old provisions, provided that the of amendment. A corporation whose are required or permitted in original articles of incorporation at the time may amend its articles of period of duration as provided in the articles of incorporation has expired 100

incorporation to revive its articles and extend the period of corporate duration, even to perpetual duration, at any time within five years after expiration. Generally, under Illinois law, a proposed amendment will be adopted upon receiving the affirmative vote of the holders of two-thirds of the outstanding shares entitled to vote on the amendment and, if any class of shares is entitled to vote as a class, the affirmative vote of the holders of two-thirds of the outstanding shares in that class. The articles of incorporation may provide for a smaller or greater vote requirement, but not less than a majority of the outstanding shares entitled to vote. Prior to voting on an amendment, Illinois law provides that the board of directors must adopt a resolution setting forth the proposed amendment and must direct that the amendment be submitted to a vote at a shareholder meeting. Written notice setting forth the proposed amendment must be given to the shareholders prior to the shareholders meeting. Under Illinois law, a majority of the whole board of directors of a corporation may amend the articles of incorporation without shareholder action to take various ministerial actions as permitted by Illinois law. Unicom's articles of incorporation and by-laws are silent with regard to amending the articles of incorporation. Generally, under Pennsylvania law, unless the articles of incorporation require a greater vote, a proposed amendment will be adopted upon receiving the affirmative vote of a majority of the votes cast by all shareholders entitled to vote thereon and, if any class or series of shares is entitled to vote thereon as a class, the affirmative vote of a majority of the votes cast in that class vote. Also, except for a proposed amendment that is the subject of a petition of shareholders entitled to cast 10% or more of the votes of all shareholders in aggregate, a proposed amendment of the articles of incorporation will be deemed not to have been adopted by a corporation unless the board of directors has also approved the amendment, even though the board submitted the amendment to the shareholders for action. Under Pennsylvania law, unless otherwise restricted in the articles of incorporation, an amendment of the articles of incorporation does not require the approval of the shareholders if shares have not been issued or if the amendment only takes various ministerial actions as permitted by Pennsylvania law. Also, shareholder approval is not necessary if the corporation has only one class of shares outstanding and the amendment is solely to increase the number of authorized shares to effectuate a stock dividend or a stock split and, in case of a stock split, may also change the par value of the shares. Under Pennsylvania law, the holders of shares of a class or series are entitled to vote as a class with respect to an amendment if the amendment would:

      "* authorize the board of directors to fix and determine the relative rights and preferences of any preferred or special class,
      " make any change in the preferences, limitations or special rights of the shares of a class or series adverse to the class or series other than preemptive rights or the right to vote cumulative,
      " authorize a new class or series having a preference as to dividends or assets which is senior to the shares of a class or series, or
      " increase the number of authorized shares of any class or series having a preference as to dividends or assets which is senior in any respect to the shares of a class or series.

Under the articles of incorporation of both PECO Energy and Exelon, the articles of incorporation may be amended in the manner and at the time prescribed by Pennsylvania law. 101

By-law Amendments Under Illinois law, unless otherwise provided in the articles of incorporation, shareholders or the board of directors may make, alter, amend or repeal the by-laws of the corporation. But no by-law adopted by the shareholders may be altered, amended or repealed by the board of directors if the by-laws so provide. Unicom's by-laws provide that the by-laws may be altered, amended or repealed by the shareholders or the board of directors. Under Pennsylvania law, after a corporation receives payment for any of its stock, the power to adopt, amend or repeal by-laws resides exclusively in the shareholders unless the by-laws confer a concurrent power on the board of directors. However, even if the shareholders confer concurrent power on the board of directors, the directors have no authority to adopt or change a by-law on any subject that is committed expressly to the shareholders by Pennsylvania law. The PECO Energy by-laws provide that the shareholders may adopt, amend or repeal by-laws only with the approval of the board of directors. The by-laws may be amended or repealed, or new by-laws may be adopted, by a vote of a majority of the board of directors at any special meeting of directors. Subject to the limitations provided in this paragraph, the Exelon by-laws provide that the board of directors may adopt, alter or repeal by-laws. In addition, the shareholders may adopt by-laws. The board of directors may not, however, adopt, alter or repeal by-laws that Pennsylvania law specifies may be adopted only by shareholders. Furthermore, the board of directors may not alter or repeal any by-law that is adopted by the shareholders and provides that it may not be altered or repealed by the board of directors. Business Combinations/FairPriceProvisions Under Illinois law, a merger or consolidation requires approval of a majority vote of the board of directors and approval by the holders of two-thirds of the outstanding shares entitled to vote. The articles of incorporation of any corporation may require any smaller or larger vote requirement, but not less than a majority of the outstanding shares entitled to vote. In addition, there are special vote requirements for certain business combinations of a domestic corporation that has not decided to opt out of these provisions. Under Illinois law, "business combination" is defined generally to include:

      "* a merger or consolidation of a corporation with an interested shareholder, or with any other corporation if the merger or consolidation is caused by an interested shareholder,
      "* any sale, lease, exchange, mortgage, pledge, transfer or other disposition of assets equal to at least 10%

of the aggregate market value of all the assets or at least 10% of the aggregate market value of the outstanding stock to or with an interested shareholder,

      "* any transaction involving the issuance or transfer by a corporation of its shares to an interested shareholder, except:
         "* based on rights to obtain shares of a corporation that were outstanding before a shareholder became an interested shareholder,
         "* based on rights to obtain dividends, distributions or the exchange of securities for shares that are evenly distributed to all holders of a class or series of shares after a shareholder becomes an interested shareholder,
         "* pursuant to an exchange offer by a corporation to purchase shares made on the same terms to all shareholders, and
         "* any issuance or transfer of shares by a corporation, so long as an interested shareholder's proportionate ownership of any shares is not increased, or
       "* any loans from a corporation to an interested shareholder.

An "interested shareholder" is defined generally as a shareholder who beneficially owns at least 15% of the outstanding voting power or who is an affiliate or associate of the corporation and beneficially owned 15% 102

of the voting power of the then outstanding voting stock within the preceding three years. The special requirements may apply to a domestic corporation that has vote any equity securities registered under Section 12 of the Securities Exchange Act of 1934 or that is subject to Section 15(d) of that Act or any other domestic corporation that elects in its articles of incorporation to be treated under these special vote requirements. For these corporations, any "business combination" summarized above requires the affirmative vote of the holders of at least 80% of the combined voting power of the outstanding shares of all classes and series of the corporation entitled to vote generally in the election of directors and the affirmative vote of a majority of the voting shares held by disinterested shareholders unless certain fair price and procedural requirements are met. These requirements include:

         "* approval by two-thirds of the disinterested directors, and
         "* satisfaction of the conditions described in the next paragraph.

The business combination must provide that all holders of common shares receive consideration for all their shares, and that the aggregate amount of cash and the fair market value of consideration other than cash to be received per share as of the date the business combination is consummated is at least equal to the higher of:

        "* the highest per share price paid by the interested shareholder to acquire any common shares beneficially owned by the interested shareholder that were acquired (1) within two years before the proposal of the business combination was publicly announced, or (2) in the transaction in which it became an interested shareholder, and
        "* the fair market value per common share on the first trading day after the date the business combination was publicly announced or on the first trading date after the date that it is publicly announced that the shareholder became an interested shareholder.

In addition, the business combination must also provide that all holders of outstanding shares, other than holders of common shares, receive consideration for all these shares, and that the aggregate amount of cash and the fair market value of consideration other than cash to be received per share as of the date the business combination is consummated is at least equal to or greater than the higher of:

       "* the highest per share price paid by the interested shareholder to acquire any of the shares beneficially owned by the interested shareholder that were acquired (1) within two years before the proposal of the business combination was publicly announced, or (2) in the transaction in which it became an interested shareholder,
       "* the highest preferential amount per share to which the holders of the shares are entitled in the event of any liquidation, dissolution or winding up of the corporation,
      "* the fair market value of the shares on the first trading day after the date the proposal of the business combination was publicly announced, or on the determination date, whichever is higher, or
      "* an amount equal to the fair market value per share determined pursuant to clause (iii) times the highest value obtained in calculating the highest per share price paid by an interested shareholder for any of the shares within the two-year period divided by the market value per share on the first day of the two-year period in which the interested shareholder acquired the shares.

Furthermore, the consideration to be received by shareholders of a particular class must be in cash or in the same form as the interested shareholder has paid. If the interested shareholder has paid in different forms, then the form by which the interested shareholder has acquired most shares shall apply. Also, after a shareholder has become an interested shareholder and before the business combination is consummated:

     "* except as approved by two-thirds of the disinterested directors, the corporation must not fail to declare and pay on time any dividends on any shares other than the common shares, and
     "* the   corporation must not reduce the annual rate of dividends paid on the common shares.

103

that complies with Finally, a proxy or information statement describing the proposed business combination public shareholders at least 30 days before the business the Securities Exchange Act of 1934 must be mailed to combination is consummated. combinations. Unicom's articles of incorporation and by-laws are silent with regard to business to a business combination Accordingly, the special voting requirements discussed above are applicable merger is not, however, the type of transaction with Unicorn and an interested shareholder. The second step vote requirement does not apply. transaction covered by this provision of Illinois law and therefore the 80% the corporation's board of Under Pennsylvania law, a merger or consolidation requires approval of shareholders entitled to vote. directors and the affirmative vote of a majority of the votes cast by all statutory provisions, shares of a Under Pennsylvania law, unless a corporation has opted out of certain Exchange Act of 1934 acquired in a "control share corporation whose shares are registered under the Securities a resolution approved by a vote of the disinterested acquisition" do not have voting rights unless restored by means an acquisition by any person of shareholders. Under Pennsylvania law a "control share acquisition" entitle that all other voting power of that person, voting power of a corporation that would, when added to power in any of the following ranges: person to cast for the first time the amount of voting

• at least 20% but less than 331/3%,
• at least 331/3% but less than 50%, or
• 50% or more.

opted out of the provisions of the Neither PECO Energy nor Exelon has in its articles of incorporation acquisitions. Pennsylvania Business Corporation Law relating to control share Other Antitakeover Protection Interested Shareholder Transactions engaging in business combinations Illinois law restricts certain publicly held Illinois corporations from of three years following the date that person became an involving an interested shareholder during the period under Illinois law is described in the interested shareholder. A general definition of a "business combination" shareholder do not apply if: previous section. The restrictions involving an interested

       "* the corporation's articles of incorporation contain a provision expressly electing not to be governed by this section,
       "* the corporation does not have a class of voting shares that is listed on a national securities exchange, by more than 2,000 authorized for quotation on the NASDAQ Stock Market or held of record by an interested shareholder or from shareholders, unless any of the foregoing results from action taken a transaction in which a person becomes an interested shareholder,
        "* a shareholder inadvertently becomes an interested shareholder and as soon as practicable divests itself of interested shareholder, or ownership of sufficient shares so that the shareholder is no longer an
        "* in the situation of certain business combinations, including mergers, consolidations, tender offers, exchange offers and major asset transfers, the business combination is:
            "* with a person who was not an interested shareholder during the previous three years or who became one with the approval of the corporation's board of directors, and
            "* approved by a majority of the members of the board of directors then in office who were directors three years or were elected or before a person became an interested shareholder within the previous directors  by   a  majority    of those previous who were recommended for election to succeed the directors.

104

Notwithstanding the three-year restriction, a business combination with an interested shareholder may occur if:

      " the business combination or the acquisition of shares by the interested shareholder is approved by the board of directors prior to the date the interested shareholder becomes an interested shareholder,
      "   after the acquisition in which the interested shareholder becomes an interested shareholder he or she owns at least 85% of the outstanding voting shares, not including certain categories of employee-owned stock, or
      "* on or after the date the interested shareholder became an interested shareholder, the business combination is approved by the board of directors and authorized by the affirmative vote of at least two thirds of the outstanding voting shares which are not beneficially owned by the interested shareholder.

The articles of incorporation or by-laws may not require a greater vote of shareholders to approve a "business combination" with an "interested shareholder" than that specified in the preceding paragraph. Pennsylvania law prohibits a corporation from engaging in a business combination with the beneficial owner of 20% or more of the corporation's stock for five years from the time the shareholder acquired the stock, unless certain conditions are met. Under Pennsylvania law, a corporation whose shares are registered under the Securities Exchange Act of 1934 that has not opted out of certain statutory provisions may engage in a business combination with a 20% shareholder within the five-year period only if:

     "* The 20% shareholder's stock purchase was approved by the corporation's board of directors before the share acquisition date,
     "* the business combination itself was approved by the corporation's board of directors before the share acquisition date,
     "* the business combination is approved by the affirmative vote of all of the holders of all of the outstanding common shares, or
     " The business combination is approved by the affirmative vote of the majority of disinterested shareholders no earlier than three months after the share acquisition date, provided the 20% shareholder is the beneficial owner of 80% of the voting shares of the corporation and provided the price paid to all shareholders meets statutory criteria establishing a formula price.

After the expiration of the five-year period, the business combination will be permitted if:

     "* approved by a majority of disinterested shareholders, or
     "* approved by the affirmative vote of the shareholders provided the price to be paid meets the formula price.

The formula price is the higher of the price paid by the 20% shareholder any time within five years before the announcement date of the combination or the share acquisition date, whichever is higher or the market value of the stock as of the announcement date or the share acquisition date, whichever is higher, plus interest on United States Treasury securities, less dividends paid on the stock. Neither PECO Energy nor Exelon has opted out of the provisions of the Pennsylvania Business Corporation Law relating to interested shareholder transactions. Anti-Greenmail Provision Illinois law has no anti-greenmail provisions. 105

Pennsylvania law provides that, unless a corporation has opted out, any profit realized by any person or group that acquires voting control over at least 20% of a corporation whose shares are registered under the Securities Exchange Act of 1934 pursuant to the disposition of equity securities of the registered corporation within two years before or 18 months after becoming a 20% shareholder is recoverable by the corporation. Neither PECO Energy nor Exelon has opted out of the anti-greenmail provisions of the Pennsylvania Business Corporation Law. ShareholderRights Plan Unicorn currently has a shareholder rights plan. Neither PECO Energy nor Exelon have adopted a shareholder rights plan. Interested Director Transactions Under Illinois law, a transaction that is fair to a corporation may not be invalidated on the grounds that a director of the corporation is directly or indirectly a party to the transaction. The party asserting validity has the burden of proving fairness unless the material facts of the transaction and the director's interest are disclosed and the transaction is approved either by a majority of disinterested directors or by the shareholders without counting the vote of any shareholder who is an interested director. Pennsylvania law provides rules for transactions between a corporation and one or more of its directors or between a corporation and another entity in which the corporation's director is also a director or in which the director has a financial interest. Under Pennsylvania law, a transaction is not void or voidable solely because:

      "* of the director's interest,
      "* the interested director was present at or participated in the meeting at which the transaction was authorized, or
      "* the interested director's vote counted in the authorization of the transaction.

A transaction is not void or voidable provided:

      "* the board of directors knows or learns of the material facts regarding the director's interest and the board authorizes the transaction by the affirmative vote of a majority of disinterested directors,
      "* the shareholders entitled to vote on the transaction know or are told in good faith the material facts regarding the director's interest, and the shareholders approve the transaction, or
      "* the transaction is fair to the corporation as of the time it is authorized by the board of directors or shareholders.

Neither the PECO Energy nor the Exelon by-laws alter the statutory rules regarding interested director transactions. Indemnification of Directors, Officers and Employees Illinois law provides that a corporation may indemnify a director or officer against liabilities and expenses if the director or officer acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, and, in the case of a criminal action, if the director or officer had no reason to believe his or her conduct was unlawful. Under Illinois law, in a proceeding brought by or in the right of the corporation, no indemnification may be made with respect to any claim as to which an officer or director has been adjudged to have been liable to the corporation, unless the court determines that that person is reasonably and fairly entitled to indemnification for expenses. Indemnification will be made by a corporation only if a determination has been made, by a majority vote of a quorum of the disinterested directors 106

or by the shareholders or by independent legal counsel, that the director or officer met the required standard of conduct. Illinois law provides that a corporation may purchase liability insurance on behalf of an officer or director whether or not the corporation would otherwise have the power to indemnify such a person. Under Illinois law, a corporation may maintain insurance on behalf of officers and directors against liabilities asserted against the individual arising out of his or her status as an officer or director, whether or not the corporation would have the power to indemnify the individual against the liability under the relevant provisions of Illinois law. Unicom's articles of incorporation and by-laws provide indemnification for all directors, officers or other employees or agents of the corporation or person who serve or served upon request of the Unicorn board of directors or an officer of the corporation as an employee or agent of the corporation or as a director, officer, employee, agent, trustee or fiduciary of another corporation, partnership, joint venture, trust or other enterprise to the full extent possible now and thereafter under Illinois law. The articles and by-laws provide that the corporation may also enter into one or more agreements with any person providing for indemnification greater or different than the one stated and that any repeal of the articles of incorporation or by-laws may not adversely affect any right or protection existing immediately prior to the repeal or modification. Pursuant to Pennsylvania law, except as otherwise provided in the corporation's by-laws, a corporation may indemnify any person who was or is a party or is threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation. That person may be indemnified against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with the action, suit or proceeding if:

        "* he or she acted in good faith,
        "* in a manner which he or she reasonably believed to be in or not opposed to the best interest of the corporation, and
       "* with respect to any criminal action or proceeding, he or she had no reasonable cause to believe his or her conduct was unlawful.

In the case of shareholder derivative suits, a corporation may indemnify any person who is or was a representative of the corporation, or is or was serving at the request of the corporation as a representative of another corporation, partnership, joint venture, trust or other enterprise against expenses, including attorneys' fees, actually and reasonably incurred in connection with the defense or settlement of the action or suit if

       "* he or she acted in good faith, and
       "* in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation.

However, indemnification may not be made for any claim, issue or matter as to which the person has been adjudged by a court of competent jurisdiction, to be liable to the corporation, unless and only to the extent a proper court determines upon that the person is fairly and reasonably entitled to indemnity for expenses as the court deems proper. Any person who has been successful on the merits or otherwise in the defense of a civil or criminal action or proceeding is entitled to indemnification against expenses, including attorneys' fees actually and reasonably incurred by that person in connection with the defense. Unless ordered by a court, any indemnification must be made by the corporation only as authorized:

      "* by the shareholders,
      "* by majority vote of a quorum of the directors who were not parties to the action, suit or proceeding, or 107

• if a quorum is not obtainable, or if the directors so direct, by independent legal counsel in written opinion.

exclude any The indemnification and advancement of expenses authorized by Pennsylvania law does not indemnification or advancement of expenses may be entitled under any other rights to which a person seeking by-law, agreement, vote of shareholders or disinterested directors or otherwise. Expenses, including attorneys' fees, incurred by an officer or director defending any civil, criminal, of the final administrative or investigative action, suit or proceeding may be paid by the corporation in advance if it is disposition of the action, suit or proceeding if the director or officer agrees to repay the amount incurred by ultimately determined that he or she is not entitled to be indemnified by the corporation. Expenses of directors deems other employees and agents may be so paid on such terms and conditions as the board appropriate. and Both the PECO Energy and Exelon by-laws provide that the company will indemnify officers directors, and certain other persons, to the fullest extent permitted by Pennsylvania law. Limitation of PersonalLiability of Directors to the Illinois law provides that a corporation may eliminate or limit the personal liability of directors fiduciary duties, provided that corporation or its shareholders for monetary damages for breach of the directors' provision may not eliminate or the corporation adopts a provision to do so in its articles of incorporation. The limit the liability of a director:

       "* for any breach of the director's duty of loyalty to the corporation or its shareholders,
       "* for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law,
       "* for the payment of improper dividends or certain corporate actions following dissolution,
       "* for transactions from which the director derived an improper personal benefit, or
       "* for any act or omission occurring before the effective date of the articles provision.

liability to the Unicom's articles of incorporation and by-laws adopt the limitation of director's personal and by-laws provide that extent and in the manner provided for under Illinois law. The articles of incorporation then this amendment if Illinois law is amended to further eliminate or limit the personal liability of directors, of incorporation or the will apply to its directors. Any repeal or modification of the section of Unicorn's articles or protection of a by-laws regarding the personal liability of a director may not adversely affect any right director existing prior to the repeal or modification. or limiting the Pennsylvania law provides that a corporation's articles may contain a provision eliminating for any breach of duty in that personal liability of directors to the corporation or its shareholders for damages capacity. However, the provision cannot eliminate or limit:

        "* The liability of any director if a judgment or other final adjudication establishes that:
           "* the director's acts or omissions were in bad faith or involved intentional misconduct or a knowing violation of law, or
           "* the director personally gained a financial profit or other advantage to which such director was not legally entitled, or
        "* the liability of any director for any act or omission before the adoption of such provision in the articles of incorporation.

108

Both the PECO Energy and Exelon by-laws include a provision eliminating the personal liability of directors to the fullest extent permitted by Pennsylvania law. Under current Pennsylvania laws, these provisions do not apply to the liability of a director pursuant to any criminal statute or the liability of a director for payment of taxes pursuant to local, state or Federal law. Constituencies Statutes Illinois law provides that the board of directors, committees of the board, individual directors and individual officers may, in considering the best interest of the corporation, consider the effects of any action upon employees, suppliers and customers of the corporation or its subsidiaries, communities in which offices or other establishments of the corporation or its subsidiaries are located, and all other pertinent factors. Pennsylvania law provides that the board of directors, committees of the board and individual directors of a business corporation may, in considering the best interests of the corporation, consider to the extent they deem appropriate:

     "* the effects of any action on any or all groups affected by the action, including shareholders, employees, suppliers, customers and creditors of the corporation, and upon communities in which offices or other establishments of the corporation are located,
     "* the short-term and long-term interests of the corporation, including benefits that the corporation may enjoy from its long-term plans and the possibility that these interests may be best served by the continued independence of the corporation,
     "* the resources, intent and conduct, past, stated and potential, of any person seeking to acquire control of the corporation, and
     "* all other pertinent factors.

Pennsylvania law also provides that, in considering the best interests of the corporation, the board of directors, committees of the board of directors and individual directors are not required to regard any corporate or other interest as dominant or controlling. Dividends Under Illinois law, the board of directors may, unless otherwise provided in the articles of incorporation, authorize, and the corporation may make, distributions to its shareholders. No distribution may be made if, after giving it effect:

     "* the corporation would be insolvent, or
    "* the net assets of the corporation would be less than zero or less than the maximum amount payable at the time of distribution to shareholders having preferential rights in liquidation if the corporation were then to be liquidated.

There is no provision regarding dividends in Unicom's articles of incorporation or by-laws. Under Pennsylvania law, the board of directors of a corporation may, except as otherwise provided in its by-laws, declare and pay distributions to shareholders in cash, property or shares, provided that a distribution may not be made if, after giving effect thereto:

    "* the corporation would be unable to pay its debts as they become due in the usual course of its business, or
    "* the total assets of the corporation would be less than the sum of its total liabilities plus the amount that would be needed, if the corporation were to be dissolved at the time the distribution is approved, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to 109

those receiving the distribution. Total assets and liabilities for this purpose are to be determined by the board of directors, which may base its determination on the factors it considers relevant, including the book value of the corporation's assets and liabilities and unrealized appreciation and depreciation of the corporation's assets. There is no provision regarding dividends in either of PECO Energy's or Exelon's articles of incorporation or by-laws. Loans to Directors Illinois law grants corporations the power to lend money to its directors, officers, employees and agents. Pennsylvania law permits loans, guarantees of obligations or similar undertakings by a corporation to its directors, officers or employees. ShareholderRecords Under Illinois law, any shareholder of record has the right to examine, at any reasonable time and upon proper demand, the corporation's books and records of account, minutes, voting trust agreements filed with the corporation and record of shareholders, and to make extracts therefrom, but only for a proper purpose. If the corporation refuses examination, the shareholder may file suit to compel proper examination. Under Pennsylvania law, every shareholder has a statutory right to inspect the stock list or books and records of a corporation for a proper purpose during the usual hours for business upon submitting a written verified demand stating his or her purpose. If a corporation does not grant inspection to a shareholder within five business days of a demand, the shareholder may apply to the court for an order to enforce his or her demand. A proper purpose is any purpose reasonably related to the person's status as a shareholder in a corporation. Issuance of Rights or Options to Purchase Shares to Directors, Officers and Employees Illinois law provides that a corporation may create and issue rights or options entitling the holder thereof to purchase shares of any class or series from the corporation, upon such terms and conditions as are fixed by the board. Pennsylvania law provides that the issuance of options or rights to directors, officers and employees may be authorized by the board of directors, unless the articles of incorporation provides otherwise. Dissenters' Rights Illinois law provides that a shareholder may dissent from, and obtain payment for its shares in the event of, certain mergers, consolidations, share exchanges, asset transfers and corporate actions that adversely affect shareholder rights. Under Pennsylvania law, a shareholder may dissent from, and receive payment of the fair value of its shares in the event of certain mergers, consolidations, share exchanges, asset transfers and corporate divisions. However, no dissenters' rights are available with respect to shares which, at the applicable record date, were either listed on a national securities exchange or held of record by more than 2,000 shareholders, unless the holders of the shares are required by the terms of the merger or consolidation to accept any consideration other than shares of the surviving corporation, shares of stock of another corporation and cash instead of fractional shares. 110

LEGAL MATTERS The legality of Exelon common stock offered by this proxy statement/prospectus will be passed upon for Exelon by Ballard Spahr Andrews & Ingersoll LLP. As of May 12, 2000, attorneys of Ballard Spahr Andrews

& Ingersoll LLP beneficially owned approximately 3,500 shares of PECO Energy common stock.

Certain United States federal income tax consequences of the merger will be passed upon for PECO Energy by Cravath, Swaine & Moore and for Unicorn by Jones, Day, Reavis & Pogue. EXPERTS The consolidated balance sheets of PECO Energy as of December 31, 1999, and December 31, 1998, and the consolidated statements of income, cash flows and changes in common shareholders' equity and preferred stock for each of the three years in the period ended December 31, 1999, incorporated in this proxy statement/prospectus by reference to PECO Energy's Annual Report on Form 10-K for the year ended December 31, 1999, have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent auditors, given on the authority of said firm as experts in accounting and auditing. The consolidated balance sheets and statements of consolidated capitalization of Unicom as of December 31, 1999, and December 31, 1998, and the statements of consolidated operations, retained earnings (deficit) and cash flows for each of the three years in the period ended December 31, 1999, incorporated in this proxy statement/prospectus by reference to Unicorn's Annual Report on Form 10-K and on Form 10-K/A for the year ended December 31, 1999, and the consolidated balance sheets and statements of consolidated capitalization of Unicorn as of March 31, 2000, and the statements of consolidated operations, retained earnings and cash flows for the three-month and twelve-month ended periods then ended, incorporated in this proxy statement/prospectus by reference to Unicorn's Quarterly Report on Form I0-Q for the period ended March 31, 2000, have been so incorporated in reliance on the report of Arthur Andersen LLP, independent auditors, given on the authority of said firm as experts in accounting and auditing. 111

CHAPTER 1I-INFORMATION ABOUT THE PECO ENERGY ANNUAL MEETING AND OTHER PROPOSALS THE PECO ENERGY ANNUAL MEETING This proxy statement/prospectus is being furnished in connection with the solicitation of proxies from the holders of PECO Energy common stock by the PECO Energy board of directors relating to the election of directors, the merger proposal and other matters to be voted upon at the PECO Energy annual meeting and at any adjournment or postponement of the meeting. This proxy statement/prospectus is also a prospectus for the shares of Exelon common stock to be issued in the merger. PECO Energy mailed this proxy statement/prospectus to shareholders beginning May 18, 2000. You should read this proxy statement/prospectus carefully before voting your shares. Date, Time and Place We will hold the PECO Energy annual meeting on Tuesday, June 27, 2000, at 9:30 a.m., local time, at the Millenium Hall of the Loews Philadelphia Hotel, 1200 Market Street, in Philadelphia, Pennsylvania. Directions to the PECO Energy annual meeting may be found on the second to last printed page of this proxy statement/prospectus and on the proxy card. Purpose of PECO Energy Annual Meeting At the PECO Energy annual meeting, you will be asked to consider and vote upon the following proposals:

      "* to consider a proposal to adopt the agreement and plan of exchange and merger dated as of September 22, 1999, as amended and restated as of January 7, 2000, among PECO Energy, Exelon and Unicorn, providing for the first step exchange and the second step merger, described under "The Merger" and "The Merger Agreement" in Chapter I,
      "* to consider and vote upon a proposal to postpone or adjourn the annual meeting, if proposed by PECO Energy's board of directors, described under "-Proposals for PECO Energy Annual Meeting-Item 2
         -Postponement or Adjournment of Annual Meeting" below,
      "* to elect four members of the PECO Energy board of directors, each for a term of three years, described under "--Proposals for PECO EnergyAnnual Meeting-Item 3-Election of PECO Energy Directors" below,
      "* to ratify PricewaterhouseCoopers, LLP as PECO Energy's independent auditors for 2000, described under "--Proposals for PECO Energy Annual Meeting-Item 4-Ratification of Appointment of Independent Auditors" below, and
      "* to consider any other business that properly comes before the PECO Energy annual meeting.

PECO Energy Record Date; Stock Entitled to Vote; Quorum Only holders of record of PECO Energy common stock at the close of business on April 5, 2000, the PECO Energy record date, are entitled to notice of and to vote at the PECO Energy annual meeting. On April 5, 2000, approximately 181,454,576 shares of PECO Energy common stock were issued and outstanding and held by approximately 130,662 holders of record. A quorum will be present at the PECO Energy annual meeting if at least a majority of the shares of PECO Energy common stock issued and outstanding and entitled at to vote on the PECO Energy record date are represented in person or by proxy. If a quorum is not present the PECO Energy annual meeting, we expect that the PECO Energy annual meeting will be adjourned or postponed to solicit additional proxies. Holders of record of PECO Energy common stock on the PECO Energy record date are entitled to one vote per share at the PECO Energy annual meeting. 112

Vote Required Assuming the presence of a quorum, generally the adoption of a proposal by PECO Energy shareholders requires the affirmative vote of the holders of at least a majority of all shares of PECO Energy common stock casting votes in person or by proxy, telephone or Internet at the PECO Energy annual meeting. Directors are elected by a plurality, and the four nominees who receive the most votes will be elected. Abstentions and broker non-votes will not be taken into account to determine the outcome of the election of directors or the approval of any proposal. Voting by PECO Energy Directors and Executive Officers At the close of business on April 5, 2000, directors and executive officers of PECO Energy and their affiliates owned and were entitled to vote approximately 354,247 shares of PECO Energy common stock, which represented approximately 0.2% of the shares of PECO Energy common stock outstanding on that date. Voting Your Shares The PECO Energy board of directors is soliciting proxies from PECO Energy shareholders. This will give you the opportunity to vote at the PECO Energy annual meeting. When you deliver a valid proxy, the shares represented by that proxy will be voted in accordance with your instructions. You may grant a proxy by

• signing and mailing your proxy card,
• calling a toll-free number and following the recorded instructions or
• going to a website on the Internet and following the instructions provided. If your shares are not registered in your own name, the bank, broker or other institution holding your shares may not offer telephone or Internet proxy voting. If your proxy card does not include telephone or Internet voting instructions, please complete and return your proxy card by mail. You may also cast your vote in person at the meeting.

Mail To grant your proxy by mail, please complete your proxy card, sign, date and return it in the enclosed envelope. To be valid, a returned proxy card must be signed and dated. Telephone You may use the toll-free number listed on your proxy card to grant your proxy. You must have your proxy card ready. Call the toll-free number and do the following:

     "* enter your Control Number located on your proxy card, and
     "* follow the recorded instructions.

Internet You may also use the Internet to grant your proxy. You must have your proxy card ready and:

     "* go to the website shown on your proxy card and follow the instructions provided, and
     "* enter your Control Number located on your proxy card.

In Person If you attend the PECO Energy annual meeting in person, you may vote your shares by completing a ballot at the meeting. 113

Voting of Proxies All shares represented by properly executed proxies received in time for the PECO Energy annual meeting will be voted at the PECO Energy annual meeting in the manner specified by the holders of those proxies. Properly executed proxies that do not contain voting instructions will be voted for the adoption of the merger agreement and the other proposals recommended by the PECO Energy board of directors. Shares of PECO Energy common stock represented at the PECO Energy annual meeting but not voting, including shares of PECO Energy common stock for which proxies have been received but for which holders of shares have abstained, will be treated as present at the PECO Energy annual meeting for purposes of determining the presence or absence of a quorum for the transaction of all business. Only shares affirmatively voted for the proposal for the adoption of the merger agreement, including properly executed proxies that do not contain voting instructions, will be counted as favorable votes for that proposal. Brokers who hold shares of PECO Energy common stock in street name for customers who are the beneficial owners of those shares may not give a proxy to vote those shares without specific instructions from those customers. These non-voted shares are referred to as broker non-votes and will have no effect in determining whether the merger agreement will be adopted. PECO Energy does not expect that any matter other than the proposal to adopt the merger agreement, the election of directors and appointment of auditors will be brought before the PECO Energy annual meeting. If, however, the PECO Energy board of directors properly presents other matters, the persons named as proxies will vote in accordance with their judgment. Revocability of Proxies Voting by use of a proxy on the enclosed form, telephone or Internet does not preclude a PECO Energy shareholder from voting in person at the PECO Energy annual meeting. A PECO Energy shareholder may revoke a proxy at any time prior to its exercise by filing with the corporate secretary of PECO Energy a duly executed revocation of proxy, by submitting a duly executed proxy, telephone or Internet vote to PECO Energy bearing a later date or by appearing at the PECO Energy annual meeting and voting in person. Attendance at the PECO Energy annual meeting without voting will not itself revoke a proxy. Solicitation of Proxies PECO Energy will bear the cost of the solicitation of proxies from its shareholders. In addition to solicitation by mail, the directors, officers and employees of PECO Energy and its subsidiaries may solicit proxies from PECO Energy shareholders by telephone or other electronic means or in person. Arrangements will also be made with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation materials to the beneficial owners of stock held of record by these persons, and PECO Energy will reimburse them for their reasonable out-of-pocket expenses. PECO Energy will mail a copy of this proxy statement/prospectus to each holder of record of PECO Energy common stock on the PECO Energy record date. Morrow & Co., Inc. will assist in the solicitation of proxies by PECO Energy. PECO Energy will pay Morrow & Co. a fee of $20,000, plus reimbursement of certain out-of-pocket expenses, and will indemnify Morrow & Co. against any losses arising out of Morrow & Co.'s proxy soliciting services on behalf of PECO Energy. 114

PECO Energy shareholders should not send stock certificates with their proxies. A transmittal form with instructions for the surrender of PECO Energy common stock certificates will be mailed to PECO Energy shareholders after completion of the merger. PROPOSALS FOR PECO ENERGY ANNUAL MEETING ITEM 1-PECO Energy Merger Proposal For summary and detailed information regarding the PECO Energy merger proposal, see "The Merger" in Chapter I. ITEM 2-Postponement or Adjournment of Annual Meeting In the event that the PECO Energy board of directors decides to adjourn or postpone the PECO Energy annual meeting, it shall submit to PECO Energy shareholders present and entitled to vote a proposal to so adjourn or postpone the annual meeting. We are asking that you grant your proxy for your shares to be voted in favor of such a proposal, if made. ITEM 3-Election of PECO Energy Directors The PECO Energy board of directors consists of 12 members, divided into three classes. The three-year terms of each class are staggered so that the term of one class expires at each annual meeting. The terms of the four Class I directors will expire at the 2000 annual meeting. The corporate governance committee has recommended, and the PECO Energy board of directors nominates, the following Class I directors for re-election: Richard H. Glanton, Rosemarie B. Greco, Corbin A. McNeill, Jr. and Robert Subin. Each has consented to serve a three-year term. If any director is unable to stand for re-election, the PECO Energy board of directors may reduce the number of directors, or designate a substitute. In that case, shares represented by proxies may be voted for a substitute director. We do not expect that any nominee will be unavailable or unable to serve. The corporate governance committee and the PECO Energy board of directors recommend a vote FOR these directors. BiographicalInformation of PECO Energy Directors CORBIN A. McNEILL, JR.* Directorsince 1990 Mr. McNeill, age 60, is Chairman, President and Chief Executive Officer of PECO Energy. He was elected Executive Vice President, Nuclear in 1988, President and Chief Operating Officer in 1990, Chief Executive Officer in 1995 and Chairman in 1997. Before joining PECO Energy in 1988, he was Senior Vice President, Nuclear of Public Service Electric and Gas Company.

• Nominee for election at 2000 annual meeting.

115

SUSAN W. CATHERWOOD Director since 1988 Ms. Catherwood, age 56, is the former Chairman of the Trustee Board, University of Pennsylvania Medical Center and Health System and Vice Chairman of the Board of the University of Pennsylvania. She was formerly Chairman of the Board of Overseers of the University of Pennsylvania Museum. Ms. Catherwood is also a director of the Glenmede Corporation, the Glenmede Trust Company, the Glenmede Trust Company of New Jersey and the Pew Charitable Trusts. I )ANIEL L. COOPER Directorsince 1997 Admiral Cooper, age 64, is the former Vice President and General Manager, Nuclear Services Division of Gilbert/Commonwealth, Inc. He retired from the Navy in 1991 as Assistant Chief of Naval Operations (Undersea Warfare). His Navy career included service as Commander, Submarine Force, of the U.S. Atlantic Fleet; Director of Navy Program Planning; and Director, Navy Budget. He is a former director and Vice Chairman of the Board of USAA insurance company, an insurance and financial services company; and until December 1999 was Chairman of the Advisory Board of Applied Research Laboratory, Penn State University. M. WALTER D'ALESSIO Directorsince 1983 Mr. D'Alessio, age 66, is Chairman, President and Chief Executive Officer of Legg Mason Real Estate Services, commercial mortgage banking and pension fund advisors. He is also a director of the Philadelphia Beltline Railroad, Independence Blue Cross and the Brandywine Real Estate Investment Trust. G. FRED DiBONA, JR. Director since 1997 Mr. DiBona, age 49, is President and Chief Executive Officer of Independence Blue Cross, a health insurance organization. He also serves as Chairman, President and Chief Executive Officer of Keystone Health Plan East, a subsidiary of Independence Blue Cross. He is past chairman of the National Blue Cross and Blue Shield Association. He is also a director of Tasty Baking Company, Philadelphia Suburban Corporation, Eclipsys Corporation and Magellan Health Services, Inc. R. KEITH ELLIOTT Directorsince 1997 Mr. Elliott, age 58, is the former Chairman and Chief Executive Officer of Hercules Incorporated, which produces specialty chemicals and related products. He is also a director of Wilmington Trust Company and Computer Task Group.

• Nominee for election at 2000 annual meeting.

116

RICHARD H. GLANTON* Directorsince 1991 Mr. Glanton, age 53, is a partner of the law firm of Reed Smith Shaw & McClay LLP. Mr. Glanton is also a director of CGU Corporation of North America, Philadelphia Suburban Corporation, Philadelphia Suburban Water Company, Wackenhut Corrections Corporation and is Chairman of Philadelphia Television Network, Inc. Reed Smith Shaw & McClay LLP provided legal services to PECO Energy during 1999. Under the board's conflict of interest policy, the board specifically reviewed the proposal to engage Mr. Glanton's partners to perform particular legal services and concluded that the representation was in the best interest of PECO Energy. ROSEMARIE B. GRECO* Directorsince 1998 Ms. Greco, age 53, is the Principle of GRECO ventures and is the former President of CoreStates Financial Corporation and Chief Executive Officer, President and director of CoreStates Bank, N.A. She is also a director of Sunoco, Inc., Pennsylvania Real Estate Investment Trust, Cardone Industries, Inc., Genuardi's Family Markets, Inc., PWRT ComServe, Inc. and Radian Group, Inc. JOHN M. PALMS, Ph.D. Directorsince 1990 Dr. Palms, age 64, is President of the University of South Carolina and Professor of Physics. He previously served as President of Georgia State University and was the Charles Howard Chandler Professor of Physics and Vice President for Academic Affairs of Emory University. He is also director of Fortis, Inc., Policy Management Systems Corporation, Chairman of the Board of Trustees of the Institute for Defense Analyses and a member of the Advisory Council for the Institute of Nuclear Power Operations. A JOSEPH F. PAQUETTE, JR. Directorsince 1988 Mr. Paquette, age 65, retired as Chairman of the Board in 1997. During his career with PECO Energy, he also held the positions of President, Chief Executive Officer and Chief Operating Officer. He is also a director of AAA Mid-Atlantic Inc. and Keystone Insurance Companies. RONALD RUBIN Director since 1988 Mr. Rubin, age 68, is Chief Executive Officer of The Pennsylvania Real Estate Investment Trust, a real estate management and development company. In 1997, the Rubin Organization, Inc. was acquired by The Pennsylvania Real Estate Investment Trust. He is a former director of Continental Bank and Midlantic Bank.

• Nominee for election at 2000 annual meeting.

117

ROBERT SUBIN* Directorsince 1994 Mr. Subin, age 61, retired as Senior Vice President-Global Sourcing & Engineering for Campbell Soup Company in 1998. During his career at Campbell Soup Company, he held the positions of Senior Vice President-Finance, President of the Bakery and Confectionery Division, President of the International Specialty Foods Division and SPresident of the Campbell Europe/America Division. Nominee for election at 2000 annual meeting Committees of the PECO Energy Board of Directors Audit Committee The Audit Committee reviews auditing, accounting, financial reporting and internal control functions. The committee also reviews officers' and directors' expenses, corporate code of conduct, environmental and legal compliance matters and Year 2000 issues. This committee recommends the independent auditors and approves the scope of the annual audit by the independent auditors and internal auditors. All members of this committee are non-employee directors. The committee meets outside of the presence of management for portions of its meetings with both the independent auditors and the internal auditors. Compensation Committee The Compensation Committee reviews the executives' compensation and administers and oversees the employee benefit plans and programs. The committee makes compensation decisions, which are approved by the full board, for the positions of Chairman, Chief Executive Officer, President, Senior Vice President, Vice President and Corporate Secretary. The committee uses the services of an independent compensation consultant who reports directly to the committee. All members are non-employee directors. Corporate Governance Committee The Corporate Governance Committee considers and recommends nominees for election as directors. The committee reviews individual committee self-assessments and makes recommendations on board and committee structure, membership, functions, compensation and effectiveness. The committee oversees management succession planning and development programs on behalf of the board. The committee also establishes the job description and performance criteria of the chief executive officer and initially evaluates the chief executive officer's performance for the board. All members are non-employee directors. Finance Committee The Finance Committee reviews and makes recommendations to the board about significant financial matters and business opportunities. The committee serves as the fiduciary of PECO Energy's qualified pension and savings plans, establishes the investment policy and reviews the transactions and performance of the investment managers. All members are non-employee directors. Nuclear Committee The Nuclear Committee oversees nuclear operations of PECO Energy for safety, reliability and quality and effectiveness of management and management systems. The committee uses an independent consultant to assist it in performing its functions. Public Affairs Committee The Public Affairs Committee advises management on matters of legislative, regulatory and public policy. Each director attended at least 92% of the meetings of the board and the meetings of committees of which he or she was a member. 118

Committee Membership Roster Corporate Public Name Board Audit Compensation Governance Finance Nuclear Affairs C. A. McNeill, Jr................. X* x* S. W. Catherwood ................ X X* X D. L. Cooper .................... X X X X M. W. D'Alessio ................. X X* X X G. F. DiBona, Jr .................. X X X R. K. Elliott .................... X X X* R. H. Glanton ................... X X X R. B. Greco .................... X X X X X J. M. Palms ..................... X X X X* J. F. Paquette, Jr .................. X X X R. Rubin ....................... X X X X R. Subin ....................... X X* X No. of Meetings in 1999 ........... 10 3 5 4 11 13 2

• Chairperson Board Compensation Employee directors receive no compensation, other than their normal salary, for serving on the board or its committees.

PECO Energy's total compensation target for directors who are not officers of PECO Energy is between the lowest 25th and the 50th percentile of the general industry average. Directors are paid in cash and deferred stock units as set forth below, and are reimbursed expenses, if any, for attending meetings:

      * $21,000 Annual board retainer,
      * $ 1,000 Meeting fee,
      * $ 2,000 Annual retainer for chairmanship of audit and nuclear committees, S$ 1,000 Annual retainer for chairmanship of compensation, corporate governance and finance committees, and

• 1,000 Deferred stock units.

Directors are required to own at least 3,000 shares of PECO Energy common stock or stock units within three years after their election to the board. Effective January 1997, PECO Energy terminated all future retirement benefit accruals and stock option grants for non-employee directors. Accrued benefits under the previous retirement plan have been replaced with a one-time grant of deferred stock units equal to the January 1997 value of all accrued benefits. The expected values of the future benefits under the previous retirement plan have been replaced with annual grants of deferred stock units. Each deferred stock unit is the right to receive one share of PECO Energy common stock at retirement. Before retirement, deferred stock units accrue dividend equivalents for each year the director serves on the board. Upon retirement, the director can receive the accumulated shares in a lump sum or spread the distribution over a period of up to ten years. Directors can elect to receive all or a portion of their compensation in stock or to defer receiving it until retirement, death or until they no longer serve as director. Deferred compensation is put in an unfunded account and credited with interest, equal to the amount that would have been earned had the compensation been invested in one or more of eight designated mutual funds. The deferred amounts and accrued interest are unfunded obligations of PECO Energy and cannot be distributed to the director until he or she reaches 65, retires or is no longer a director. There are exceptions to this rule for financial hardship. 119

In 1999, non-employee directors received $520,000 as a group. At its April 27, 1999 meeting, the corporate governance committee reviewed the overall level of director compensation and increased the annual allocation of deferred stock units from 715 to 1,000. Report of the Compensation Committee What is Our Compensation Philosophy? The objectives of PECO Energy's executive compensation program are to motivate and reward senior management for achieving high levels of business performance and outstanding financial results. In 1999, PECO Energy continued to direct its focus to compensating executives competitively with general industry. This philosophy reflects a commitment to attract executives from competitive businesses and retain key executives to ensure positive business performance and continued focus on achieving long-term growth in shareholder value. The compensation committee, comprised of non-employee directors, has the responsibility of administering executive compensation programs, policies and practices. There are three parts to PECO Energy's executive compensation program:

      "* Base salary,
      "* Annual bonuses, and
      "* Long-term incentives.

These three parts balance short-term, mid-term and long-term business objectives and align executive financial rewards with those of PECO Energy's shareholders. Annual incentives are awarded for the successful achievement of PECO Energy's financial and operational goals established at the beginning of each year. Long-term incentives are generally granted in the form of stock options and restricted stock. These awards tie the executives' financial rewards directly to increased shareholder value. What Factors Do We Consider in Determining Overall Compensation? Compensation levels for PECO Energy's executives are reviewed each year by a nationally recognized, independent consulting firm. A survey of large, general industry companies, adjusted for PECO Energy's size, including the majority of companies in the "Fortune 500", is prepared and presented to the compensation committee. The compensation committee uses this information, along with individual performance and PECO Energy's overall financial condition, to make decisions on each executive's overall compensation. How Do We Determine Base Salary? Base salaries for PECO Energy's executives are determined by individual performance and by comparisons to the salaries of executives in similar positions in general industry, and where appropriate, the utility sector. The goal for the base salary component is to pay competitively with comparable markets to attract and retain key executives. Executive salaries are targeted to correspond to approximately the median (50th percentile) salaries of the companies identified and surveyed. Mr. McNeill's 1999 Base Salary: The committee determined Mr. McNeill's base salary as Chairman, President and CEO by considering:

• input from an outside consulting firm, which reviews competitive data and estimates a competitive level of base pay, 120

       "* performance achieved against financial goals in 1998, and
       "* the implementation of PECO Energy's strategic plans.

Other Named Executives' 1999 Base Salary: The base pay for the other named executive officers listed in the Summary Compensation Table on page 125 was determined by their individual performance and by considering comparable compensation data from the industry surveys referred to above. How Are Annual Bonuses Determined? Under the PECO Energy management incentive compensation plan, annual bonuses are paid to executives based on a combination of the achievement of pre-determined corporate and business unit-specific measures and individual performance. The objective of the incentive plan is to tie executive bonuses to achievement of key goals of PECO Energy and the executive's particular business unit. Corporate and business unit measures are established each year and are based on critical business factors necessary to achieve a balance of short and long-term strategic business objectives. These goals are incorporated into a number of factors designed to measure corporate and business unit performance. These key performance factors are financial, customer, internal and innovation measures, which are described below. 1999 Bonus Payout Level: For 1999, Mr. McNeill's bonus payout was determined according to the following corporate performance measures:

       "* Net Income,
       "* Cash Flow,
       "* Average Customer Retention of PECO Energy's Distribution Division,
       "* Customer Value Index of PECO Energy's Distribution Division,
       "* Employee Commitment,
       "* Safety,
      "* Generating Company Capacity Growth,
      "* Exelon Portfolio Growth, and
      "* Implementation of the Corporate Value Drivers.

The other named executive officers listed in the Summary Compensation Table on page 125 are measured on a combination of corporate results and on measures specific to their business unit or department. Executive Factors Weighting M r. M cNeill ................................................... Corp orate 100% Messrs. Egan and Durham ......................................... Corporate 80% Business Unit 20% Messrs. Lawrence and Rainey ...................................... Corporate 60% Business Unit 40% Mr. MeNeill's 1999 Bonus: In evaluating Mr. McNeill's performance, the committee considered the overall performance of PECO Energy against the measures that were achieved in the incentive plan. In arriving at Mr. McNeill's bonus, the committee factored in his leadership in positioning PECO Energy for the future, including:

• The fact that overall financial, customer, and operational results were consistently above target levels, 121

      " The aggressive growth plan of the generating company, with the acquisition, or signed intent to acquire, 5,600 megawatts of additional generation capacity through the purchase of Three Mile Island, Nine Mile Point, Oyster Creek, Peach Bottom, Clinton, Vermont Yankee and entry into certain power purchase contracts,
      "* The inception of the Exelon Infrastructure Services subsidiary, as a separate line of business, and
      "* The pending merger of PECO Energy and Unicorn, which will result in one of the largest electric utility companies in the United States.

A final 1999 plan payout to Mr. McNeill of $1,000,000 was approved by the Board. Other Named Executive Officers' 1999 Bonuses: The final 1999 incentive plan payouts as approved by the committee for Messrs. Egan, Durham, Lawrence and Rainey were an aggregate of $1,105,100 for the group and were determined in accordance with the incentive plan and each individual's performance. How Is Compensation Used To Focus Management on Long-Term Value Creation? In 1997, the shareholders approved an amended 1989 long-term incentive plan. The amended 1989 plan awards performance-based grants and provides PECO Energy flexibility in its executive compensation practices in a competitive, deregulated business environment. For 1999, the amended 1989 plan was divided into two segments: mid-term and long-term incentives. Mid-term Incentives Mid-term incentives are awarded in the form of restricted stock to retain key executives engaged in positioning PECO Energy. Awards are determined upon the successful completion of strategic goals designed to achieve long-term business success and increased shareholder value. Depending upon PECO Energy's progress each year, the committee may award restricted stock with prohibitions on sale or transfer until the restrictions lapse. Restricted stock was awarded to key executives after a review of the progress made in repositioning PECO Energy to compete successfully over the long term. Specific areas considered in determining awards for Mr. McNeill and the other named officers included outstanding shareholder return for 1998, finalization of the settlement with the Pennsylvania Public Utility Commission, and growth in both core and new lines of business. Mr. McNeill's mid-term award of 25,000 shares of restricted stock was approved by the Board of Directors. The mid-term awards as approved by the Board of Directors for Messers. Egan, Durham, Lawrence and Rainey were an aggregate of 14,000 shares of restricted stock. Long-term Incentives Long-term incentives are granted in the form of stock options. The purpose of stock options is to align compensation directly to increases in shareholder value. Individuals receiving options are given the right to buy a fixed number of shares of PECO Energy common stock at the closing price of the PECO Energy common stock on the date of grant during a specified period of time. In 1998, Mr. McNeill and other named officers received a multi-year grant of stock options. These awards were designed to motivate the executives to achieve aggressive stock appreciation during the uncertain business conditions that exist during the transition to deregulation. In addition, this approach supported the strategy of shifting total compensation from utility industry to general industry standards, where the proportion of at-risk pay to fixed pay is considerably higher. In 1999, no stock options were awarded to executives who received these significant grants. Mr. Durham, who did not receive a multi-year award in 1998, received an award in 1999 of 30,000 stock options. 122

Stock Ownership Guidelines PECO Energy is committed to strengthening the alignment of its executives' financial interests with those of its shareholders. Officers of PECO Energy are required to own the following levels of stock: Position Stock Ownership Levels Chairman, President and CEO .............................. 4 times salary Senior Vice Presidents ................................... 2 times salary Other officers .......................................... 1 times salary Officers must meet the required levels of stock ownership by February 2002 or five years from their election as an officer of PECO Energy, whichever is later. The Chairman reviews ownership progress of executives on a regular basis, and reports progress against target levels to the compensation committee annually. Stock options, whether vested or unvested, are not considered stock owned for the purpose of meeting the ownership guidelines. Can We Deduct Executive Compensation Under Section 162(m) of the Internal Revenue Code? Under Section 162(m) of the Internal Revenue Code, PECO Energy may not deduct executive compensation in excess of $1.0 million per year unless it qualifies as performance-based compensation. The compensation committee reviewed PECO Energy's current compensation plans and practices and concluded that it was entitled to deduct executive compensation under Section 162(m). Are the Companies Used in the Executive Compensation Comparison and in the ShareholderReturn Comparison the Same? The shareholder return comparison companies are those included in the Dow Jones Utility Average. For 1999, the companies used for executive pay comparisons are companies across general industry, including a number of major electric utilities. What Was PECO Energy Company's Cumulative ShareholderReturn? As noted on the graph shown on page 124, an investment of $100 in PECO Energy common stock on December 31, 1994 would have grown in value to $185.34 assuming reinvestment of dividends at December 31, 1999. For the five-year period ending December 31, 1999, the total cumulative return for holders of PECO Energy common stock amounted to approximately 85%, or the equivalent of 13.13% per year compounded. That return was slightly below the comparable Dow Jones Utility Average, and both indices were substantially below the return of the Standard & Poor's 500 Stock Index. Compensation Committee Robert Subin, Chairman G. Fred DiBona, Jr. Rosemarie B. Greco John M. Palms, Ph.D. Ronald Rubin 123

Comparison of Five-Year Cumulative Return The performance chart below illustrates a five-year comparison of cumulative total returns based on an initial investment of $100 in PECO Energy common stock as compared with the S&P 500 Stock Index and the Dow Jones Utility Average for the period 1994 through 1999. This performance chart assumes:

     * $100 invested on December 31, 1994 in PECO Energy common stock, S&P 500 Stock Index and Dow Jones Utility Average, and

• all dividends are reinvested.

Comparison of Five-Year Cumulative Return-1995-1999 400

               *-----------------------------------------------------------------------A                    ----------

350 300 ----------------------------------------------- ---------------------- II D 0 250 ---------- --------------------------------- L L 200 A 150 --- - ------------------------------------- R S 100 50 I III 0 12/94 12/95 12/96 12/97 12/98 12/99 December 31, 1994 1995 1996 1997 1998 1999 117.01 121.82 217.31 185.34 PECO Energy Company (----) ................. $100.00 130.68 137.58 169.17 225.61 290.09 351.13 S&P 500 Stock Index (- * -) ................... $100.00

                                                                   $100.00    131.98   143.99    177.11   210.54       197.86 Dow Jones Utility Average (- - ) ...............

124

Summary Compensation Table Compensation of Executive Officers The amounts listed under "All Other Compensation" are matching contributions made by PECO Energy under the PECO Energy Employee Savings Plan. Annual Compensation Long-Term Compensation Awards Payouts Restricted Stock Long-Term All Other Award(s) Options Incentive Plan Compensation Name and Principal Position Year Salary ($) Bonus ($) Other ($) ($) (#)(A) Payouts ($) ($) Corbin A. McNeill, Jr.... 1999 659,857 1,000,000 0 942,188 0 0 3,200 Chairman of the Board, 1998 585,476 708,100 0 0 500,000 0 3,200 President and Chief 1997 551.112 330,200 0 0 50,000 0 3,200 Executive Officer Michael J. Egan ....... 1999 326,312 311,400 0 150,750 0 0 0 Senior Vice President, 1998 317,439 235,700 0 0 125,000 0 0 Finance and Chief 1997 63,003 229,148 0 99,851(B) 298,000 0 200,000(C) Financial Officer Gerald R. Rainey ....... 1999 310,386 289,000 0 150,750 0 0 2,076 President and Chief 1998 269,308 193,700 0 0 90,000 0 2,040 Nuclear Officer, 1997 215,260 99,783 0 0 10,000 0 3,200 PECO Energy Nuclear James W. Durham ...... 1999 298,831 274,500 0 120,600 30,000 0 3,200 Senior Vice President, 1998 298,952 225,300 0 0 34,000 0 3,200 and General Counsel 1997 294,639 111,733 0 0 20,000 0 3,200 Kenneth G. Lawrence ... 1999 291,847 241,200 0 94,219 0 0 3,200 Senior Vice President, 1998 282,164 200,700 0 0 115,000 0 3,107 Corporate and Presi 1997 255,126 107,142 0 0 20,000 0 3,200 dent, PECO Energy Dis tribution (A) In 1998, Messrs. McNeill, Egan, Rainey and Lawrence received a multi-year grant of stock options. Therefore, they did not receive any stock options in 1999. (B) At December 31, 1999, Mr. Egan held 4,475 shares of restricted stock with an aggregate value of

          $155,506. These shares vest on October 13, 2000 and Mr. Egan will receive dividends on these shares during the vesting period.

(C) The signing bonus that Mr. Egan received when he was elected an officer effective October 13, 1997. 125

4-Option Grants in 1999 The options listed below become exercisable in full based on a combination of PECO Energy stock price performance and time. Once the stock has closed at a price of $41.00, one third of the options will vest 12 months from the date of grant, one-third will vest 24 months from the date of grant and one-third will vest 36 months from the date of grant. Values indicated are an estimate based on the Black-Scholes option pricing model. Although executives risk forfeiting these options in some circumstances, these risks are not factored into the calculated values. The actual value of these options will be determined by the excess of the stock price over the exercise price on the date the option is exercised. There is no certainty that the actual value realized will be at or near the value estimated by the Black-Scholes option pricing model. Assumptions used for the Black-Scholes model are as of December 31, 1999 and are as follows: Risk-free interest rate ................................ 5.41% V olatility . ...................... ........... ....... .2836 Dividend yield ..................................... 6.26% Tim e of exercise ................................... 9.5 years Grant Date Individual Grants Value

                                                              % of Total Number of              Options Securities            Granted Underlying Options        to Employees Exercise or Base                         Grant Date Name                         Granted(#)              in 1999         Price($/SH)   Expiration Date  Present Value($)

Corbin A. McNeill, Jr. 0 0 N/A N/A 0 Chairman of the Board, President and Chief Executive Officer Michael J. Egan ........ 0 0 N/A N/A 0 Senior Vice President, Finance and Chief Financial Officer Gerald R. Rainey ....... 0 0 N/A N/A 0 President and Chief Nuclear Officer, PECO Energy Nuclear James W. Durham ...... 30,000 .16 37.6875 02/23/09 241,800 Senior Vice President and General Counsel Kenneth G. Lawrence .... 0 0 N/A N/A 0 Senior Vice President, Corporate and President, PECO Energy Distribution 126

Option Exercises and Year-End Value This table shows the number and value of exercised and unexercised stock options for the named executive officers during 1999. Value is determined using the market value of PECO Energy common stock at the year-end price of $34.75 per share, minus the value of PECO Energy common stock at the exercise price. All options whose exercise price exceeds the market value are valued at zero. Number of Securities Value of Underlying Unexercised Unexercised in-the-Money Options at Options at 12/31/99 12/31/99 Shares (#)Exercisable ($)Exercisable Acquired Value Name on Exercise(#) Realized($) Unexercisable Unexercisable Corbin A. M cNeill, Jr ....................... 25,000 596,875 E 823,500 E 10,725,375 Chairman of the Board, U 0 U 0 President and Chief Executive Officer M ichael J. Egan ........................... 0 0 E 423,000 E 5,379,039 Senior Vice President, U 0 U 0 Finance and Chief Financial Officer Gerald R. Rainey .......................... 0 0 E 0 E 0 President and Chief Nuclear Officer, U 0 U 0 PECO Energy Nuclear James W . Durham ......................... 0 0 E 174,000 E 1,580,250 Senior Vice President and General Counsel U 20,000 U 0 Kenneth G. Lawrence ....................... 20,000 497,760 E 108,000 E 1,108,500 Senior Vice President, Corporate and U 0 U 0 President, PECO Energy Distribution 127

Pension Plan Table Average Annual Compensation for Highest Consecutive Years of Service Five Years 10 years 15 years 20 Years 25 Years 30 Years 35 Years 40 Years

 $ 100,000.00          $ 19,343     $ 26,514      $ 33,686     $ 40,857       $ 48,029     $ 55,200     $ 62,372 200,000.00           39,843        54,764        69,686       84,607        99,529      114,450       129,372 300,000.00           60,343        83,014       105,686      128,357       151,029      173,700       196,372 400,000.00           80,843      111,264        141,686      172,107       202,529     232,950       263,372 500,000.00          101,343      139,514        177,686     215,857        254,029     292,200       330,372 600,000.00          121,843      167,764       213,686      259,607        305,529     351,450       397,372 700,000.00          142,343      196,014       249,686      303,357        357,029     410,700       464,372 800,000.00          162,843      224,264       285,686      347,107        408,529     469,950       531,372 900,000.00          183,343      252,514       321,686      390,857        460,029     529,200       598,372 1,000,000.00          203,843      280,764       357,686      434,607        511,529     588,450       665,372 Messrs. McNeill, Egan, Rainey, Durham and Lawrence have 32, 2, 30, 21 and 30 credited years of service, respectively, under PECO Energy's pension program. Mr. Durham has been granted one year of additional service, for purposes of calculating his benefits under PECO Energy's pension program, for each year of service up to a maximum of 10 additional years.

Retirement Plans The preceding table shows the estimated annual retirement benefits payable on a straight-life annuity basis to participating employees, including officers, in the earnings and year of service classes indicated, under PECO Energy's non-contributory retirement plans. The amounts shown in the table are not subject to any deduction for Social Security or other offset amounts. Covered compensation includes salary and bonus which is disclosed in the Summary Compensation Table on page 125 for the named executive officers. The calculation of retirement benefits under the plans is based upon average earnings for the highest consecutive five-year period. The Internal Revenue Code limits the annual benefits that can be paid from a tax-qualified retirement plan. As permitted by the Employee Retirement Income Security Act of 1974, PECO Energy has supplemental plans which allow the payment out of general funds of PECO Energy of any benefits calculated under provisions of the applicable retirement plan which may be above these limits. 128

Other Information Change-of-ControlAgreements PECO Energy has entered into change-of-control agreements with most of its executive officers, including the individuals named in the Summary Compensation Table. The purpose of the agreements is to assure the objective judgment, and to keep the loyalties, of key executives when PECO Energy is faced with a potential change of control by providing for a continuation of salary, bonus, health and other benefits for a maximum period of three years. See "The Merger-Interests of PECO Energy's Directors and Management in the Merger -Change in Control under Plans" in Chapter I. In addition, PECO Energy's long-term incentive plan allows the committee administering this plan to terminate the restrictions on stock options and restricted stock grants at any time. PECO Energy has also entered into two trust agreements to provide for the payment of retirement benefits and deferred compensation benefits of directors and officers that include provisions requiring full funding in the event of a change of control. Beneficial Ownership The following table indicates how much PECO Energy common stock was owned by the directors, named executive officers and beneficial owners of more than 5% owned as of December 31, 1999. In reviewing this table, please note the following:

    "* the shares listed as "Beneficially Owned" include shares in the Employee Savings Plan, the Officers and Directors Deferred Compensation Plan and the Directors Deferred Stock Unit Plan,
     "* the shares listed as "May Be Acquired" include shares of PECO Energy common stock which can be acquired upon the exercise of stock options granted under the PECO Energy Long-Term Incentive Plan, and
     "* beneficial ownership of directors and officers as a group represents less than 1% of the outstanding shares of PECO Energy common stock.

Number of Common Shares Beneficially May Be Name Owned Acquired Total Susan W . Catherwood, Director ............................. 9,165 6,000 15,165 Daniel L. Cooper, Director ................................. 2,992 0 2,992 M. Walter D'Alessio, Director .............................. 9,798 6,000 15,798 G. Fred DiBona, Jr., Director ............................... 2,958 0 2,958 James W. Durham, Officer ................................. 17,095 194,000 211,095 Michael J. Egan, Officer ................................... 20,134 423,000 443,134 R. Keith Elliott, Director ................................... 3,958 0 3,958 Richard H. Glanton, Director ................................ 5,723 0 5,723 Rosemarie B. Greco, Director ................................ 4,523 0 4,523 Kenneth G. Lawrence, Officer ................................ 11,828 108,000 119,828 Corbin A. McNeill, Jr., Director and Officer .................... 90,391 848,500 938,891 John M. Palms, Ph.D., Director .............................. 9,577 6,000 15,577 Joseph F. Paquette, Jr., Director ............................. 42,034 90,000 132,034 Gerald R. Rainey, Officer .................................. 25,970 0 25,970 Ronald Rubin, Director..... ............................... 10,266 6,000 16,266 Robert Subin, Director .................................... 5,439 5,000 10,439 Directors and Officers as a group (42) ......................... 411,557 2,679,100 3,090,657 This table does not include 533,293 shares of common stock held under PECO Energy's Service Annuity Plan. Messrs. Cooper, D'Alessio, Elliott, Paquette and Rubin are members of the finance committee which monitors the investment policy and performance of the investments under that plan. 129

Section 16(a) Beneficial Ownership Reporting Compliance The federal securities laws require PECO Energy's directors and executive officers to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of any securities of PECO Energy. To PECO Energy's knowledge, based solely on a review of the copies of these reports given to PECO Energy and written representations that no other reports were required during 1999, all of PECO Energy's directors and executive officers made the required filings except that Rosemarie Greco, a director of PECO Energy, filed one late report of changes in beneficial ownership on Form 4 relating to a purchase of shares of PECO Energy common stock, and except that Ian McLean, an officer of PECO Energy, filed an initial statement of beneficial ownership late. ITEM 4-Ratification of Appointment of Independent Auditors Coopers & Lybrand had been our independent auditors for many years. Effective July 1, 1998, Coopers & Lybrand merged with PriceWaterhouse to form PricewaterhouseCoopers, LLP. Since this merger, PricewaterhouseCoopers has been our independent auditors. The audit committee and the board of directors believe that PricewaterhouseCoopers's long-term knowledge of PECO Energy is invaluable, especially as PECO Energy moves to competition in the energy market. Representatives of PricewaterhouseCoopers working on PECO Energy matters are periodically changed, providing PECO Energy with new expertise and experience. Representatives of PricewaterhouseCoopers have direct access to members of the audit committee and regularly attend their meetings. Representatives of PricewaterhouseCoopers will attend the PECO Energy annual meeting to answer appropriate questions and make a statement if they desire. In 1999, the audit committee reviewed the PricewaterhouseCoopers Audit Plan for 2000 and proposed fees and concluded that the scope of audit was appropriate and the proposed fees were reasonable. The audit committee and the board of directors recommend a vote FOR PricewaterhouseCoopers, LLP as PECO Energy's independent auditors for 2000. Other Matters Nominees for Board of Directors You may recommend any person as a nominee for director of PECO Energy by writing to M. Walter D'Alessio, Chairman of the Corporate Governance Committee, c/o PECO Energy Company, 2301 Market Street, P.O. Box 8699, Philadelphia, PA 19101-8699. Any such recommendation will be subject to review by the Corporate Governance Committee of the PECO Energy board of directors, which has the sole discretion to decide whom it will recommend to the full board of directors, and the PECO Energy board of directors has the sole discretion to make the final selection of board-nominated candidates for election as directors of PECO Energy. If you intend to nominate a candidate for election to the PECO Energy board of directors at the annual meeting in opposition to the candidates designated by the PECO Energy board of directors, you must submit to Katherin K. Combs, Deputy General Counsel and Corporate Secretary, PECO Energy Company, 2301 Market Street, P.O. Box 8699, Philadelphia, PA 19101-8699, written notice of such intent between April 12, 2000 and May 12, 2000. Such written notice must include a notarized statement indicating the nominee's willingness to serve, if elected, and information required under PECO Energy's By-laws, including the nominee's principal occupations or employment over the past five years. 130

ShareholderProposals In order to be considered, PECO shareholders must submit proposals for next year's PECO Energy annual meeting in writing to Katherine K. Combs, Deputy General Counsel and Corporate Secretary, PECO Energy Company, 2301 Market Street, P.O. Box 8699, Philadelphia, PA 19101-8699. Under the PECO Energy By laws, no proposal can be considered at the PECO Energy 2001 annual meeting unless it is received by the Corporate Secretary of PECO Energy before the close of business on January 17, 2000. The proposal must also meet the other requirements of the rules of the Securities and Exchange Commission relating to shareholder proposals. DiscretionaryVoting Authority The PECO Energy board of directors knows of no other matters to be presented for action at the meeting. As to any other matters that may properly come before the meeting, the individuals serving as proxies intend to vote in their best judgment. Your signed proxy card gives authority to M. Walter D'Alessio, Joseph F. Paquette, Jr. and J. Barry Mitchell to vote on these matters. DIRECTIONS to Loews Philadelphia Hotel From The North (1-95) Follow 1-95 South to Central Philadelphia, exit number 17 to Callowhill Street. Turn right at the bottom of the exit ramp and follow Callowhill Street to 12th Street and make a left. Follow 12th Street to Market Street. Loews is located on the Southwest corner of 12th and Market Streets. From New York or North Jersey (NJ Turnpike) Follow the New Jersey Turnpike to Exit #4 and take Route 73 North (Philadelphia/Camden). Follow Route 73 North to Route 90 (left exit), which crosses the Betsy Ross Bridge (Eastbound toll $3.00). After crossing the bridge follow 1-95 South to Central Philadelphia, exit number 17 to Callowhill Street. Turn right at the bottom of the exit ramp and follow Callowhill Street to 12th Street and make a left. Follow 12th Street to Market Street. Loews is located on the Southwest comer of 12th and Market Streets. From The South or Airport (1-95) Follow 1-95 North to from Philadelphia International Airport or from points South. Exit 1-95 North to the left at exit 17. Follow the signs to Callowhill Street. Follow Callowhill Street to 12th Street and make a left. Follow 12th Street to Market Street. Loews is located on the Southwest corner of 12th and Market Streets. From Atlantic City Take the Atlantic City Expressway to Route 42 North. Follow Route 42 North to 1-76 West. Follow 1-76 West to 1-676 West, crossing the Benjamin Franklin Bridge (Eastbound toll $3.00). After crossing the bridge continue straight onto Vine Street. Follow Vine Street to 12th Street and make a left. Follow 12th Street to Market Street. Loews is located on the Southwest corner of 12th and Market Streets. From The West (PA Turnpike) Exit the Turnpike from Exit 24, the Valley Forge Interchange, to 1-76 East. Exit 1-76 East to the left onto 1-676 East. Follow 1-676 for only 1/2 mile to the Broad Street exit. At the top of the Broad Street exit ramp make a right onto 15th Street. Go one light to Race Street, and turn left. Follow Race Street to 12th Street and make a right. Follow 12th Street to Market Street. Loews is located on the Southwest corner of 12th and Market Streets. From The Northeast Extension (PA Turnpike) Take the Northeast Extension to the East Pennsylvania Turnpike-Exit 25A. Then continue on 1-476 South to 1-76 East. Exit 1-76 East to the left onto 1-676 East. Follow 1-676 for only 1/2 mile to the Broad Street exit. At the top of the Broad Street exit ramp make a right onto 15th Street. Go one light to Race Street, and turn left. Follow Race Street to 12th Street and make a right. Follow 12th Street to Market Street. Loews is located on the Southwest corner of 12th and Market Streets. 131

CHAPTER II-INFORMATION ABOUT THE UNICOM ANNUAL MEETING AND OTHER PROPOSALS THE UNICOM ANNUAL MEETING This proxy statement/prospectus is being furnished in connection with the solicitation of proxies from the holders of Unicorn common stock by the Unicorn board of directors relating to the election of directors, the merger proposal and other matters to be voted upon at the Unicorn annual meeting and at any adjournment or postponement of the meeting. This proxy statement/prospectus is also a prospectus for the shares of Exelon common stock to be issued in the merger. Unicorn mailed this proxy statement/prospectus to shareholders beginning May 18, 2000. You should read this proxy statement/prospectus carefully before voting your shares. Date, Time and Place We will hold the Unicorn annual meeting on Wednesday, June 28, 2000, at 10:30 a.m., local time, at the Grand Ballroom of the Hyatt Regency Chicago, 151 East Wacker Drive, Chicago, Illinois. Purpose of Unicorn Annual Meeting At the Unicorn annual meeting, you will be asked to consider and vote upon the following proposals:

     "* to consider a proposal to approve the agreement and plan of exchange and merger dated as of September 22, 1999, as amended and restated as of January 7, 2000, among PECO Energy, Exelon and Unicorn, providing for the first step exchange and the second step merger, described under "The Merger" and "The Merger Agreement" in Chapter I,
     "* to consider and vote upon a proposal to postpone or adjourn. the annual meeting, if proposed by Unicorn's board of directors, described under "-Proposals for Unicorn Annual Meeting-Item 2 Postponement or Adjournment of Annual Meeting" below,
     "* to elect nine members of the Unicorn board of directors, described under "--Proposals for Unicorn Annual Meeting-Item 3-Election of Unicorn Directors" below,
     "* to ratify Arthur Andersen LLP as Unicorn's independent auditors for 2000, described under "--Proposals for Unicorn Annual Meeting-Item 4-Appointment of Independent Auditors" below, and
      "* to consider any other business that properly comes before the Unicorn annual meeting.

Unicorn Record Date; Stock Entitled to Vote; Quorum Only holders of record of Unicorn common stock at the close of business on May 12, 2000, the Unicorn record date, are entitled to notice of and to vote at the Unicorn annual meeting. On May 12, 2000, approximately 176,522,602 shares of Unicorn common stock were issued and outstanding and held by a approximately 108,149 holders of record. A quorum will be present at the Unicorn annual meeting if at least majority of the shares of Unicorn common stock issued and outstanding and entitled to vote on the Unicorn we record date are represented in person or by proxy. If a quorum is not present at the Unicorn annual meeting, to solicit additional proxies. Holders of expect that the Unicorn annual meeting will be adjourned or postponed record of Unicorn common stock on the Unicorn record date are entitled to one vote per share at the Unicorn annual meeting. Vote Required The approval of the merger agreement by Unicorn shareholders requires the affirmative vote of the holders of at least two-thirds of all outstanding shares of Unicorn common stock. If a Unicorn shareholder abstains 132

                         -        -

from voting or does not vote (either in person or by proxy), it will have the same effect as voting against right to approval of the merger agreement. For the election of directors, each Unicorn shareholder has the vote the number of shares owned by such shareholder for as many persons as there are directors to be elected, of directors to be or to cumulate such votes and give one candidate as many votes as shall equal the number proportion among elected multiplied by the number of such shares or to distribute such cumulative votes in any persons receiving the any number of candidates. Assuming 'that a quorum is present at the meeting, the nine of the shares of greatest number of votes shall be elected as directors, and the affirmative vote of a majority common stock represented at the meeting and entitled to vote on the matter is required for approval of any from voting items other than the approval of the merger and the election of directors. Proxies marked to abstain matter. with respect to any of these matters will have the legal effect of voting against such Voting by Unicorn Directors and Executive Officers At the close of business on May 12, 2000, directors and executive officers of Unicorn and their affiliates owned and were entitled to vote less than 1% of the shares of Unicom common stock outstanding on that date. How to Vote Your Shares The Unicorn board of directors is soliciting proxies from Unicom shareholders. This will give you the opportunity to vote at the Unicom anrual meeting. You may grant a proxy by

• signing and mailing your proxy card,
• calling a toll-free number and following the recorded instructions or
• going to a website on the Internet and following the instructions provided.

If your shares are not registered in your own name, the bank, broker or other institution holding your shares may not offer telephone or Internet proxy voting. If your proxy card does not include telephone or Internet voting instructions, please complete and return your proxy card by mail. You may also cast your vote in person at the meeting. Mail To grant your proxy by mail, please complete your proxy c~ard ano sign, date and return it in the enclosed envelope. To be valid, a returned proxy card must be signed and dated. Telephone You may use the toll-free number listed on your proxy card to grant your proxy. You must have your proxy card ready. Call the toll-free number and:

      "* enter your Control Number located on your proxy card, and
      "* follow the recorded instructions.

Internet You may also use the Internet to grant your proxy. You must have your proxy card ready and:

      "* go to the website shown on your proxy card and follow the instructions provided, and
      "* enter your Control Number located on your proxy card.

133

                                            -                                             ___           -             C In Person If you attend the Unicom annual meeting in person, you may vote your shares by cGmpleting a ballot at the meeting.

How Your Proxy Will be Voted All shares represented by properly executed proxies received in time for the Unicorn annual meeting will be voted at the Unicom annual meeting in the manner specified by the holders of those proxies. Properly executed proxies that do not cohMtan Vo'ting instructions will be voted FOR the approval of the merger agreement, FOR the proposal to postpone or adjourn the annual meeting, if proposed by Unicom's board of directors, FOR the election of directors and FOR the appointment of auditors and the other proposals recommended by the Unicorn board of directors. The proxy holders will cumulate votes for the election of directors for shares represented by proxies only if a shareholder gives them specific written instructions to do so. Shares of Unicorn common stock represented at the Unicorn annual meeting but not voting, including shares of Unicorn common stock for which proxies have been received but for which holders of shares have abstained, will be treated as present at the Unicorn annual meeting for purposes of determining the presence or absence of a quorum for the transaction of all business. Brokers who hold shares of Unicorn common stock in street name for customers who are the beneficial owners of those shares may not give a proxy to vote those shares on the merger proposal without specific instructions from those customers. These non-voted shares are referred to as broker non-votes and will have the same effect as votes against the approval of the merger agreement. Brokers may vote your shares for the election of directors and the appointment of auditors without your instructions. Unicorn does not expect that any matter other than the proposal to approve the merger agreement, a proposal to postpone or adjourn the annual meeting, if proposed by Unicorn's board of directors, the election of directors and appointment of auditors will be brought before the Unicorn annual meeting. If, however, the Unicorn board of directors properly presents other matters, the persons named as proxies will vote in -accordance with their judgment. Revocability of Proxies Voting by use of a proxy oi the _,u orm, telephone or Internet does not preclude a Unicorn shareholder from voting in person at the Unicorn annual meeting. A Unicorn shareholder may revoke a proxy at any time prior to its exercise by filing with Unicorn a duly executed revocation of proxy, by submitting a duly executed proxy, telephone or Internet vote to Unicorn bearing a later date or by appearing at the Unicorn annual meeting and voting in person. Attendance at the Unicorn annual meeting without voting will not itself revoke a proxy. Solicitation of Proxies Unicorn will bear the cost of the solicitation of proxies from its shareholders. In addition to solicitation by mail, the directors, officers and employees of Unicom and its subsidiaries may solicit proxies from Unicorn shareholders by telephone or other electronic means or in person. Arrangements will also be made with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation materials to the beneficial owners of stock held of record by these persons, and Unicorn will reimburse them for their reasonable out-of-pocket expenses. Unicorn will mail a copy of this proxy statement/prospectus to each holder of record of Unicorn common stock on the Unicorn record date. 134

Morrow & Co., Inc. will assist in the solicitation of proxies by Unicorn. Unicorn will pay Morrow & Co. a fee of $50,000, plus reimbursement of certain out-of-pocket expenses, and will indemnify Morrow & Co. against any losses arising out of Morrow & Co.'s proxy soliciting services on behalf of Unicorn. Unicom shareholders should not send stock certificates with their proxies. A transmittal form with instructions for the surrender of Unicorn common stock certificates will be mailed to Unicorn shareholders after completion of the merger. PROPOSALS FOR UNICOM ANNUAL MEETING ITEM 1-Unicom Merger Proposal For summary and detailed information regarding the Unicorn merger proposal, see "The Merger" in Chapter I. ITEM 2-Postponement or Adjournment of Annual Meeting In the event that the Unicorn board of directors decides to adjourn or postpone the Unicorn annual meeting, it shall submit to Unicorn shareholders present and entitled to vote a proposal to so adjourn or postpone the annual meeting. We are asking that you grant your proxy for your shares to be voted in favor of such a proposal, if made. ITEM 3-Election of Unicom Directors Elizabeth Anne Moler resigned from the Unicorn and CornEd boards of directors on December 31, 1999, to become a Senior Vice President of Unicorn and CornEd. Donald P. Jacobs is retiring as a director of Unicom and CornEd after serving as a director of Unicorn since its incorporation in 1994 and as a director of CornEd since 1979. His contributions to Unicorn and to CornEd have been many and are gratefully appreciated. The vacancies created by Ms. Moler's resignation and Mr. Jacob's retirement are not being filled, and the number of directors is being reduced to nine. Nine directors are to be elected at the annual meeting to serve terms of one year and until their respective successors have been elected. The nominees for director, all of whom are now serving as directors of Unicorn and CornEd, are listed below together with certain biographical information. Except as otherwise indicated, each nominee for director has been engaged in his or her present principal occupation for at least the past five years. Unicorn was formed in 1994. BiographicalInformation of Unicom Directors EDWARD A. BRENNAN Mr. Brennan, age 66. Director of Unicorn and CornEd since 1995. Retired. Chairman and CEO of Sears, Roebuck and Co. (retail merchandiser) for more than five years prior to his retirement-in August 1995. Chairman of Compensation Committee. Other directorships: The Allstate Corporation, AMR Corporation, Dean Foods Company, Minnesota Mining and Manufacturing Company, Morgan Stanley Dean Witter & Co. Mgaand The SABRE Group Holdings, Inc. 135

CARLOS H. CANTU Mr. Cantu, age 66. Director of Unicorn and CornEd since July 31, 1998. Retired. President and Chief Executive Officer of The ServiceMaster Company (service businesses) from January 1, 1994 through October 1, 1999. Other directorships: The ServiceMaster Company, First Tennessee National Corporation. JAMES W. COMPTiON Mr. Compton, age 62. Director of Unicom since 1994 and CornEd since 1989. President and Chief Executive Officer of the Chicago Urban League (a non-profit agency). Chairman of Audit and Compliance Committee and member of Compensation Committee. Other directorships: Ariel Mutual Funds and Highland Community Bank. BRUCE DeMARS Mr. DeMars, age 64. Director of Unicom and ComEd since 1996. Vice President and Secretary of DeMars, Inc. (consulting firm) since May 1997 and Partner, Trident Merchant Group since May 1998. Admiral, United States Navy and Director, Naval Nuclear Propulsion Program for more than five years prior to his retirement in October 1996. Member of Audit and Compliance Committee. Other directorship: McDermott International. SUE L. GIN Ms. Gin, age 58. Director of Unicorn since 1994 and ComEd since 1993. Founder, Owner, Chairman and Chief Executive Officer of Flying Food Group, Inc. (in-flight catering company). Chairperson of Business Development Committee and member of Audit and Compliance and Governance and Nominating Committees. EDGAR D. JANNO] 7TA Mr. Jannotta, age 68. Director of Unicorn and ComEd since 1994. Senior Director of William Blair & Company, L.L.C. (investment banking and brokerage company) since January 1996. For more than five years prior thereto, Managing Partner of William Blair

                & Company and Senior Partner during 1995. Chairman of Governance and Nominating Committee and member of Business Development Committee. Other directorships: AAR Corp., AON Corporation, Bandag, Incorporated and Molex Incorporated.

136

JOHN W. ROGERS, JR. Mr. Rogers, age 42. Director of Unicorn and CornEd since 1999. President of Ariel Capital Management, Inc., an institutional money management firm which he founded in 1983. Ariel Capital Management also serves as the investment advisor, administrator and distributor for Ariel Mutual Funds. Member of Governance and Nominating and Business Development Committees. Other directorships: AON Corporation, Bank One Corporation, Burrell Communications Group, Inc. and GATX Corporation. JOHN W. ROWE Mr. Rowe, age 54. Director, Chairman, President and Chief Executive Officer of Unicorn and CornEd since March 16, 1998. President and Chief Executive Officer of New England Electric System from February 1989 to March 1998. Other directorships: Fleet Boston Financial, UnumProvident Corporation and Wisconsin Central Transportation Corporation. RICHARD L. THOMAS Mr. Thomas, age 69. Director of Unicorn and CornEd since July 31, 1998. Retired. Chairman of First Chicago NBD Corporation (banking and financial services) from 1995 to 1996 and of The First National Bank of Chicago from 1992 to 1996. Member of the Audit and Compliance and Compensation Committees. Other directorships: IMC Global Inc., The PMI Group, Inc., The SABRE Group Holdings, Inc. and Sara Lee Corporation. Committees of the Unicorn Board of Directors Audit and Compliance Committee The Audit and Compliance Committee consists of four directors who are not employees or former employees of Unicom or any of its subsidiaries. Members serve three-year staggered terms. The Audit and Compliance Committee acts as the principal agent of the board of directors in fulfilling its responsibilities relating to corporate financial accounting and disclosure practices, in overseeing the establishment and maintenance of an appropriate system of internal controls and internal audit functions, and in monitoring and promoting compliance with applicable laws, regulations and Unicorn's policies The Audit and Compliance Committee met four times in 1999. Members of the committee are James W. Compton (Chairman), Bruce DeMars, Sue L. Gin and Richard L. Thomas. Business Development Committee The Business Development Committee consists of three directors who are not employees or former employees of Unicorn or any of its subsidiaries. Members serve one-year terms. The Business Development Committee advises and assists the board of directors in providing oversight and direction to Unicorn's customer service and new business development activities. The Business Development Committee met once in 1999. Members of the committee are Sue L. Gin (Chairperson), Edgar D. Jannotta, and John W. Rogers, Jr. 137

Compensation Committee The Compensation Committee consists of four directors who are not and have never been employees of Unicorn or any of its subsidiaries. Members serve one-year terms. The Compensation Committee oversees general compensation policy of Unicorn, establishes and administers compensation programs applicable to the principal officers of Unicorn, and administers awards under Unicorn's Deferred Compensation Unit Plan, Long Term Incentive Plan, and 1996 Directors' Fee Plan. The Compensation Committee met seven times in 1999. Members of the committee are Edward A. Brennan (Chairman), James W. Compton, Donald P. Jacobs and Richard L. Thomas. Governance and Nominating Committee The Governance and Nominating Committee consists of four directors who are not employees or former employees of Unicorn or its subsidiaries. Members serve one-year terms. The Governance and Nominating Committee oversees corporate governance policies, practices and procedures of Unicorn and makes such recommendations as it may deem appropriate to the full board of directors, acts as the executive committee of the board of directors when the board of directors is not in session, and recommends to the board of directors candidates for election to the board of directors. The committee will consider nominees recommended by shareholders if such recommendations are submitted in writing, accompanied by a description of the proposed nominee's qualifications and other relevant biographical information and evidence of the consent of the proposed nominee. The recommendations should be addressed to the Governance and Nominating Committee, in care of the Secretary of Unicorn. Nominations also may be presented by shareholders at the annual meeting of shareholders provided that they comply with the nomination procedures set forth in Unicom's By-laws, which are summarized in this proxy statement/prospectus under the heading "Shareholder Proposals and Nominations for 2001 Annual Meeting". The Governance and Nominating Committee met two times in 1999. Members of the committee are Edgar D. Jannotta (Chairman), Sue L. Gin, Donald P. Jacobs and John W. Rogers, Jr. Attendance at Meetings During 1999, there were 14 meetings of Unicom's board of directors. The average attendance of all incumbent directors, expressed as a percent of the aggregate total of board and board committee meetings in 1999, was 97%. Each incumbent director attended at least 80% of the meetings of Unicorn's board and board committees of which the director was a member, except Mr. Cantu, who attended 57% of the meetings of Unicorn's board of directors. Mr. Cantu missed several meetings as a result of illness. Board Compensation Directors who are not employees of Unicorn or any of its subsidiaries receive an annual fee of $36,200 payable in shares of Unicorn common stock under the Unicom Corporation 1996 Directors' Fee Plan. These directors also receive a fee of $1,500 for each board of directors and committee meeting they attend and an additional annual fee of $2,500 for each committee of the board of directors that they chair, which meeting and chair fees may, at the election of the director, be paid in shares of Unicorn common stock under the 1996 Directors' Fee Plan. In the event that directors also serve as directors of ComEd, or as chairs of corresponding committees of ComEd, the aggregate fees paid to such directors in respect of such service to Unicorn and CornEd do not exceed the foregoing amounts, so that directors do not receive duplicate fees. Directors who are full-time employees of Unicom or any of its subsidiaries receive no fees for service on the Unicorn board of directors. Directors may defer their fees. Prior to 1997, directors who had never been an officer or an employee of Unicorn or any of its subsidiaries, and who had attained at least age 65 and completed the required period of board service (3 to 5 years as applicable, including service as a director of ComEd), became eligible for retirement benefits upon retirement. Such benefits were to be paid to the retired director or a surviving spouse for a period equal to such director's years of service (including service as a director of CornEd) in an amount per year equal to the annual retainer for board members as in effect at the time of payment. Effective January 1, 1997, the Unicom board of directors terminated the further accrual of retirement benefits and offered 138

each director the option to irrevocably elect, in lieu of amounts otherwise payable, a lump sum amount payable upon retirement, either by delivery of shares of Unicom common stock or in cash. In lieu of further accrual of retirement benefits, non-employee directors received a $6,200 increase in their annual fee (from $30,000 to $36,200), effective June 1, 1997 and payable in shares of Unicorn common stock. Other Information Ariel Capital Management, Inc. has acted as investment manager with respect to a portion of the assets of an employee benefit plan of ComEd since 1994. During 1999, such firm received approximately $170,499 in fees. In 2000, it is estimated that such firm will receive approximately $163,000 in fees. Mr. Rogers is President of Ariel Capital Management, Inc. Unicorn believes the fees paid or payable are equivalent to the fees that would have been paid to an unaffiliated third party for similar services. Security Ownership of Certain Beneficial Owners and Management No person is known to Unicorn to be the beneficial owner of more than five percent of Unicorn common stock. The following table lists the beneficial ownership, as defined under the rules of the Securities and Exchange Commission, as of March 31, 2000, of Unicorn common stock held by each of the directors, each of the executive officers named in the Summary Compensation Table on page 141 and Unicom's directors and executive officers as a group. In addition, the table includes two columns describing securities held by such persons that are not considered to be "beneficially owned" under the rules of the SEC. The column headed "Other Stock Options" includes stock options held by such persons that are not exercisable within 60 days of March 31, 2000. The column headed "Deferred Share Equivalents" includes shares deferred by such persons under the Unicorn Corporation Stock Bonus Deferral Plan or the Unicorn Corporation 1996 Directors' Fee Plan or share equivalents held in the Unicorn Corporation Retirement Plan for Directors. Beneficial Ownership of Common Stock Other Deferred Amount Percent Stock Share Name and Nature of Class Options(5) Equivalents(7) Edward A. Brennan ....................... 4,438

• 1,250 Carlos H . Cantu .......................... 2,425
• James W . Compton ....................... 5,105
• 3,751 Bruce DeM ars ........................... 4,064
• 510 Sue L . Gin .............................. 12,873
• 1,181 Donald P. Jacobs ......................... 10,202
• 10,632 Edgar D. Jannotta ........................ 7,567
• 4,667 John W . Rogers, Jr........................ 1,000
• 985 Richard L. Thomas ....................... 10,616
• 2,771 John W . Rowe ........................... 222,278(1)(2)
• 281,666 39,258 Oliver D. Kingsley, Jr ...................... 53,064(1)
• 133,332 61,696 Robert J. M anning ........................ 79,328(1)(3)
• 68,197(6) 24,823(8)

Pamela B. Strobel ........................ 52,490(1)

• 74,166 15,548 David R. Helwig ......................... 31,001(1)
• 52,999 16,663 Directors and executive officers as a group (22 persons) ............. 679,984(1)(4)
• 1,019,855 213,224
• Less than one percent (1) The numbers and percentages of shares shown in the table above include shares as to which the indicated person(s) had the right to acquire within 60 days of March 31, 2000 upon the exercise of outstanding stock options, as follows: Mr. Rowe 216,334; Mr. Kingsley 41,668; Mr. Manning 72,103 (includes 12,935 options owned by spouse); Ms. Strobel 40,334; Mr. Helwig 19,001; and all executive officers and directors as a group (including such individuals) 487,445. Such persons disclaim any beneficial ownership of the shares subject to such options.

139

(2) Includes 2,000 shares owned by spouse, beneficial ownership of which is disclaimed. (3) Includes 14,910 shares owned by spouse, beneficial ownership of which is disclaimed. (4) Includes 16,910 shares owned by spouses. The directors and executive officers to whom such beneficial ownership is attributed disclaim any beneficial ownership of the shares held by such persons. (5) Includes stock options which are not considered to be "beneficially owned" under SEC rules because they cannot be exercised within 60 days of March 31, 2000. (6) Includes 9,865 stock options held by spouse, beneficial ownership of which is disclaimed. (7) Includes share equivalents that are not considered to be "beneficially owned" under SEC rules because they are deferred under the Unicorn Corporation Stock Bonus Deferral Plan, the Unicorn 1996 Directors' Fee Plan, or the Unicorn Corporation Retirement Plan for Directors. Under the Unicorn Corporation Stock Bonus Deferral Plan and the Unicorn 1996 Directors' Fee Plan, executives and directors, respectively, may defer the receipt of the stock portion of certain awards made pursuant to the Unicorn Corporation Long Term Incentive Plan or certain fees, respectively. Deferred amounts are only required to be kept in Unicorn's books of account as deferred stock accounts, which are for bookkeeping purposes only. Unicorn has no obligation to set aside or segregate any actual shares of Unicorn common stock or other assets in respect of such accounts. Unicorn has elected to issue the deferred shares to trusts having an institutional trustee, which has sole voting rights with respect to such shares. At the end of the deferral period (in the case of the Unicorn Stock Bonus Deferral Plan) or upon leaving the board of directors (in the case of the Unicorn 1996 Directors' Fee Plan), the share equivalents are distributed in whole shares of Unicorn common stock and cash in lieu of any fractional share. Dividends paid with respect to deferred shares under the Unicorn Stock Bonus Deferral Plan are either reinvested in Unicorn common stock and held by such Trustee or are paid to the executive officer making the deferral. Dividends paid with respect to deferred shares under the Unicorn 1996 Directors' Fee Plan are reinvested in Unicorn common stock and held by such Trustee. Under the Unicorn Corporation Retirement Plan for Directors, effective January 1, 1997, the accrual of further benefits was terminated and directors could elect to have benefits accrued through such date deferred into share equivalents to be paid in shares of Unicorn common stock upon retirement. Accounts under such Plan are credited with an additional number of share equivalents determined by assuming the reinvestment of dividend equivalents on share equivalents in such accounts. (8) Includes 3,721 deferred share equivalents held by spouse. 140

Executive Compensation The following table sets forth certain information relating to the compensation during the past three calendar years of the person who served as the Chief Executive Officer during 1999 and the other four most highly compensated executive officers of Unicorn or CornEd at December 31, 1999. Summary Compensation Table Annual Compensation Long-Term Compensation Awards Payouts LTIP Payouts Bonus Other Securities Annual Underlying All Other Stock Compen Restricted Options/ Stock Compen Name and Salary Cash Based(l) sation(2) Stock(3) SARs Cash Based(l) sation(4) Principal Position Year $ $ $ $ $ #__ $ $ $ John W. Rowe(5) ..... 1999 957,692 529,125 529,125* 55,112 - 123,000 475,246 203,677* 42,478 Chairman (Chief 1998 726,923 484,209 484,209* 215,117 -- 250,000 343,219 52,537* 2,728,076 Executive Officer) 1997 Unicorn and ComEd Oliver D. Kingsley, Jr.(6) ............ 1999 544,385 - 594,000* 175,502 231,562 40,000 322,488* 24,139 Executive Vice President 1998 475,000 383,332* 220,713 35,000 - 187,984* 20,994 Unicorn and ComEd 1997 82,212 202,828 560,000 25,000 182,712 10,777* 378,395 Robert J. Manning .... 1999 401,931 210,456 70,152* 40,000 102,229 102,229* 18,327 Executive Vice President 1998 375,035 184,958 61,653* - 35,000 43,469 43,469* 22,132 Unicom and CornEd 1997 312,802 86,319 28,773* - 291,250 25,000 42,153 42,153* 19,894 Pamela B. Strobel ..... 1999 375,131 208,961 69,654* - 30,000 84,410 84,410* 16,483 Executive Vice President 1998 341,000 137,341 58,861* - 20,000 42,528 42,528* 20,347 and General Counsel 1997 304,970 41,742 13,914* - 291,250 17,500 33,605 33,605* 19,247 Unicom and CornEd David R. Helwig(7) ... 1999 355,115 177,071 177,071* 479,256 25,000 144,206* 15,702 Senior Vice President 1998 312,500 196,727* -- 22,000 85,747* 285,875 Unicorn and CornEd 1997 - (1) All of the amounts shown under "Bonus-Stock-Based" and "LTIP Payouts- -Stock-Based" were either paid in shares of Unicom common stock or were deferred and are deemed to be invested in shares of Unicom's common stock, and thus fully "at risk" until the end of the deferral period. Deferred amounts are noted with an asterisk. See note 7 to the "Security Ownership of Certain Beneficial Owners and Management" table on page 140. (2) Excludes perquisites and other benefits, unless the aggregate amount of such compensation is at least the lesser of either $50,000 or 10% of the total annual salary and bonus reported for the named executive officer. For 1999, includes $13,276 and $66,345 paid to Messrs. Rowe and Kingsley for the payment of taxes and $75,000 paid to Mr. Kingsley as a living cost allowance and $15,395 paid for financial and legal services for Mr. Rowe. For 1998, includes $89,381 and $132,077 paid to Messrs. Rowe and Kingsley, respectively, for reimbursements for the payment of taxes, $108,340 paid to Mr. Rowe for moving expenses and $75,000 paid to Mr. Kingsley as a living cost allowance. For 1997, includes payments to Mr. Kingsley of $74,065 for moving expenses, $75,000 as a living cost allowance and $53,251 for reimbursement of taxes. (3) The value shown is as of the date of grant. Dividends are paid or accrued on restricted stock awards at the same rate as paid to all shareholders. As of December 31, 1999, Mr. Manning had an aggregate of 5,000 shares of restricted stock worth $167,500, Ms. Strobel had an aggregate of 10,000 shares of restricted stock worth $335,000, Mr. Helwig had an aggregate of 12,000 shares of restricted stock worth $402,000 and Mr. Kingsley had an aggregate of 16,500 shares of restricted stock worth $552,750. (4) Amounts shown include matching contributions made by CoinEd pursuant to the ComEd Employee Savings and Investment Plan ("ESIP"), matching contributions made by CornEd pursuant to the CornEd 141

Excess Benefit Savings Plan and premiums and administrative service fees paid by ComEd on behalf of the named individuals under various group life insurance plans. For the year 1999, contributions made to the ESIP amounted to $6,960, $6,960, $4,184, $4,518 and $4,547 on behalf of Mr. Rowe, Mr. Kingsley, Mr. Manning, Ms. Strobel and Mr. Helwig, respectively. Contributions made to the ComEd Excess Benefit Savings Plan during 1999 totaled $34,700, $16,720, $12,311, $11,104 and $10,901 on behalf of Mr. Rowe, Mr. Kingsley, Mr. Manning, Ms. Strobel and Mr. Helwig, respectively. Premiums and administrative service fees paid during 1999 for Split Dollar Life, Accidental Death and Travel Accident insurance policies for Mr. Rowe, Mr. Kingsley, Mr. Manning, Ms. Strobel and Mr. Helwig, respectively, are as follows: $818, $459, $1,832, $861 and $254. For the year 1998, contributions made to the ESIP amounted to $7,287, $4,246, $4,350 and $1,915 on behalf of Mr. Kingsley, Mr. Manning, Ms. Strobel and Mr. Helwig, respectively. Contributions made to the ComEd Excess Benefit Savings Plan during 1998 totaled $31,621, $13,375, $11,079, $9,787 and $8,960 on behalf of Mr. Rowe, Mr. Kingsley, Mr. Manning, Ms. Strobel and Mr. Helwig, respectively. Premiums and administrative service fees paid during 1998 for Split Dollar Life, Accidental Death and Travel Accident insurance policies for Mr. Rowe, Mr. Kingsley, Mr. Manning and Ms. Strobel, respectively, are as follows: $96,455, $332, $6,807 and $6,210. CornEd is entitled to recover the premiums and administrative service fees from any amounts paid by the insurer on such Split Dollar Life policies and has retained a collateral interest on each policy to the extent of the premiums and administrative service fees paid with respect to such policy. Includes a $2,000,000 lump sum payment to Mr. Rowe in 1998 as partial compensation for actual compensation, benefits and programs which Mr. Rowe was, or was reasonably expected to become, entitled to receive from his previous employer, and a payment of $600,000 as an inducement to enter into his employment agreement. For 1997, includes $375,000 paid to Mr. Kingsley as an inducement to enter into his employment agreement. For 1998, includes $275,000 paid to Mr. Helwig as an inducement to enter into his employment agreement. (5) Mr. Rowe commenced employment on March 16, 1998. (6) Mr. Kingsley commenced employment on November 1, 1997. (7) Mr. Helwig commenced employment on January 19, 1998. 142

Option/SAR Grants in Last Fiscal Year Individual Grants Number of Securities  % of Total Underlying Options/SARs Exercise Grant Date Options/SARs Granted to or Base Present Granted(l) Employees in Price Expiration Value(2) Name # Fiscal Year $ /Share Date $ John W. Rowe (CEO) .................. 110,000 5.99 35.75 1/24/09 $712,250 John W. Rowe (CEO) .................. 13,000(3) 0.71 35.563 3/03/09 84,175 Oliver D. Kingsley, Jr ................... 40,000 2.18 35.75 1/24/09 259,000 Robert J. Manning ..................... 40,000 2.18 35.75 1/24/09 259,000 Pamela B. Strobel ..................... 30,000 1.63 35.75 1/24/09 194,250 David R. Helwig ...................... 25,000 1.36 35.75 1/24/09 161,875 (1) Except as noted in note 3 below, each option becomes exercisable in equal annual increments on the first, second and third anniversaries of the grant date, subject to acceleration in the event that termination after a change in control of Unicom occurs. The options do not include any stock appreciation rights. (2) The "grant date present value" is based upon the Black-Scholes option-pricing model. The actual value, if any, an executive may realize upon exercise of the option will depend on the excess of the stock price over the exercise price on the date the option is exercised. Consequently, there is no assurance the value realized by an executive will be at or near the value estimated by the Black-Scholes model. The principal assumptions incorporated into the valuation model by Unicorn for the options expiring 1/24/09 and 3/03/09 are as follows: (i) expected time to exercise of seven years, (ii) dividend yield rate of 4.5%, (iii) risk-free interest rate of 4.83% and (iv) expected volatility of 23.02%. (3) Mr. Rowe received this grant of options as a premium for deferring half of his 1998 Annual Incentive Award. Half of this grant vested immediately and the balance vested on the first anniversary of the grant date. Aggregated Option Exercises in 1999 and 1999 Year-End Option Value Shares Underlying Unexercised Value of Unexercised Acquired Options at In-The-Money Options at on Value December 31, 1999 December 31, 1999(1) Exercise Realized(l) Exercisable Unexercisable Exercisable Unexercisable Name # $ # # $ $ John W. Rowe (CEO) ........ 0 0 89,834 283,166 5,167 10,333 Oliver D. Kingsley, Jr ......... 0 0 28,334 71,666 91,669 45,832 Robert J. Manning ........... 0 0 45,834 71,666 326,454 93,221 Pamela B. Strobel ........... 0 0 30,334 49,166 226,519 65,254 David R. Helwig ............ 0 0 7,334 39,666 13,747 13,745 (1) Market value less exercise price, before payment of applicable income taxes. Long-term Incentive Plans-Awards in Last Fiscal Year Number of Performance or Other Estimated Future Payouts Under Shares, Units Period Until Non-Stock Price-Based Plans or Other Maturation Threshold Target Maximum Name Rights(l) or Payout(2) Number Number Number (Number of Performance Units) John W. Rowe (CEO) ............ 12,694.32 3 years 6,347.16 12,694.32 25,388.64 Oliver D. Kingsley, Jr............... 6,093.27 3 years 3,046.64 6,093.27 12,186.55 Robert J. Manning .............. 4,804.31 3 years 2,402.16 4,804.31 9,608.62 Pamela B. Strobel ............... 3,905.94 3 years 1,952.97 3,905.94 7,811.89 David R. Helwig ............... 3,235.42 3 years 1,617.71 3,235.42 6,470.85 (1) Long-term performance unit awards were established in 1994 for executive and group level employees under the Unicom Corporation Long-Term Incentive Plan. The awards are based on a three-year 143

performance period. For the awards described in the table, the number of units initially awarded to a participant is determined by dividing a percentage of base salary (including income from current compensation units under Unicorn's and ComEd's Deferred Compensation Unit Plans) by $38.403. The applicable percentages for the individuals shown in the table are: 50% for Mr. Rowe; 45% for Mr. Kingsley; 45% for Mr. Manning; 40% for Ms. Strobel; and 35% for Mr. Helwig. If a promotion changes the applicable percentage of salary, awards are pro-rated accordingly. Payouts are based on achievement of corporate shareholder value added and customer satisfaction goals as well as specific business unit strategic initiatives over the three-year performance period ending December 31, 2001. The dollar value of a payout will be determined by multiplying (a) the number of units applicable by (b) the average closing price of Unicorn common stock as reported in the Wall Street Journal as New York Stock Exchange Composite Transactions during the calendar quarter ending on December 31, 2001 by (c) the level of performance achieved. Payments will be made half in cash and half in the form of unrestricted shares of Unicom common stock. A participant may elect to defer receipt of up to 100% of the total award (net of applicable taxes) under the Unicorn Corporation Stock Bonus Deferral Plan and receive, after such deferral, the deferred amount in the form of unrestricted shares of Unicorn common stock. (2) Three-year period ending December 31, 2001. 144

Service Annuity System The following table sets forth the annual retirement benefits payable under ComEd's Service Annuity System (including payments under a supplemental management retirement plan) to employees who retire at age 65 at stated levels of compensation and years of service at retirement (in 1999). PENSION PLAN TABLE Highest 4-Year Average Earnings Annual Normal Retirement Benefits After Specified Years of Service* 15 20 25 30 35 40

 $ 100,000          $ 31,936        $ 42,472       $    52,368        $    61,784         $    70,842    $    79,633 200,000           63,872          84,945          104,735            123,568             141,684        159,266 300,000          95,808         127,417          157,103            185,351             212,526        238,899 400,000          127,744         169,889          209,470            247,135             283,368        318,532 500,000          159,681        212,362           261,838            308,919             354,211        398,165 600,000          191,617        254,834           314,206            370,703             425,053        477,798 700,000          223,553        297,307           366,573            432,487             495,895        557,431 800,000         255,489        339,779           418,941            494,271             566,737        637,064 900,000          287,425        382,251           471,308            556,054             637,579        716,696 1,000,000          319,361        424,724           523,676            617,838             708,421        796,329 1,100,000          351,297        467,196           576,044            679,622             779,263        875,962 1,200,000          383,233        509,668           628,411            741,406             850,105        955,595 1,300,000          415,169        552,141           680,779            803,190             920,948      1,035,228 1,400,000          447,106        594,613           733,146            864,974             991,790      1,114,861 1,500,000         479,042         637,085           785,514            926,757           1,062,632      1,194,494 1,600,000          510,978        679,558           837,882            988,541           1,133,474      1,274,127 1,700,000          542,914        722,030           890,249          1,050,325           1,204,316      1,353,760 1,800,000          574,850        764,503           942,617          1,112,109           1,275,158      1,433,393 1,900,000          606,786        806,975           994,984          1,173,893           1,346,000      1,513,026 2,000,000          638,722        849,447         1,047,352          1,235,677           1,416,842      1,592,659 An employee may elect a marital annuity for a surviving spouse which would reduce the employee's normal retirement benefits. The amounts shown reflect certain assumptions as to total earnings, but do not reflect any reduction for Social Security benefits.

Service Annuity System. CornEd maintains a non-contributory pension plan, the Service Annuity System, for all regular employees of CornEd. The Service Annuity System ("Plan") provides benefits upon retirement at age 65 which are based upon years of credited service and percentages of the employee's highest consecutive four-year average annual base pay, which includes basic compensation and certain incentive pay. An employee with at least 10 years of service may retire prior to attaining age 65 (but not prior to age 50) and will receive reduced benefits if retirement is prior to age 60. A non-executive employee may work beyond age 65 with additional benefits accruing for earnings and service after age 65. Contributions to the Plan by CornEd are based upon actuarial determinations that take into account the amount deductible for income tax purposes and the minimum contribution required under the Employee Retirement Income Security Act of 1974, as amended. Compensation used in the computation of annual retirement benefits under the Plan is substantially equivalent to the amounts shown in the "Salary" and "Bonus" columns under the "Annual Compensation" heading of the Summary Compensation Table. The compensation used in the computation of annual retirement benefits under the Plan is limited by the Internal Revenue Code as of January 1, 2000 to $170,000 (which number is subject to adjustment for increases in the cost of living) for any one employee. Any reduction in the annual retirement benefits payable to management employees under the Plan as a result of any limitations imposed by the Internal Revenue Code is restored under a supplemental management retirement plan maintained by 145

ComEd, which also provides retirement benefits granted under employment agreements or other arrangements. Thus, annual retirement benefits, as set forth in the Pension Plan Table above, are based on the sum of the amounts shown in the "Salary" and "Bonus" columns under the "Annual Compensation" heading of the Summary Compensation Table, without limitation as a result of the application of the provisions of the Internal Revenue Code. The approximate number of years of credited service under the Plan or, if applicable, under the supplemental management retirement plan, for the persons named in the Summary Compensation Table are as follows: John W. Rowe, 22 years; Robert J. Manning, 36 years; Oliver D. Kingsley, 17 years; Pamela B. Strobel, 7 years; and David R. Helwig, 2 years. Employment Agreements John W. Rowe Unicorn and CornEd have an employment agreement with John W. Rowe, pursuant to which he became Chairman, President and Chief Executive Officer of each company on March 16, 1998. The agreement provides that Mr. Rowe will be paid an annual base salary of at least $900,000. Unicorn also granted Mr. Rowe an option to purchase 250,000 shares of common stock with an option price equal to the fair market value of the common stock as of March 16, 1998. Such options become exercisable in equal installments on March 16 of 1999, 2000, and 2001, and expire on March 15, 2008. In accordance with the terms of his employment agreement, Mr. Rowe was not entitled to any additional grants of stock options during 1998. The employment agreement with Mr. Rowe further provides that Mr. Rowe will participate in Unicom's Annual Incentive Award Program and will receive an annual incentive award for 1998 and 1999 that shall equal at least $600,000. The employment agreement was amended to provide that Mr. Rowe's annual incentive awards for 1998 and 1999 would be paid half in cash and half in Unicorn common stock, and that the guaranteed portion of Mr. Rowe's annual incentive award for 1998 and 1999 would be paid 50% in cash and 50% as a grant of shares of Unicorn common stock, half of which vested on the date the annual incentive would otherwise be paid (the "Grant Date") and half of which vested on the anniversary of the Grant Date. In connection with this grant of shares, Mr. Rowe also received, on the Grant Date, an option to purchase 13,000 of Unicorn common stock, which was the number of shares with a value as of the Grant Date of $90,000 (determined using the pricing models used by the Compensation Committee). Such option became exercisable 50% on the Grant Date and 50% on the first anniversary thereof. Mr. Rowe participates in the Unicorn Long-Term Performance Unit Award Program, and any award payable under such Program with respect to the three-year performance periods ending on December 31, 1998, 1999, or 2000 will be made as though he had participated in the Program throughout such performance periods (except in the case of a termination of employment). Mr. Rowe agreed to defer receipt of the stock portion of any incentive award under the Unicorn Corporation Stock Bonus Deferral Plan. As partial compensation for actual compensation, benefits and programs that Mr. Rowe was, or was reasonably expected to become, entitled to receive from his previous employer, he received a lump-sum payment of $2,000,000. In addition, Mr. Rowe received $600,000 as an inducement to enter into the employment agreement. Mr. Rowe's employment agreement provides for a retirement benefit equal to the amount that would have been payable under the Service Annuity System (plus amounts payable under the CornEd Supplemental Management Retirement Plan) for an employee who retires at age 60 (or such greater age if Mr. Rowe should become eligible for the retirement benefit after attaining the age of 60) calculated based on the assumption that Mr. Rowe had completed 20 years of credited service as well as his actual years of credited service. The employment agreement with Mr. Rowe provides for severance payments to Mr. Rowe if he should be terminated without cause or if he should terminate the employment agreement for good reason (as defined in the agreement) equal to his base salary at the time of such termination, together with a formula annual incentive award (as defined in the agreement), until the later of March 16, 2001 or one year after termination (if such termination should occur before March 16, 2001), or one year after the date of termination (if such termination should occur after March 16, 2001), and a continuation of health and life insurance benefits during such period, plus retirement benefits. In addition, any unvested options shall continue to become exercisable 146

during such period, except that any unvested portion of the deferred shares and additional option granted to Mr. Rowe pursuant to the amendment to his employment agreement described above will immediately become fully exercisable upon any such termination of employment. If the termination occurs within 24 months following a change in control of Unicorn, such benefits will be paid for three years after the date of termination. Mr. Rowe agreed not to use for his own benefit or disclose any confidential information of Unicom or CoinEd during or after the term of his employment, and not to compete with Unicom or CornEd or solicit any key employee or interfere with the relationship with any material customer or supplier of either company until two years after the term of his employment with the companies. The employment agreement has been amended and restated, effective upon the completion of the merger, as described under "The Merger-Interests of Unicom's Directors and Management in the Merger" in Chapter I. Oliver D. Kingsley, Jr. ComEd entered into an employment agreement with Oliver D. Kingsley, Jr. pursuant to which he became Executive Vice President and President and Chief Nuclear Officer-Nuclear Generation Group, effective November 1, 1997. The agreement provides for an annual base salary for 1997 and 1998 equal to $475,000, and further provides for a guaranteed increase of at least 4% per year, beginning in 1999. Mr. Kingsley received an option to purchase 25,000 shares of common stock with an option price equal to the fair market value of the common stock as of November 1, 1997. Such options become exercisable in equal installments on November 1 of 1998, 1999 and 2000, and expire on October 31, 2007. Mr. Kingsley also received a grant of 20,000 shares of restricted stock that vests in equal installments on November 1 of 1998, 1999 and 2000. The employment agreement with Mr. Kingsley provides that Mr. Kingsley will participate in Unicom's Annual Incentive Award Program and will receive an annual incentive award for 1998 and 1999 at least equal to the target award of $213,750. Mr. Kingsley participates in the Unicom Long-Term Performance Unit Award Program, and any award payable under such Program with respect to the three-year performance periods ending on December 31, 1997, 1998, or 1999 will be made as though he had participated in the Program throughout such performance periods (except in the case of a termination of employment). In addition, Mr. Kingsley received $375,000 as an inducement to enter into the employment agreement, and an annual living cost allowance equal to $75,000 (increased by the amount of applicable taxes on such amount as so increased) for the first three years of the agreement term. Mr. Kingsley's employment agreement provides for a retirement benefit equal to the amount that would have been payable under the Service Annuity System (plus amounts payable under the CoinEd Supplemental Management Retirement Plan) for an employee who retires at age 60 calculated based on the assumption that Mr. Kingsley had completed 15 years of credited service beginning with the third year of his employment and that such credited service increased by five years during each of the next two years, in addition to his actual years of credited service after five years of employment. The employment agreement with Mr. Kingsley provides for a lump sum severance payment to Mr. Kingsley if he should be terminated without cause equal to two times his base salary at the time of such termination, and a continuation of health and life insurance benefits for two years after the date of termination, plus retirement benefits (calculated as though he had completed at least 15 years of credited service if such termination occurs during the first two years of employment) and retiree health care coverage. In addition, any unvested portion of the restricted stock granted under the agreement will immediately become fully vested and nonforfeitable. Mr. Kingsley agreed not to use for his own benefit or disclose any confidential information of Unicom or CornEd during or after the term of his employment, and not to solicit any employee of CornEd for one year after the term of his employment with CornEd. 147

Severance Plans Unicorn established the Key Management Severance Plan in 1998 to provide key employees, including the named executive officers, certain benefits in the event their employment is terminated by their employer without cause, or in the event they resign for good reason (both terms as defined in the Plan). Benefits under the Plan include severance pay equal to the sum of a terminated executive's current annual base salary plus the average of his annual incentive awards for the two years preceding the termination, annual incentive awards and long-term incentive awards (with respect to any performance cycle for which the executive has completed 24 months) prorated through the date of termination, continuation of health care coverage, life insurance and long-term disability coverage, and outplacement services. Payment of severance pay and continuation of the benefits described above is made over two years, and the amount of the severance pay and incentive and the payment period is included for purposes of calculating retirement benefits under the supplemental management retirement plan and determining eligibility for retiree health care coverage. As a condition of receiving plan benefits, an executive must agree not to use for his own benefit or disclose any confidential information of Unicorn or CornEd during or after the term of his employment, and not to compete with Unicorn or CornEd or solicit any key employee or interfere with the relationship with any material customer or supplier of either company until two years after the term of his employment with the companies, and must release Unicom from all claims arising out of his employment as of the date of termination. In the case of Mr. Rowe and Mr. Kingsley, the severance benefits provided under the terms of their employment agreements will control, to the extent they exceed the benefits provided under the Plan. The boards of directors of Unicom and CornEd approved a change in control policy (the "Policy") in 1998 pursuant to which Mr. Rowe and the other named executive officers will receive benefits in the event their employment is terminated without cause or if they resign for good reason (as such terms are defined under the Policy) within 24 months following a change in control of Unicom. The change in control benefits are provided in the form of individual agreements for the named executives, and Mr. Rowe's employment agreement was amended, effective March 8, 1999, to reflect the Policy provisions. The benefits provided in the event of a change in control, including approval of the merger, are described under "The Merger-Interests of Unicorn's Directors and Management in the Merger" in Chapter I. Compensation Committee Report on Executive Compensation The Compensation Committee of the Boards of Directors of Unicorn and CornEd has furnished the following report on executive compensation: Introduction. The Committee is responsible for Unicorn's executive compensation philosophy and policies, which form the basis for the Committee's decisions. The overall objectives of the executive compensation programs are to drive and reinforce achievement of financial objectives and strategic initiatives, to provide compensation opportunities that are competitive with top performing energy services companies and general industry firms, and to ensure that compensation is linked to performance and increasing shareholder value. It is the policy of the Committee to compensate executive officers based on fulfillment of their responsibilities and their achievement of established corporate and business unit goals. The business challenges resulting from the restructuring of the utility industry make it critical that Unicorn's compensation programs drive and reinforce achievement of financial, operational and strategic goals. A study of management compensation programs was commissioned by the Committee in the fall of 1998. This study was conducted by a leading external management compensation consulting firm and included an assessment of business plans and strategic and competitive compensation levels compared with the external market. While overall, Unicorn's total compensation levels were found to be generally competitive, the study results indicated that Unicorn's mix of compensation components (i. e., salary, annual and long term incentives and stock options) could be more effectively aligned with the competitive market. Based on those results, Unicom's pay-for-performance philosophy was refined to have an increased emphasis on pay-at-risk. When excellent performance is achieved, pay will exceed market levels. Failure to achieve target goals will result in 148

below-market pay. In addition, other compensation changes were made to achieve a more effective use of shareholder value as a determinant of compensation and to encourage officers and other employees to act like owners of the business. The Committee believes that compensation paid should be appropriate in relation to the financial performance of Unicorn and should be sufficient to enable Unicorn to attract and retain individuals possessing the talents required for ensuring the Company's long-term successful performance. The Committee also believes that incentive compensation performance goals for executive management should be based on factors over which management has significant control and which are important to Unicorn's long-term success. In 1999, the major components of executive officer compensation were base salary, consisting of cash salary and current compensation unit income, non-qualified stock options, and incentive compensation (both annual and longer-term) related to awards under the Unicorn Corporation Long-Term Incentive Plan. Base Salary. The process of determining the officers' base salaries began with a review of the salary levels for various comparable executive positions at a group of peer companies identified by the Committee. The Committee also used compensation survey information from several executive compensation-consulting firms. The Committee then considered differences from other companies in Unicom's organizational structure and the responsibilities of its executive officers, in the size, scope and complexity of Unicom's operations, and in the regulatory environment and competitive challenges faced by Unicorn. Salary range increases and salary adjustment budgets are established annually for non-officer employees based on business and economic conditions of Unicorn as well as on competitive practices. Beginning in 1999, Unicorn initiated a two-year scheduled review cycle for officer level executives to make the rewards more meaningful and to cover a longer performance period. Salaries are adjusted based upon each executive's performance impact and overall contributions to Unicorn. The Chairman reviewed the base salary of each officer and recommended an adjustment after assessing particular responsibilities and performance. The Chairman's recommendations were reviewed and approved by the Committee. Percentage increases for individual officers varied and were structured to recognize changes in industry compensation levels; to reflect the impact, performance and contributions of individual officers; and to reflect strategic changes in job responsibilities and assignments. In 1999, four executive officers held current compensation units. Each such unit entitles the holder to receive current income equal to the dividends paid on one share of Unicorn Common Stock. During 1999, no additional units were awarded by the Committee. Incentive Compensation Awards. Another component of executive compensation is incentive compensation earned under awards made by the Committee under the Unicorn Corporation Long-Term Incentive Plan. Such incentives are designed to drive and enforce achievement of established financial, operational and strategic goals that are critical to Unicom's success, including increasing shareholder value. Incentive opportunities include an annual incentive target, a long-term performance unit target covering a three year performance period and non-qualified stock options. The Unicorn Corporation 1999 Annual Incentive Award for Management Employees under the Unicorn Corporation Long-Term Incentive Plan was established to reward the achievement of certain corporate and business unit goals during 1999. The annual incentive award placed increased emphasis on financial performance, strategic direction and results that will increase shareholder value. A significant portion of the 1999 annual incentive for executive officers was tied to a Shareholder Value Added measure. The award is variable and is designed to encourage achievement of short-term goals. Employees receive incentive awards only if their business units and Unicorn meet or exceed the established performance targets for the year. The amount of the individual awards is based upon the individual and collective accomplishments of employees and varies based upon the degree to which the financial and strategic goals are met or exceeded and upon the Committee's assessment of individual performance. For key management employees, the annual incentive award is payable 75% in cash and 25% in Unicorn Common Stock. 149

For management employees other than those in selected sales-related positions, the 1999 corporate financial goal was "Shareholder Value Added." Shareholder Value Added was defined as revenues (ComEd, Off System and Subsidiaries) less Costs (operations and maintenance expenditures, fuel, depreciation and taxes), minus capital charge (debt and equity costs). Staff executive officers' annual incentive awards were tied to the corporate Shareholder Value Added goals whereas line executive officers were tied to both the corporate Shareholder Value Added goal and his or her business unit's Shareholder Value Added goal. The 1999 Unicorn Corporate Shareholder Value Added achieved was 138.95% of the target level. In addition to the Shareholder Value Added goal tie, the remaining portion of executive officers' annual incentive award was comprised of a combination of corporate and business unit strategic initiatives and key performance indicators. Quantitative goals (for example, nuclear capacity) were measured on a scale of performance ranging from "threshold" to "maximum." Other strategic goals were assessed and approved by the Committee. For Mr. Rowe and other executive officers, the final determination of the annual incentive award was based on the accomplishment of Shareholder Value Added, strategic goals, and an individual performance assessment by the Committee. A long term performance unit award program was established in 1994 to focus employees on long range performance by linking certain incentive payments to specific performance measures. Incentive opportunities are expressed as a percentage of base salary and increase with the executive's management level. The awards payable in 2000 and in 2001 are based on the total return of Unicorn Common Stock relative to that of the other companies constituting the Dow Jones Utility Stock Index over three-year performance periods. The Dow Jones Utility Stock Index includes Unicorn and fourteen other large energy services companies. To better support improved business performance and the creation of Unicorn shareholder value, the award payable in 2002 places a significant emphasis on Business Unit performance as well as corporate profitability as measured by Corporate Cumulative Shareholder Value Added and a Customer Satisfaction Index. Awards for the performance period 1997-1999 resulted in a payment that was 115.5% of the target award. Payments to certain executive officers are included in the "Payouts" column under the "Long-Term Compensation" heading in the Summary Compensation Table. Unicom's shareholder return increased by 44.3% during that same performance period. Stock Option Grants in 1999. Unicorn grants non-qualified stock options to reward and motivate the Company's management to increase long-term shareholder value. Option grants are made generally to key employees who are expected to contribute materially to Unicorn's success. The option awards permit grantees to purchase shares of Unicorn's Common Stock at an exercise price equal to the market value on the date of grant, and become exercisable in equal increments over a three-year period. The options have a maximum term of ten years. Committee decisions regarding the size of option grants were based on an evaluation of competitive data drawn from companies in a study conducted in fall 1998 for Unicom by a leading executive compensation consulting firm, as well as the option recipient's base salary, target mix of other compensation components, management level, performance and potential. Compensation of the Chief Executive Officer. In considering the compensation for 1999 of Mr. Rowe, the Compensation Committee evaluated Unicorn's 1998 performance, compensation for other chief executive officers, and Unicorn's strategic direction. Under his employment agreement, Mr. Rowe is paid an annual base salary of at least $900,000, is guaranteed an annual incentive award for 1998 and 1999 of at least $600,000, and participates in the Long-Term Performance Unit Award Programs with respect to the three-year performance periods ending December 31, 1998, 1999 and 2000 as though he had participated in the Program throughout the performance periods. Salary. The Committee's assessment of the personal performance of Mr. Rowe was based upon an evaluation of his leadership, achievements and contributions to Unicorn during 1998, as well as an assessment of competitive practices and market comparisons of chief executive officers for comparable companies. Mr. Rowe's total annual salary in 1999 was increased $75,000 to a rate of $975,000 per year. 150

Incentive Compensation Plans Annual Incentive Program. Mr. Rowe participated in the annual incentive program described earlier in this report. Mr. Rowe's target award was 70% of his base salary. The actual award paid was 155.1% of his target level based on the achievement of Shareholder Value Added, strategic goals and an individual performance assessment by the Comnuittee. The Committee approved payment of the award 50% in cash and 50% in Unicorn Common Stock. Mr. Rowe deferred the portion of his incentive that was payable in Unicom Common Stock under the Unicorn Corporation Stock Bonus Deferral Plan. Long Term Performance Unit Award. Mr. Rowe's award opportunity for the 1997-1999 performance cycle was at a target level of 50% of his then-current base salary. The actual award paid was 115.5% of his target level based on the total return of Unicom Common Stock relative to the other companies constituting the Dow Jones Utility Stock Index over the performance period. Stock Option Award. Mr. Rowe was granted 110,000 non-qualified stock options as part of the normal annual grant cycle. In addition, as Mr. Rowe voluntarily deferred one-half of his guaranteed annual awards for 1998 and 1999, the Committee awarded him a premium of an additional 13,000 options on March 4, 1999. One-half of this premium grant vested immediately and the remaining portion will vest on March 4, 2000. Internal Revenue Code Section 162(m) Considerations. Under Section 162(m) of the Internal Revenue Code, executive compensation in excess of $1 million is generally not deductible for purposes of corporate income taxes. However, "qualified performance-based compensation" which is paid pursuant to a plan meeting certain requirements of the Code and applicable regulations remains deductible. As noted in previous reports, the Committee intends to continue reliance on performance-based compensation programs, consistent with sound executive compensation policy. Such programs will be designed to fulfill, in the best possible manner, future corporate business objectives. The Committee's policy has been to seek to cause executive incentive compensation to qualify as "performance-based" in order to preserve its deductibility for federal income tax purposes to the extent possible without sacrificing flexibility in designing appropriate compensation programs. In 1997 and 1999, the Company obtained shareholder approval of performance-based incentives in Long-Term Performance Unit Awards in order to qualify such compensation as "performance-based." However, in order to provide executives with appropriate incentives, the Committee may also determine, in light of all applicable circumstances, that it would be in the best interests of Unicorn for awards to be paid under certain of its incentive compensation programs or otherwise in a manner that would not satisfy the requirements to qualify as performance-based compensation under Code Section 162(m). The portion of Mr. Rowe's incentive compensation that was guaranteed under his employment agreement does not qualify as performance-based compensation under Code Section 162(m), and accordingly, to the extent receipt of such compensation is not deferred, the amount of such incentive compensation and salary in excess of $1 million will not be deductible by Unicorn for purposes of corporate income taxes. Mr. Rowe deferred the portion of his incentive that was payable in Unicom Common Stock under the Unicom Corporation Stock Bonus Deferral Plan. Compensation Committee Edward A. Brennan, Chairman James W. Compton Donald P. Jacobs Richard Thomas ShareholderReturn Performance Set forth below is a line graph comparing the quarterly percentage change in the cumulative total shareholder return on Unicom common stock ("UCM") against the cumulative total return of the S&P 500 Composite Stock Index and the Dow Jones Utility Stock Index for the five-year period ending December 31, 1999. 151

Cumulative Performance Since January 1, 1995 Assuming Reinvestment of Dividends (January 1, 1995 = $100) TOTAL RETURN 360 "r 1 340 320 300 280 260 240 220 200 180 160 i 140 120 100 80 1 m m m D M J S D M J S D M J S D M J S D M J S D 1995 1996 1997 1998 1999 December 31, 1994 1995 1996 1997 1998 1999 Unicorn Corporation (- -- ) ................................ $100.00 144 127 154 202 183 S&P 500 Stock Index ( x ) ............................... $100.00 137 169 225 289 350 Dow Jones Utility Average ( e ) ........................... $100.00 132 144 177 210 198 ITEM 4-Ratification of Appointment of Independent Auditors Subject to shareholder approval, the Unicom board of directors has appointed Arthur Andersen LLP, independent public accountants, as auditors to examine the annual and quarterly consolidated financial statements of Unicom and its subsidiary companies for 2000. The shareholders will be asked at the annual meeting to approve such appointment. The firm of Arthur Andersen LLP has audited the accounts of Unicorn since its inception in 1994, and CornEd since 1932. A representative of Arthur Andersen LLP will be present at the meeting to make a statement if such representative so desires, and to respond to shareholders' questions. Other Matters ShareholderProposals and Nominationsfor 2001 Annual Meeting Any shareholder proposal intended to be presented at the 2001 annual meeting of Unicorn's shareholders must be received at the principal executive offices of Unicorn by the close of business on January 17, 2000, in order to be considered for inclusion in Unicom's proxy materials relating to that meeting. In addition, under Unicorn's By-laws, in order for a shareholder to bring business before, or to make a nomination of a candidate 152

for election as a director at, an annual meeting, the shareholder must comply with the procedures set forth in the Unicorn By-laws. Under the Unicorn By-laws, written notice in proper form of any business to be brought before an annual meeting must be provided to the Secretary of Unicorn not less than 90 nor more than 120 days before the anniversary date of the preceding annual meeting of shareholders. However, if the annual mrreeting is called for a date that is not within 30 days before or after such anniversary date, notice by the shareholder must be so received by the Secretary not later than 10 days after the day on which notice of the date of the annual meeting was mailed or publicly announced. To be in proper written form, the notice must include a brief description of such business, the reasons for conducting such business at the annual meeting, and certain information concerning the identity of the shareholder proposing to bring the business before the annual meeting. Similarly, under the Unicorn By-laws, written notice in proper form of any nomination of a candidate for election as a director at an annual meeting must be provided to the Secretary within the same time limits as set forth above for business to be brought before a meeting by a shareholder. To be in proper written form, the notice must set forth all information regarding the nominee that is required to be disclosed pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, together with certain information concerning the identity of the shareholder proposing to make the nomination. A copy of the Unicorn By-law provisions specifying the requirements for shareholders wishing to bring business before the annual meetings or wishing to make a nomination for election as a director at such meetings will be furnished to any shareholder without charge upon written request to the Secretary. Any such proposal, nomination or request should be directed to the Secretary of Unicorn at the 37th Floor, Bank One Building, 10 South

Dearborn Street,

Chicago, Illinois. If mailed, it should be sent to Secretary, Unicorn Corporation, 10 South

Dearborn Street,

Post Office Box A-3005, Chicago, Illinois 60690-3005. As of the date of this proxy statement/prospectus, management knows of no matters to be brought before the annual meeting other than the matters referred to in this proxy statement/prospectus. If, however, further business is presented, the proxy holders will act in accordance with their best judgment. 153

CHAPTER IV-WHERE YOU CAN FIND MORE INFORMATION Exelon filed a registration statement on Form S-4 on May 15, 2000, to register with the Securities and Exchange Commission the Exelon common stock to be issued to PECO Energy and Unicom shareholders in the merger. This proxy statement/prospectus is a part of that registration statement and constitutes a prospectus of Exelon in addition to being a proxy statement of PECO Energy and Unicorn. As allowed by Securities and Exchange Commission rules, this proxy statement/prospectus does not contain all the information you can find in Exelon's registration statement or the exhibits to the registration statement. PECO Energy and Unicorn file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission. You may read and copy any reports, statements or other information that PECO Energy and Unicomr file with the Securities and Exchange Commission at the Securities and Exchange Commission's public reference rooms at the following locations: Public Reference Room New York Regional Office Chicago Regional Office 450 Fifth Street, N.W. 7 World Trade Center Citicorp Center Room 1024 Suite 1300 500 West Madison Street Washington, D.C. 20549 New York, NY 10048 Suite 1400 Chicago, IL 60661-2511 Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the public reference rooms. These Securities and Exchange Commission filings are also available to the public from commercial document retrieval services and at the Internet worldwide web site maintained by the Securities and Exchange Commission at "http://www.sec.gov". Reports, proxy statements and other information concerning PECO Energy and Unicorn may also be inspected at the offices of the New York Stock Exchange, which is located at 20 Broad Street, New York, New York 10005. The Securities and Exchange Commission allows PECO Energy, Unicorn and Exelon to "incorporate by reference" information into this proxy statement/prospectus, which means that the companies can disclose important information to you by referring you to other documents filed separately with the Securities and Exchange Commission. The information incorporated by reference is considered part of this proxy statement/prospectus, except for any information superseded by information contained directly in this proxy statement/prospectus or in later filed documents incorporated by reference in this proxy statement/prospectus. This proxy statement/prospectus incorporates by reference the documents set forth below that PECO Energy and Unicom have previously filed with the Securities and Exchange Commission. These documents contain important business and financial information about PECO Energy and Unicorn that is not included in or delivered with this proxy statement/prospectus. PECO Energy Filings (File No. 1-1401) Period Annual Report on Form 10-K Fiscal Year ended December 31, 1999 Quarterly Report on Form 10-Q For the Period ended March 31, 2000 Current Reports on Form 8-K Filed January 7, 2000, January 13, 2000, March 21, 2000, March 24, 2000 and May 3, 2000 Registration Statement on Form 8-A (description of Filed October 24, 1991 PECO Energy common stock) 154

Unicom Filings (File No.1-11375) Period Annual Report on Form 10-K and on Form 10-K/A Fiscal Year ended December 31, 1999 Quarterly',Report on Form 10-Q For the Period ended March 31, 2000 Current Reports on Form 8-K Filed January 7, 2000, January 13, 2000 and May 9, 2000 Registration Statement on Form 8-B (description of Filed August 24, 1994 Unicorn common stock) Registration Statement on Form 8-A (description of Filed February 6, 1998 the Unicorn rights to acquire Unicorn common stock) PECO Energy and Unicorn also incorporate by reference additional documents that may be filed with the Securities and Exchange Commission under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act between the date of this proxy statement/prospectus and the date of the PECO Energy annual meeting and the date of the Unicom annual meeting, as applicable. These include periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy statements. PECO Energy has supplied all information contained or incorporated by reference in this proxy statement/prospectus relating to PECO Energy and Exelon, and Unicom has supplied all information relating to Unicorn. If you are a PECO Energy shareholder or a Unicorn shareholder, we may have sent to you some of the documents incorporated by reference, but you can also obtain any of them through the companies, the Securities and Exchange Commission or the Securities and Exchange Commission's Internet web site as described above. Documents incorporated by reference are available from the companies without charge, excluding all exhibits, except that if the companies have specifically incorporated by reference an exhibit in this proxy statement/prospectus, the exhibit will also be provided without charge. You may obtain documents incorporated by reference in this proxy statement/prospectus by requesting them in writing or by telephone from the appropriate company at the following addresses: PECO Energy Company Unicom Corporation 2301 Market Street 37th Floor, 10 South Dearborn Street Post Office Box 8699 Post Office Box A-3005 Philadelphia, Pennsylvania 19101-8699 Chicago, Illinois 60690-3005 Telephone: 1-888-340-7326 Telephone: 1-800-950-2377 Attention: Investor Relations Attention: Shareholder Services If you would like to request documents, please do so by June 19, 2000, in order to receive them before your annual meeting. You should rely only on the information contained or incorporated by reference in this proxy statement/prospectus. We have not authorized anyone to provide you with information that is different from what is contained in this proxy statement/prospectus. Therefore, if anyone does give you information of this sort, you should not rely on it. If you are in a jurisdiction where offers to exchange or sell, or solicitations of offers to exchange or purchase, the securities offered by this document or the solicitation of proxies is unlawful, or if you are a person to whom it is unlawful to direct these types of activities, then the offer presented in this document does not extend to you. This proxy statement/prospectus is dated May 15, 2000. You should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than that date. Neither the mailing of this proxy statement/prospectus to PECO Energy and Unicorn shareholders nor the issuance of Exelon common stock in the merger creates any implication to the contrary. 155

[THIS PAGE INTENTIONALLY LEFT BLANK] ANNEX A AMENDED AND RESTATED AGREEMENT AND PLAN OF EXCHANGE AND MERGER Dated as of September 22, 1999, Amended and Restated as of January 7, 2000, Among PECO ENERGY COMPANY, NEWHOLDCO CORPORATION And UNICOM CORPORATION

[THIS PAGE INTENTIONALLY LEFT BLANK] TABLE OF CONTENTS ARTICLE I The Exchange and Merger SECTION 1.01. The Exchange and M erger ............................................. A-1 SECTION 1.02. C losing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2 SECTION 1.03. M erger Effective Tim e ................................................ A-2 SECTION 1.04. Effects.......................................................... A-2 SECTION 1.05. Articles of Incorporation and By-laws ..................................... A-2 SECTION 1.06. Newco Board of Directors ............................................. A-3 SECTION 1.07. Newco Senior Officers ................................................ A-3 SECTION 1.08. O perations ... ..... ... ... ........ ................. ....... ... ... ..... A-3 ARTICLE II Effect on the Capital Stock of the Constituent Corporations SECTION 2.01. Effect on Capital Stock ............................................... A-3 SECTION 2.02. Exchange of Certificates ............................................... A-4 SECTION 2.03. Certain Adjustments .................................................. A-7 ARTICLE III Representations and Warranties of the Company SECTION 3.01. Organization, Standing and Power ....................................... A-8 SECTION 3.02. Company Subsidiaries; Equity Interests .................................... A-8 SECTION 3.03. C apital Structure .................................................... A-8 SECTION 3.04. Authority; Execution and Delivery; Enforceability ............................ A-9 SECTION 3.05. N o Conflicts; Consents ................................................ A-10 SECTION 3.06. SEC Documents; Undisclosed Liabilities ................................... A-11 SECTION 3.07. Inform ation Supplied ................................................. A-11 SECTION 3.08. Absence of Certain Changes or Events .................................... A-12 SECTION 3.09. Taxes.......................................................... A- 12 SECTION 3.10. Absence of Changes in Benefit Plans ..................................... A-13 SECTION 3.11. ERISA Compliance; Excess Parachute Payments ............................. A- 13 SECTION 3.12. Litigation ...... .............. ........ ...... ...... ... ... ... ... ... .. A-15 SECTION 3.13. Compliance with Applicable Laws; Permits ................................ A-15 SECTION 3.14. Brokers; Schedule of Fees and Expenses ................................... A-15 SECTION 3.15. Opinion of Financial Advisor ........................................... A-15 SECTION 3.16. Y ear 2000 ......................................................... A-15 SECTION 3.17. Environm ental M atters ................................................ A-15 SECTION 3.18. Labor and Employee Relations .......................................... A-17 SECTION 3.19. Operations of Nuclear Power Plants ...................................... A-17 SECTION 3.20. Parent Share Ownership ............................................... A-17 SECTION 3.21. Regulation as a Utility ................................................ A-17 SECTION 3.22. Contracts; No Default ................................................ A-17 SECTION 3.23. Title to Properties ................................................... A-18 SECTION 3.24. Intellectual Property .................................................. A-18 SECTION 3.25. H edging . . .. . .. .. . . . . .. . . . . . . . . . . .. . .. . .. .. . . . . . . . . . . . . . . . . .. . . .. . A-18 SECTION 3.26. Regulatory Proceedings ............................................... A-18 i

ARTICLE IV Representations and Warranties of Parent and Newco SECTION 4.01. Organization, Standing and Power ....................................... A-19 A-19 SECTION 4.02. Parent Subsidiaries; Equity Interests ...................................... 4.03. C apital Structure .................................................... A-19 SECTION A-20 SECTION 4.04. Authority; Execution and Delivery; Enforceability ............................ A-21 SECTION 4.05. No Conflicts; Consents ............................................... A-21 SECTION 4.06. SEC Documents; Undisclosed Liabilities ................................... A-22 SECTION 4.07. Inform ation Supplied ................................................. A-22 SECTION 4.08. Absence of Certain Changes or Events .................................... A-22 SECTION 4.09. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-23 SECTION 4.10. Absence of Changes in Benefit Plans ..................................... A-24 SECTION 4.11. ERISA Compliance; Excess Parachute Payments ............................. A-25 SECTION 4.12. Litigation . .. . .. .. . . . . . . . .. . . . .. . .. . .. .. . .. . .. .. . . . . .. . .. .. . .. . .. . . A-25 SECTION 4.13. Compliance with Applicable Laws; Permits ................................ A-25 SECTION 4.14. Brokers; Schedule of Fees and Expenses ................................... A-25 SECTION 4.15. Opinions of Financial Advisors .........................................

                                                      ... ........               ........ ........       ... ... ...........               A-26 SECTION 4.16. Y ear 2000 .. ... ........

A-26 SECTION 4.17. Environmental M atters ................................................ A-26 SECTION 4.18. Labor and Employee Relations .......................................... A-27 SECTION 4.19. Operations of Nuclear Power Plants ...................................... A-27 SECTION 4.20. Company Share Ownership ............................................ A-27 SECTION 4.21. R egulation as a U tility ................................................ A-27 SECTION 4.22. Contracts; N o D efault ................................................ A-28 SECTION 4.23. Title to Properties ................................................... A-28 SECTION 4.24. Intellectual Property .................................................. A-28 SECTION 4.25. H edging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-28 SECTION 4.26. Regulatory Proceedings ............................................... ARTICLE V Covenants Relating to Conduct of Business SECTION 5.01. Conduct of Business ................................................. A-28 A-34 SECTION 5.02. No Solicitation by Company ........................................... A-35 SECTION 5.03. No Solicitation by Parent .............................................. ARTICLE VI Additional Agreements SECTION 6.01. Preparation of the Form S-4 and the Proxy Statement; Shareholders Meetings ....... A-37 A-38 SECTION 6.02. Access to Information; Confidentiality .................................... A-39 SECTION 6.03. Regulatory Matters; Reasonable Best Efforts ................................ A-39 SECTION 6.04. Company and Parent Stock Options and Other Stock Plans ..................... A-42 SECTION 6.05. Benefit Plans; W orkforce M atters ........................................ A-43 SECTION 6.06. Indem nification ..................................................... A-43 SECTION 6.07. Fees and Expenses ................................................... A-44 SECTION 6.08. Public A nnouncem ents ................................................ A-44 SECTION 6.09. Transfer T axes ...................................................... ii

SECTION 6.10. A ffiliates .. ... ... ... ... ........... ... ... ... ... ... ... ... ... ... ...... A-45 SECTION 6.11. Stock Exchange Listing ............................................... A-45 SECTION 6.12. Rights Agreements; Consequences if Rights Triggered ........................ A-45 SECTION 6.13. Tax Treatm ent ...................................................... A-45 SECTION 6.14. Reorganization and Amendment ......................................... A-45 SECTION 6.15. Common Stock Repurchase ............................................ A-46 SECTION 6.16. Parity of Com pensation ............................................... A-46 SECTION 6.17. B oard Seats ........................................................ A-46 ARTICLE VII Conditions Precedent SECTION 7.01. Conditions to Each Party's Obligation To Effect The Merger .................... A-46 SECTION 7.02. Conditions to Obligations of Parent and Newco .............................. A-47 SECTION 7.03. Conditions to Obligations of the Company ................................. A-48 ARTICLE VIII Termination, Amendment and Waiver SECTION 8.01. Termination...................................................... A-48 SECTION 8.02. Effect of Termination ................................................. A-50 SECTION 8.03. Amendment...................................................... A-50 SECTION 8.04. Extension; W aiver ................................................... A-50 SECTION 8.05. Procedure for Termination, Amendment, Extension or Waiver ................... A-51 ARTICLE IX General Provisions SECTION 9.01. Nonsurvival of Representations and Warranties .............................. A-51 SECTION 9.02. Notices .. . . . . . . . .. .. . .. . .. . . . . . . . .. .. . . . . .. . . . . . . . . .. . .. . . . . . . . .. . A-51 SECTION 9.03. Definitions ......................................................... A-52 SECTION 9.04. Interpretation; Disclosure Letters ........................................ A-52 SECTION 9.05. Severability ........................................................ A-52 SECTION 9.06. Counterparts ....................................................... A-52 SECTION 9.07. Entire Agreement; No Third-Party Beneficiaries ............................. A-52 SECTION 9.08. G overning Law ..................................................... A-53 SECTION 9.09. A ssignment ........................................................ A-53 SECTION 9.10. Enforcem ent ....................................................... A-53 SECTION 9.11. New co O bligations .................................................. A-53 iii

INDEX OF DEFINED TERMS Defined Term Section "Affiliate" Section 9.03 "Agreement" Recitals "AmerGen" Section 5.01(b)(iv) "AmerGen Nuclear Facilities" Section 4.19(b) "Applicable Law" Section 3.05(a) "Articles of Exchange" Section 1.03(a) "Atomic Energy Act" Section 3.05(b) "Certificates" Section 2.02(b)(v) " Closing" Section 1.02 "Closing Date" Section 1.02 "Code" Recitals "ComEd" Section 1.08(a) "Common Shares Trust" Section 2.02(e)(ii) "Company" Recitals "Company Acquisition Agreement" Section 5.02(b)

"Company Benefit Plans"                          Section 3.10 "Company Board"                                  Section 3.04(b)
"Company By-laws"                                Section 3.01 "Company Cash Consideration"                     Section 2.01(b)(ii)
"Company Certificates"                           Section 2.02(b)(v)
"Company Chairman"                               Section 6.16 "Company Charter"                                Section 3.01 "Company Common Stock"                           Recitals "Company Competing Transaction"                  Section 5.02(a)
"Company Conversion Number"                      Section 2.01(b)(ii)
"Company Disclosure Letter"                      Section 3.02(a)
"Company Dissent Shares"                         Section 2.01(b)(iv)
"Company Employee Stock Option"                  Section 6.04(f)
"Company Employment Arrangements"                Section 3.10 "Company Exchange Ratio"                         Section 2.01(b)(ii)
"Company Material Adverse Effect"                Section 3.01 "Company Nuclear Facilities"                     Section 3.19 "Company Permits"                                Section 3.13(b)
"Company Reorganization"                          Section 5.01(g)
"Company Required Statutory Approvals"            Section 3.05(b)
"Company Rights"                                  Section 3.03(a)
"Company Rights Agreement"                        Section 3.03(a)
"Company SEC Documents"                           Section 3.06 "Company Shareholder Approval"                    Section 3.04(c)
"Company Shareholders Meeting"                    Section 6.01(d)
"Company Stock Plans"                             Section 6.04(f)
 "Company Subsidiaries"                           Section 3.01 "Confidentiality Agreement"                      Section 6.02 "Consent"                                        Section 3.05(b)
 "Contract"                                       Section 3.05(a)
 "ERISA"                                          Section 3.1 (b)
 "Election Deadline"                              Section 2.02(b)
 "Environmental Claims"                           Section 3.17(f)(i)
 "Environmental Laws"                             Section 3.17(f)(ii) iv

INDEX OF DEFINED TERMS Defined Term Section "Environmental Permits" Section 3.17(f)(iii)

   "Excess Shares"                                      Section 2.02(e)(ii)
   "Exchange Act"                                       Section 3.05(b)
   "Exchange Agent"                                     Section 2.02(a)
   "Exchange Consideration"                             Section 2.01(a)(ii)
   "Exchange Effective Time"                            Section 1.03(a)
   "Exchange Fund"                                      Section 2.02(a)
   "FERC"                                               Section 3.05(b)
  "Filed Company SEC Documents"                         Section 3.08 "Filed Parent SEC Documents"                         Section 4.08 "Final Order"                                        Section 7.01(c)
  "First Step Exchange"                                Recitals "Form S-4" Section 3.07 "Form of Election"                                   Section 2.02(b)
  "GAAP"                                               Section 3.06 "Governmental Entity"                                Section 3.05(b)
  "Hazardous Materials"                                Section 3.17(f)(iv)
  "HSR Act"                                            Section 3.05(b)
  "IBCA"                                               Section 1.01(b)
  "ICC"                                                Section 3.05(b)
  "Illinois Articles of Merger"                        Section 1.03(b)
 "Indemnified Party"                                   Section 6.06(c)
 "Intellectual Property Rights"                        Section 3.24 "Judgment"                                            Section 3.05(a)
 "Liens"                                               Section 3.02(a)
 " Losses"                                             Section 6.06(c)
 "Material Adverse Effect"                             Section 9.03
 Merger"                                             Recitals "Merger Consideration"                                Section 2.01(b)(ii)
 "Merger Effective Time"                              Section 1.03(b)
"'NRC"                                                Section 3.05(b)
"NYSE"                                                Section 2.02(e)(ii)
"Newco"                                               Recitals "Newco Articles"                                      Section 1.05(a)
"Newco Board"                                         Section 1.06(b)
"Newco By-laws"                                       Section 1.05(b)
"Newco Common Stock"                                  Recitals "Original Merger Agreement"                           Recitals "Outside Date"                                        Section 8.01(b)
"PBCL"                                                Section 1.01(a)
"PCBs"                                                Section 3.17(f)(iv)
"PPUC" Section 4.05(b)

"PUHCA" Section 3.02(a) "PURPA" Section 3.02(a) "Parent" Recitals "Parent Acquisition Agreement" Section 5.03(b) "Parent Benefit Plans" Section 4.10 "Parent Board" Section 4.04(b) "Parent By-laws" Section 4.01 v

INDEX OF DEFINED TERMS Section Defined Term Section 4.03(a) "Parent Capital Stock" Section 2.02(b)(v) "Parent Certificate" Section 6.16 "Parent Chairman" "Parent Charter" Section 4.01 Recitals "Parent Common Stock" Section 5.03(a) "Parent Competing Transaction" Section 4.02(a) "Parent Disclosure Letter" Section 6.04(0 "Parent Employee Stock Option" Section 4.10 "Parent Employment Arrangements" Section 2.01(a)(ii) "Parent Exchange Ratio" Section 4.01 "Parent Material Adverse Effect" Section 4.19(a) "Parent Nuclear Facilities" Section 4.13(b) "Parent Permits" Section 4.03(a) "Parent Preferred Stock" Section 5.01(g)

"Parent Reorganization" Section 4.05(b)
"Parent Required Statutory Approvals" Section 6.04(f)
"Parent SAR" Section 4.06 "Parent SEC Documents" Section 4.04(c)
"Parent Shareholder Approval" Section 6.01(e)
"Parent Shareholders Meeting" "Parent Stock Plans"                               Section 6.04(f)

Section 4.01 "Parent Subsidiaries" Section 5.01(a)(xii)

"Power Purchase Agreement" Section 1.03(b)
"Pennsylvania Articles of Merger" Section 4.13(b)
"Pennsylvania Competition Act" Section 9.03 "Person" Section 3.02(a)
"Power Act" Section 3.05(b)
"Proxy Statement" Section 3.11 (a)
 "Qualified Plans" Section 5.02(d)
 "Qualifying Company Proposal" Section 5.03(d)
 "Qualifying Parent Proposal" Section 3.17(f)(v)
 "Release" Section 5.02(a)
 "Representatives" Section 3.05(b)
 "SEC" Recitals "Second Step Merger" Section 2.01(b)(iv)
 "Sections 11.65 and 11.70" Section 3.06 "Securities Act" Section 1.01(c)
 "Share Issuance" Section 6.04(e)
 "Stock Plan" Section 9.03 "Subsidiary" Section 1.01(b)
 "Surviving Corporation" Section 3.09(g)
 "Taxes" Section 3.09(g)
  "Tax Return" Section 1.01(c)
  "Transactions" Section 6.16 "Transition Period" Section 6.09 "Transfer Taxes" Section 3.03(d)
  "Voting Company Debt" Section 4.03(d)
  "Voting Parent Debt" vi

AMENDED AND RESTATED AGREEMENT AND PLAN OF EXCHANGE AND MERGER dated as of September 22, 1999, as amended and restated as of January 7, 2000 (this "Agreement"), among PECO ENERGY COMPANY, a Pennsylvania corporation ("Parent"), NEWHOLDCO CORPORATION, a Pennsylvania corporation and a wholly owned subsidiary of Parent ("Newco"), and UNICOM CORPORATION, an Illinois corporation (the "Company"). WHEREAS Parent, Newco and the Company entered into an Agreement and Plan of Exchange and Merger dated as of September 22, 1999 (the "Original MergerAgreement"), and they now desire to amend and restate the Original Merger Agreement (it being understood that all references herein to this "Agreement" refer to the Original Merger Agreement as amended and restated hereby and that all references herein to the "date hereof" or the "date of this Agreement" refer to September 22, 1999); WHEREAS the respective Boards of Directors of Parent, Newco and the Company have approved the consummation of the business combination provided for in this Agreement, pursuant to which (a) Parent and Newco will, on the terms and subject to the conditions set forth in this Agreement, effect a mandatory share exchange (the "First Step Exchange") whereby each outstanding share of common stock, no par value, of Parent (the "Parent Common Stock") shall be acquired by Newco in exchange for common stock, no par value, of Newco (the "Newco Common Stock"), as herein provided, (b) immediately thereafter, the Company will, on the terms and subject to the conditions set forth in this Agreement, merge with and into Newco (the "Second Step Merger" and, together with the First Step Exchange, the "Merger"), whereby each share of common stock, no par value, of the Company (the "Company Common Stock") will be converted into the right to receive Newco Common Stock and cash, as herein provided, (c) the holders of Parent Common Stock and Company Common Stock will together own all of the outstanding shares of Newco Common Stock and (d) each share of each other class of capital stock of Parent and the Company shall be unaffected and remain outstanding; WHEREAS for Federal income tax purposes it is intended that the Merger constitutes transactions described in Section 351 of the Internal Revenue Code of 1986, as amended (the "Code"), and the Second Step Merger constitutes a transaction described in Section 368(a) of the Code; and WHEREAS Parent, Newco and the Company desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also to prescribe various conditions to the Merger. NOW, THEREFORE, the parties hereto, intending to be legally bound hereby, agree as follows: ARTICLE I The Exchange and Merger SECTION 1.01. The Exchange and Merger. (a) On the terms and subject to the conditions set forth in this Agreement, in accordance with the Business Corporation Law of the Commonwealth of Pennsylvania ("PBCL"), Parent and Newco shall effect the First Step Exchange at the Exchange Effective Time (as defined in Section 1.03). As a result of the First Step Exchange, Parent shall become a wholly owned subsidiary of Newco. The effects and the consequences of the First Step Exchange and the Second Step Merger shall be as set forth in Section 1.04. (b) On the terms and subject to the conditions set forth in this Agreement, in accordance with the Illinois Business Corporation Act (the "IBCA") and the PBCL, the Company shall be merged with and into Newco at the Merger Effective Time (as defined in Section 1.03). At the Merger Effective Time, the separate corporate existence of the Company shall cease and Newco shall continue as the surviving corporation (the "Surviving Corporation"). A-1

(c) The First Step Exchange, the Second Step Merger, the issuance by Newco of Newco Common Stock in connection with the Merger (the "Share Issuance") and the other transactions contemplated by this Agreement are referred to in this Agreement collectively as the "Transactions". SECTION 1.02. Closing. The closing (the "Closing") of the Merger shall take place at such location as shall be determined by the parties at 10:00 a.m. on the second business day following the satisfaction (or, to the extent permitted by Applicable Law (as defined in Section 3.05), waiver by all parties) of the conditions set forth in Section 7.01, or, if on such day any condition set forth in Section 7.02 or 7.03 has not been satisfied (or, to the extent permitted by Applicable Law, waived by the party or parties entitled to the benefits thereof), as soon as practicable after all the conditions set forth in Article VII have been satisfied (or, to the extent permitted by Applicable Law, waived by the parties entitled to the benefits thereof), or at such other place, time and date as shall be agreed in writing between Parent and the Company. The date on which the Closing occurs is referred to in this Agreement as the "Closing Date". SECTION 1.03. Merger Effective Time. (a) Prior to the Closing, Parent shall prepare, and on the Closing Date Parent shall file with the Department of State of the Commonwealth of Pennsylvania, articles of exchange or other appropriate documents (in any such case, the "Articles of Exchange") executed in accordance with the relevant provisions of the PBCL and shall make all other filings or recordings required under the PBCL to effect the First Step Exchange. The First Step Exchange shall become effective at such time as the Articles of Exchange are duly filed with such Department of State, or at such other time as Newco and Parent shall agree and specify in the Articles of Exchange (the time the First Step Exchange becomes effective being the "Exchange Effective Time"). (b) Prior to the Closing and after the Exchange Effective Time, Newco and the Company shall prepare, and on the Closing Date and after the Exchange Effective Time Newco and the Company shall (i) file with the Department of State of the Commonwealth of Pennsylvania, the articles of merger or other appropriate documents (in any such case, the "Pennsylvania Articles of Merger") executed in accordance with the relevant provisions of the PBCL and shall make all other filings or recordings required under the PBCL to effect the Second Step Merger and (ii) thereafter file with the Secretary of State of the State of Illinois, articles of merger or other appropriate documents (in any such case, the "Illinois Articles of Merger") executed in accordance with the relevant provisions of the IBCA and shall make all other filings or recordings required under the IBCA to effect the Second Step Merger. The Second Step Merger shall become effective at such time as the Illinois Articles of Merger are duly filed as provided by Applicable Law and the Secretary of State of the State of Illinois has issued a certificate of merger in respect of the Second Step Merger, or at such other time as Newco and the Company shall agree and specify as provided by Applicable Law (the time the Second Step Merger becomes effective being the "Merger Effective Time"). SECTION 1.04. Effects. The First Step Exchange shall have the effects set forth in Section 1931 of the PBCL. The Second Step Merger shall have the effects set forth in Section 1929 of the PBCL and Section 11.50 of the IBCA. SECTION 1.05. Articles of Incorporationand By-laws. (a) At the Merger Effective Time, the Articles of Incorporation of Newco (the "Newco Articles") shall, until thereafter changed or amended as provided therein or by Applicable Law and as Parent and the Company shall have agreed prior to the Merger Effective Time, be the Articles of Incorporation of the Surviving Corporation and shall in any case be amended to provide that the name of Newco be changed to "Exelon Corporation". (b) At the Merger Effective Time, the By-laws of Newco (the "Newco By-laws") shall, until thereafter changed or amended as provided therein or by Applicable Law and as Parent and the Company shall have agreed prior to the Merger Effective Time, be the By-laws of the Surviving Corporation, and shall in any case be amended by inserting the provisions set forth in Exhibit A as Article X thereof. A-2

SECTION 1.06. Newco Board ofDirectors. (a) The directors of Parent immediately prior to the Exchange Effective Time shall be the directors of Newco as of the Exchange Effective Time, until the earlier of the Merger Effective Time or their resignation or removal or the due election and qualification of their respective successors, as the case may be. (b) In accordance with the Newco By-laws, as amended pursuant to Section 1.05(b), as of the Merger Effective Time, the Board of Directors of the Surviving Corporation (the "Newco Board") shall consist of 16 members, eight of whom shall be serving as members of the Board of Directors of Parent immediately prior to the Merger Effective Time who are recommended by the Board of Directors of Parent immediately prior to the Merger Effective Time, and eight of whom of whom shall be members of the Board of Directors of the Company immediately prior to the Merger Effective Time who are recommended by the Board of Directors of the Company immediately prior to the Merger Effective Time. SECTION 1.07. Newco Senior Officers. As of the Merger Effective Time the senior officers of Newco shall be as set forth in Exhibit B and shall hold office until their respective successors are duly elected and qualified, or until their earlier death, resignation or removal in accordance with the Newco By-Laws. SECTION 1.08. Operations. (a) Corporate Offices. The Surviving Corporation shall maintain (i) in Chicago, Illinois offices serving as its corporate headquarters, (ii) in southeastern Pennsylvania offices serving as the headquarters of the generation and power marketing businesses of the Surviving Corporation and its subsidiaries, and (iii) offices in Chicago, Illinois and southeastern Pennsylvania as the headquarters of Commonwealth Edison Company, an Illinois corporation ("CornEd"), and Parent, respectively. The chief nuclear officer of the Surviving Corporation shall maintain offices in both Chicago, Illinois and southeastern Pennsylvania. (b) Charities. The parties agree that provision of charitable contribution and community support in the respective service areas of Parent and the Company and their respective subsidiaries serves a number of important goals. During the two-year period immediately following the Merger Effective Time, the Surviving Corporation shall provide, directly or indirectly, charitable contributions and traditional local community support within the respective service areas of Parent and the Company and each of their subsidiaries that are utilities at levels substantially comparable to and no less than the levels of charitable contributions and community support provided by Parent and the Company and such subsidiaries within their service areas within the two-year period immediately prior to the Merger Effective Time. ARTICLE II Effect on the Capital Stock of the Constituent Corporations; Exchange of Certificates SECTION 2.01. Effect on Capital Stock. (a) First Step Exchange. At the Exchange Effective Time, by virtue of the First Step Exchange and without any action on the part of the holder of any shares of Parent Common Stock or Newco Common Stock: (i) Cancelation of Treasury Stock. Each share of Parent Common Stock that is owned by Parent shall automatically be canceled and retired and shall cease to exist, and no Newco Common Stock or other consideration shall be delivered or deliverable in exchange therefor. (ii) Exchange of PareniCommon Stock. (A) Subject to Section 2.01(a)(i), each issued share of Parent Common Stock shall be exchanged for one fully paid and nonassessable share of Newco Common Stock (the "Parent Exchange Ratio"). (B) The shares of Newco Common Stock to be issued by Newco upon the exchange of shares of Parent Common Stock pursuant to this Section 2.01(a)(ii) are referred to collectively as "Exchange Consideration". As of the Exchange Effective Time, all such shares of Parent Common Stock shall A-3.

be exchanged for Exchange Consideration and such shares of Parent Common Stock shall remain outstanding and shall be owned and held by Newco, and each holder of a certificate representing any such shares of Parent Common Stock shall cease to have any rights with respect thereto, except the right to receive Exchange Consideration upon surrender of such certificate in accordance with Section 2.02, without interest. (iii) ParentPreferred Stock. The Parent Preferred Stock (as defined in Section 4.03(a)) outstanding immediately prior to the Exchange Effective Time shall remain outstanding, without change, after the Exchange Effective Time, and no consideration shall be delivered or deliverable in exchange therefor. (b) Second Step Merger. At the Merger Effective Time, by virtue of the Second Step Merger and without any action on the part of the holder of any shares of Company Common Stock or Newco Common Stock: (i) Cancelation of Treasury Stock and Newco-Owned Stock. Each share of Company Common Stock that is owned by the Company or Newco shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and no Newco Common Stock or other consideration shall be delivered or deliverable in exchange therefor. (ii) Conversion of Company Common Stock. (A) Subject to Sections 2.01(b)(i) and 2.02(e), each issued share of Company Common Stock shall be converted into the right to receive (1) $3.00 in cash (the "Company Cash Consideration") and (2) 0.875 (the "Company Conversion Number") fully paid and nonassessable shares of Newco Common Stock (the "Company Exchange Ratio"). (B) The Company Cash Consideration, shares of Newco Common Stock to be issued upon the conversion of shares of Company Common Stock pursuant to this Section 2.01(b)(ii) and cash in lieu of fractional shares of Newco Common Stock to the extent contemplated by Section 2.02(e) are referred to collectively as "Merger Consideration". As of the Merger Effective Time, all such shares of Company Common Stock shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each holder of a certificate representing any such shares of Company Common Stock shall cease to have any rights with respect thereto, except the right to receive Merger Consideration upon surrender of such certificate in accordance with Section 2.02, without interest. (iii) Newco Common Stock. The Newco Common Stock outstanding immediately prior to the Merger Effective Time issued as contemplated by Section 2.01(a)(ii) shall remain outstanding, without change, after the Merger Effective Time, and no Merger Consideration shall be delivered or deliverable in exchange therefor. (iv) Dissent Rights. Notwithstanding anything in this Agreement to the contrary, shares ("Company Dissent Shares") of Company Common Stock that are outstanding immediately prior to the Merger Effective Time and that are held by any person who is entitled to demand and properly demands payment of the fair value of such Company Dissent Shares pursuant to, and who complies in all respects with, Sections 11.65 and 11.70 of the IBCA ("Sections 11.65 and 11.70") shall be converted into the right to receive Merger Consideration as provided in Section 2.01(b)(ii), and shall thereafter be subject to sale and purchase rights in accordance with Sections 11.65 and 11.70. SECTION 2.02. Exchange of Certificates. (a) Exchange Agent. Promptly following the Merger Effective Time, Newco shall deposit with such bank or trust company as may be designated by Newco and reasonably acceptable to Parent and the Company (the "Exchange Agent"), for the benefit of the holders of shares of Parent Common Stock and Company Common Stock, for exchange in accordance with this Article II, through the Exchange Agent, cash equal to the total aggregate Company Cash Consideration and certificates representing the shares of Newco Common Stock issuable pursuant to Section 2.01 in exchange for outstanding Company Certificates or Parent Certificates. Newco shall provide to the Exchange Agent on a timely basis, as and when needed after the Merger Effective Time, cash equal to the total aggregate Company Cash A-4

Consideration (such shares of Newco Common Stock and cash, together with any dividends or distributions with respect thereto, being hereinafter referred to as the "Exchange Fund"). For the purposes of such deposit, Newco shall assume that there will not be any fractional shares of Newco Common Stock. Newco shall make available to the Exchange Agent, for addition to the Exchange Fund, from time to time as needed, cash sufficient to pay cash in lieu of fractional shares to the extent provided in Section 2.02(e). (b) Exchange Procedures. As soon as reasonably practicable after the Merger Effective Time, the Exchange Agent shall mail to each holder of record of a certificate or certificates that immediately prior to the Exchange Effective Time represented outstanding shares of Parent Common Stock that were converted into the right to receive Exchange Consideration (the "Parent Certificates") or that immediately prior to the Merger Effective Time represented outstanding shares of Company Common Stock that were converted into the right to receive Merger Consideration (the "Company Certificates" and, together with the Parent Certificates, the "Certificates"), in each case, pursuant to Section 2.01, (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent and shall be in such form and have such other provisions as Parent and the Company may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for Exchange Consideration or Merger Consideration, as the case may be. Upon surrender of a Parent Certificate or a Company Certificate for cancelation to the Exchange Agent, together with such letter of transmittal, duly executed, and such other documents as may reasonably be required by the Exchange Agent, the holder of such Certificate shall be entitled to receive in exchange therefor Company Cash Consideration and a certificate representing that number of whole shares of Newco Common Stock (together with cash in lieu of fractional shares), in each case, that such holder has the right to receive pursuant to the provisions of this Article II, and the Certificate so surrendered shall forthwith be canceled. Until such time as a certificate representing Newco Common Stock is issued to or at the direction of the holder of a surrendered Company Certificate or Parent Certificate, such Newco Common Stock shall be deemed not outstanding and shall not be entitled to vote on any matter. In the event of a transfer of ownership of Parent Common Stock or Company Common Stock that is not registered in the transfer records of Parent or the Company, as the case may be, payment may be made and a certificate representing the appropriate number of shares of Newco Common Stock may be issued to a person other than the person in whose name the Certificate so surrendered is registered, if such Certificate shall be properly endorsed or otherwise be in proper form for transfer and the person requesting such payment shall pay any transfer or other taxes required by reason of such payment or the issuance of shares of Newco Common Stock to a person other than the registered holder of such Certificate or establish to the satisfaction of Newco that such tax has been paid or is not applicable. Subject to Sections 11.65 and 11.70 of the IBCA (in the case of a Company Certificate), until surrendered as contemplated by this Section 2.02, each Company Certificate or Parent Certificate shall be deemed at any time after the Merger Effective Time or Exchange Effective Time, as applicable, to represent only the right to receive upon such surrender Merger Consideration or Exchange Consideration, as applicable, as contemplated by this Section 2.02. No interest shall be paid or accrue on any cash payable, whether in respect of Exchange Consideration, Merger Consideration, dividends or otherwise, upon surrender of any Certificate. Any dividend reinvestment plan, employee stock ownership plan or similar plan of the Company may be treated as a single holder of Company Common Stock for the purposes of Section 2.02(e). (c) Distributionswith Respect to Unexchanged Shares. No dividends or other distributions with respect to Newco Common Stock with a record date after the Merger Effective Time shall be paid to the holder of any unsurrendered Company Certificate or Parent Certificate with respect to the shares of Newco Common Stock issuable upon surrender thereof, and no cash payment in lieu of fractional shares shall be paid to any such holder pursuant to Section 2.02(e), until the surrender of such certificate in accordance with this Article II. Subject to Applicable Law, following surrender of any such Certificate, there shall be paid to the holder of the certificate representing whole shares of Newco Common Stock issued in exchange therefor, without interest, (i) at the time of such surrender, the amount of any cash payable in lieu of a fractional share of Newco Common Stock to which such holder is entitled pursuant to Section 2.02(e) and the amount of dividends or other distributions with a record date after the Merger Effective Time theretofore paid with respect to such A-5

whole shares of Newco Common Stock, and (ii) at the appropriate payment date, the amount of dividends or other distributions with a record date after the Merger Effective Time but prior to such surrender and a payment date subsequent to such surrender payable with respect to such whole shares of Newco Common Stock. (d) No FurtherOwnership Rights in Parent Common Stock or Company Common Stock. The Exchange Consideration and Merger Consideration issued (and paid) in accordance with the terms of this Article I1upon conversion and exchange of any shares of Parent Common Stock or Company Common Stock, as the case may be, shall be deemed to have been issued (and paid) in full satisfaction of all rights pertaining to such shares of Parent Common Stock or Company Common Stock, subject, however, to (i) the Surviving Corporation's obligations to pay or provide for the rights of dissenters and (ii) the Surviving Corporation's obligation to pay any dividends or make any other distributions with a record date prior to the Merger Effective Time that may have been declared or made by the Parent on such shares of Parent Common Stock or the Company on such shares of Company Common Stock, respectively, in accordance with the terms of this Agreement or prior to the date of this Agreement and which remain unpaid at the Merger Effective Time, and after the Merger Effective Time there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of shares of Parent Common Stock or Company Common Stock that were outstanding immediately prior to the Merger Effective Time. If, after the Merger Effective Time, any certificates formerly representing shares of Parent Common Stock or Company Common Stock, as the case may be, are presented to the Surviving Corporation or the Exchange Agent for any reason, they shall be canceled and exchanged as provided in this Article II. (e) No FractionalShares. (i) Except as otherwise agreed to by the Company and Parent as provided in Section 2.02(e)(v), no certificates or scrip representing fractional shares of Newco Common Stock shall be issued upon the conversion of Company Common Stock pursuant to Section 2.01, and such fractional share interests shall not entitle the owner thereof to vote or to any rights of a holder of Newco Common Stock. For purposes of this Section 2.02(e), all fractional shares to which a single record holder would be entitled shall be aggregated and calculations shall be rounded to three decimal places. (ii) As promptly as practicable following the Merger Effective Time, the Exchange Agent shall determine the excess of (A) the number of shares of Newco Common Stock delivered to the Exchange Agent by Newco pursuant to Section 2.02(a) over (B) the aggregate number of whole shares of Newco Common Stock to be issued to holders of Company Common Stock pursuant to Section 2.02(b) (such excess being herein called the "Excess Shares"). As soon after the Merger Effective Time as practicable, the Exchange Agent, as agent for the holders of Company Common Stock, shall sell the Excess Shares at then prevailing prices on the New York Stock Exchange (the "NYSE"), all in the manner provided in Section 2.02(e)(iii). (iii) The sale of the Excess Shares by the Exchange Agent shall be executed on the NYSE through one or more member firms of the NYSE and shall be executed in round lots to the extent practicable. The proceeds from such sale or sales available for distribution to the holders of Company Common Stock shall be reduced by transfer taxes in connection with such sale or sales of the Excess Shares. Until the net proceeds of such sale or sales have been distributed to the holders of Company Common Stock entitled thereto, the Exchange Agent shall hold such proceeds in trust for such holders of Company Common Stock (the "Common Shares Trust"). The Exchange Agent shall determine the portion of the Common Shares Trust to which each holder of a Certificate shall be entitled, if any, by multiplying the amount of the aggregate net proceeds comprising the Common Shares Trust by a fraction, the numerator of which is the amount of the fractional share interest in a share of Newco Common Stock to which such holder is entitled under Section 2.01(b)(ii) (or would be entitled but for this Section 2.02(e)) and the denominator of which is the aggregate amount of fractional interests in a share of Newco Common Stock to which all holders of Company Common Stock are entitled. (iv) As soon as practicable after the determination of the amount of cash, if any, to be paid to holders of Company Common Stock in lieu of any fractional share interests in Newco*Common Stock, the Exchange Agent shall make available such amounts, without interest, to such holders entitled to receive such cash. A-6

(v) Notwithstanding anything herein to the contrary, if the Company and Parent so agree prior to the Closing, Newco may establish a common stock direct share registration program pursuant to which shareholders would receive a book entry credit for fractional shares of Newco Common Stock in lieu of cash as otherwise provided in this Section 2.02(e). If the Company and Parent agree to have Newco establish such a program, any reference herein to fractional shares shall refer to such book entry fractional shares and no cash will be issued for such shares except as may be provided by such program. In no event will Newco issue certificates or script representing fractional shares. (f) Termination of Exchange Fund. Any portion of the Exchange Fund that remains undistributed to the holders of Parent Common Stock or Company Common Stock for six months after the Merger Effective Time shall be delivered to Newco, upon demand, and any holder of Parent Common Stock or Company Common Stock who has not theretofore complied with this Article II shall thereafter look only to Newco for payment of its claim for Exchange Consideration or Merger Consideration, as the case may be, and any dividends or distributions with respect to:Newco Common Stock as contemplated by Section 2.02(c). (g) No Liability. None of Parent, Newco, the Company or the Exchange Agent shall be liable to any person in respect of any shares of Newco Common Stock (or dividends or distributions with respect thereto) or cash from the Exchange Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar Applicable Law. If any Company Certificate or Parent Certificate has not been surrendered prior to five years after the Merger Effective Time (or immediately prior to such earlier date on which Merger Consideration or Exchange Consideration or any dividends or distributions with respect to Newco Common Stock as contemplated by Section 2.02(c)(i) in respect of such Company Certificate or Parent Certificate would otherwise escheat to or become the property of any Governmental Entity (as defined in Section 3.05)), any such shares, cash, dividends or distributions in respect of such Company Certificate shall, to the extent permitted by Applicable Law, become the property of the Surviving Corporation, free and clear of all claims or interest of any person previously entitled thereto. (h) Investment of Exchange Fund. The Exchange Agent shall invest any cash included in the Exchange Fund, as directed by Newco, on a daily basis. Any interest and other income resulting from such investments shall be paid to Newco. (i) Withholding Rights. Newco shall be entitled to deduct and withhold from the consideration otherwise payable to any holder of Parent Common Stock or Company Common Stock pursuant to this Agreement such amounts as may be required to be deducted and withheld with respect to the making of such payment under the Code, or under any provision of state, local or foreign tax law. To the extent that amounts are so withheld and paid over to the appropriate taxing authority, Newco will be treated as though it withheld an appropriate amount of the type of consideration otherwise payable pursuant to this Agreement to any holder of Parent Common Stock or Company Common Stock, sold such consideration for an amount of cash equal to the fair market value of such consideration at the time of such deemed sale and paid such cash proceeds to the appropriate taxing authority. SECTION 2.03. CertainAdjustments. If after the date hereof and on or prior to the Closing Date, the outstanding shares of Parent Common Stock or Company Common Stock shall be changed into a different number of shares by reason of any reclassification, recapitalization, split-up, combination or exchange of shares, or any dividend payable in stock or other securities is declared thereon with a record date within such period, or any similar event shall occur, the Exchange Consideration and the Merger Consideration will be adjusted accordingly to provide to the holders of Parent Common Stock and Company Common Stock, respectively, the same economic effect as contemplated by this Agreement prior to such reclassification, recapitalization, split-up, combination, exchange or dividend or similar event. This provision is not intended to affect the need for either party to obtain the other party's consent to take such an action under any other provision of this Agreement. A-7

ARTICLE III Representations and Warranties of the Company The Company represents and warrants to Parent and Newco as follows: SECTION 3.01. Organization, Standing and Power. Each of the Company and each of its subsidiaries (the "Company Subsidiaries") is duly organized, validly existing and in good standing (with respect to jurisdictions which recognize the concept of good standing) under the laws of the jurisdiction in which it is organized and has full corporate power and authority and possesses all governmental franchises, licenses, permits, authorizations and approvals necessary to enable it to own, lease or otherwise hold its properties and assets and to conduct its businesses as conducted as of the date of this Agreement, other than such franchises, licenses, permits, authorizations and approvals the lack of which, individually or in the aggregate, has not had and could not reasonably be expected to have a Material Adverse Effect on the Company (a "Company MaterialAdverse Effect"). The Company and each Company Subsidiary is duly qualified to do business in each jurisdiction where the nature of its business or their ownership or leasing of its properties make such qualification necessary, other than such qualifications the lack of which, individually or in the aggregate, has not had and could not reasonably be expected to have a Company Material Adverse Effect. The Company has made available to Parent true and complete copies of the articles of incorporation of the Company, as amended to the date of this Agreement (as so amended, the "Company Charter"),and the By-laws of the Company, as amended to the date of this Agreement (as so amended, the "Company By-laws"), and the comparable charter or organizational documents of each Company Subsidiary, in each case as amended through the date of this Agreement. SECTION 3.02. Company Subsidiaries;Equity Interests. (a) The letter, dated as of the date of this Agreement, from the Company to Parent and Newco (the "Company Disclosure Letter") lists each Company Subsidiary and its jurisdiction of organization and specifies each of the Company Subsidiaries that is (i) a "public-utility company", a "holding company", a "subsidiary company", an "affiliate" of any public-utility company, an "exempt wholesale generator" or a "foreign utility company" within the meaning of Section 2(a)(5), 2(a)(7), 2(a)(8), 2(a)(1 1), 32(a)(1) or 33(a)(3) of the Public Utility Holding Company Act of 1935, as amended ("PUHCA"), respectively, (ii) a "public utility" within the meaning of Section 201(e) of the Federal Power Act (the "Power Act") or (iii) a "qualifying facility" within the meaning of the Public Utility Regulatory Policies Act of 1978, as amended ("PURPA"), or that owns such a qualifying facility. All the outstanding shares of capital stock of each Company Subsidiary have been validly issued and are fully paid and nonassessable and, except as set forth in the Company Disclosure Letter, are owned by the Company, by another Company Subsidiary or by the Company and another Company Subsidiary, free and clear of all pledges, liens, charges, mortgages, encumbrances and security interests of any kind or nature whatsoever (collectively, "Liens"). (b) Except for its interests in the Company Subsidiaries and except for the ownership interests set forth in the Company Disclosure Letter or interests acquired after the date of this Agreement without violating any covenant of this Agreement, the Company does not own, directly or indirectly, any capital stock, membership interest, partnership interest, joint venture interest or other equity interest with a fair market value as of the date of this Agreement in excess of $500,000 in any person, as reasonably determined by the Company. SECTION 3.03. Capital Structure. (a) The authorized capital stock of the Company consists of 400,000,000 shares of Company Common Stock. At the close of business on August 31, 1999, (i) 217,411,003 shares of Company Common Stock were issued and outstanding, (ii) 264,406 shares of Company Common Stock were held by the Company in its treasury, (iii) 4,625,691 shares of Company Common Stock were subject to outstanding Company Employee Stock Options (as defined in Section 6.04) and 4,700,637 additional shares of Company Common Stock were reserved for issuance pursuant to the Company Stock Plans (as defined in Section 6.04), (iv) 368,171 shares of Company Common Stock were reserved for issuance pursuant to the Company's Employee Stock Purchase Plan, (v) 164,845 shares of Company Common A-8

Stock were reserved for issuance pursuant to the Company's 1996 Directors' Fee Plan, (vi) 88,526 shares of Company Common Stock were subject to exchange for the common stock, $12.50 par value of CornEd, and (vii) 400,000 shares of Company Common Stock were reserved for issuance in connection with the rights (the "Company Rights") issued pursuant to the Rights Agreement dated as of February 2, 1998 (as amended from time to time, the "Company Rights Agreement"), between the Company and First Chicago Trust Company of New York, as Rights Agent. (b) Except as set forth in clause (a) of this Section 3.03 or in the Company Disclosure Letter, at the close of business on August 31, 1999, no shares of capital stock or other voting securities of the Company were issued, reserved for issuance or outstanding. (c) All outstanding shares of Company Common Stock are, and all such shares that may be issued prior to the Merger Effective Time will be when issued, duly authorized, validly issued, fully paid and nonassessable and not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the IBCA, the Company Charter, the Company By-laws or any Contract (as defined in Section 3.05) to which the Company is a party or otherwise bound. (d) There are not any bonds, debentures, notes or other indebtedness of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which holders of Company Common Stock may vote ("Voting Company Debt"). (e) Except as set forth in clause (a) of this Section 3.03 or in the Company Disclosure Letter, as of the date of this Agreement, there are not any options, warrants, rights, convertible or exchangeable securities, "phantom" stock rights, stock appreciation rights, stock-based performance units, commitments, Contracts, arrangements or undertakings of any kind to which the Company or any Company Subsidiary is a party or by which any of them is bound (i) obligating the Company or any Company Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other equity interests in, or any security convertible or exercisable for or exchangeable into any capital stock of or other equity interest in, the Company or of any Company Subsidiary or any Voting Company Debt or (ii) obligating the Company or any Company Subsidiary to issue, grant, extend or enter into any such option, warrant, call, right, security, commitment, Contract, arrangement or undertaking. (f) As of the date of this Agreement, except as described in the Company Disclosure Letter, there are not any outstanding contractual obligations of the Company or any Company Subsidiary to repurchase, redeem or otherwise acquire any shares of capital stock of the Company or any Company Subsidiary. (g) The Company has delivered to Parent a complete and correct copy of the Company Rights Agreement, as amended to the date of this Agreement. SECTION 3.04. Authority; Execution and Delivery; Enforceability. (a) The Company has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the Transactions. The execution and delivery by the Company of this Agreement and the consummation by the Company of the Transactions have been duly authorized by all necessary corporate action on the part of the Company, subject, in the case of the Second Step Merger, to receipt of the Company Shareholder Approval (as defined in Section 3.04(c)). The Company has duly executed and delivered this Agreement, and this Agreement constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms. (b) The Board of Directors of the Company (the "Company Board"), at a meeting duly called and held, duly and unanimously adopted resolutions (i) approving this Agreement, the Merger and the other Transactions, (ii) determining that the terms of the Second Step Merger and the other Transactions are fair to and in the best interests of the Company and its shareholders and (iii) directing that this Agreement be submitted to a vote of the Company's shareholders and recommending that they approve this Agreement. Such resolutions are A-9

II-sufficient to render inapplicable to Parent and Newco and this Agreement, to the extent otherwise applicable, the Merger and the other Transactions the provisions of Sections 7.85 and 11.75 of the IBCA. To the Company's knowledge, no other state takeover statute or similar statute or regulation applies or purports to apply to the Company with respect to this Agreement, the Second Step Merger or any other Transaction. (c) The only vote of holders of any class or series of Company securities necessary to approve and adopt this Agreement and the Second Step Merger is the approval of this Agreement by the holders of at least two-thirds of the shares of outstanding Company Common Stock entitled to vote (the "Company Shareholder Approval"). The affirmative vote of the holders of Company Common Stock, or any of them, is not necessary to consummate any Transaction other than the Second Step Merger. SECTION 3.05. No Conflicts; Consents. (a) Except as set forth in the Company Disclosure Letter, the execution and delivery by the Company of this Agreement does not, and the consummation of the Merger and the other Transactions and compliance with the terms hereof and thereof will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, consent, approval, cancelation or acceleration of any obligation or to loss of a material benefit under, or to increased, additional, accelerated or guaranteed rights or entitlements of any person under, or result in the creation of any Lien upon any of the properties or assets of the Company or any Company Subsidiary under, any provision of (i) the Company Charter, the Company By-laws or the comparable charter or organizational documents of any Company Subsidiary, (ii) any loan or credit agreement, contract, lease, license, indenture, note, bond, agreement, permit, concession, franchise or other instrument (a "Contract") to which the Company or any Company Subsidiary is a party or by which any of their respective properties or assets is bound or (iii) subject to the filings and other matters referred to in Section 3.05(b), any judgment, order or decree ("Judgment") or statute, law, ordinance, rule or regulation ("Applicable Law") or writ, permit or license applicable to the Company or any Company Subsidiary or their respective properties or assets (other than immaterial consents, approvals, licenses, permits, orders, authorizations, registrations, declarations or filings, including with respect to communications systems, zoning, name changes, occupancy and similar routine regulatory approvals), other than, in the case of clauses (ii) and (iii) above, any such items that, individually or in the aggregate, have not had and could not reasonably be expected to have a Company Material Adverse Effect. (b) No consent, approval, license, permit, order or authorization (other than immaterial consents, approvals, licenses, permits, orders, authorizations, registrations, declarations or filings, including with respect to communications systems, zoning, name changes, occupancy and similar routine regulatory approvals) ("Consent") of, action by or in respect of, or registration, declaration or filing with, or notice to, any Federal, state, local or foreign government or any court of competent jurisdiction, administrative or regulatory agency or commission or other governmental authority or instrumentality or any non-governmental self-regulatory agency, commission or authority, domestic or foreign (a "Governmental Entity") is required to be obtained or made by or with respect to the Company or any Company Subsidiary in connection with the execution, delivery and performance of this Agreement or the consummation of the Transactions, other than (i) compliance with and filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) the filing with the Securities and Exchange Commission (the "SEC") of (A) a proxy or information statement relating to the approval of this Agreement by the Company's shareholders (the "Proxy Statement"), and (B) such reports under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as may be required in connection with this Agreement, the Second Step Merger and the other Transactions, (iii) the filing of the Illinois Articles of Merger with, and the issuance of a certificate of merger by, the Secretary of State of the State of Illinois, the filing of the Pennsylvania Articles of Merger with the Department of State of Pennsylvania and the filing of appropriate documents with the relevant authorities of the other jurisdictions in which the Company is qualified to do business, (iv) notice to, and the consent and approval of, the Federal Energy Regulatory Commission ("FERC") under the Power Act, (v) notice to, and the consent and approval of, the Nuclear Regulatory Commission (the "NRC") under the Atomic Energy Act of 1954, as amended (the "Atomic Energy Act"), (vi) notice to the Illinois Commerce Commission (the "ICC"), (vii) the consents, filings and approvals required under PUHCA, (viii) compliance with and such filings as may be required under A-10

applicable Environmental Laws (as defined in Section 3.17), (ix) such filings as may be required in connection with the taxes described in Section 6.09 and (x) such other items as are set forth in the Company Disclosure Letter (collectively, whether or not legally required to be obtained, the "Company Required Statutory Approvals"). (c) The Company and the Company Board have taken all action necessary to (i) render the Company Rights inapplicable to this Agreement, the Merger and the other Transactions and (ii) ensure that (A) neither Parent nor any of its affiliates or associates is or will become an "Acquiring Person" (as defined in the Company Rights Agreement) by reason of this Agreement, the Merger or any other Transaction, (B) a "Distribution Date" (as defined in the Company Rights Agreement) shall not occur by reason of this Agreement, the Merger or any other Transaction and (C) the Company Rights shall expire immediately prior to the Merger Effective Time. SECTION 3.06. SEC Documents; UndisclosedLiabilities. The Company and the Company Subsidiaries have filed all reports, schedules, forms, statements and other documents required to be filed by the Company or any Company Subsidiary with the SEC since January 1, 1998 (the "Company SEC Documents"). Each Company SEC Document complied in all material respects as of its respective date with the requirements of the Exchange Act or the Securities Act of 1933, as amended (the "Securities Act"), as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such Company SEC Document, and except to the extent that information contained in any Company SEC Document has been revised or superseded by a later filed Company SEC Document, does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements of the Company included in the Company SEC Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with generally accepted accounting principles ("GAAP") (except, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the consolidated financial position of the Company and its consolidated subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Except as set forth in the Filed Company SEC Documents (as defined in Section 3.08) or the Company Disclosure Letter or incurred after the date hereof in the usual, regular and ordinary course of business in substantially the same manner as previously conducted and not prohibited by this Agreement, neither the Company nor any Company Subsidiary has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) required by GAAP to be set forth on a consolidated balance sheet of the Company and its consolidated subsidiaries or in the notes thereto and that, individually or in the aggregate, could reasonably be expected to have a Company Material Adverse Effect. SECTION 3.07. Information Supplied. None of the information supplied or to be supplied by the Company for inclusion or incorporation by reference in (i) the registration statement on Form S-4 to be filed with the SEC by Newco in connection with the Share Issuance (the "Form S-4") will, at the time the Form S-4 is filed with the SEC, at any time it is amended or supplemented or at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or (ii) the Proxy Statement will, at the date it is first mailed to the Company's shareholders or Parent's shareholders or at the time of the Company Shareholders Meeting (as defined in Section 6.01) or the Parent Shareholders Meeting (as defined in Section 6.01), contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Proxy Statement will comply as to form in all material respects with the requirements of the Exchange Act and the rules and regulations thereunder, except that no representation is made by the Company with respect to statements made or incorporated by reference therein based on information supplied by or on behalf of Parent or Newco for inclusion or incorporation by reference in the Proxy Statement. A-11

SECTION 3.08. Absence of Certain Changes or Events. Except as disclosed in the Company SEC Documents filed and publicly available prior to the date of this Agreement (the "Filed Company SEC Documents") or in the Company Disclosure Letter: (a) since December 31, 1998, there has not been any event, change, effect or development that, individually or in the aggregate, has had or could reasonably be expected to have a Company Material Adverse Effect, other than events, changes, effects and developments relating to the economy in general or to the Company's industry in general and not specifically relating to the Company or any Company Subsidiary; and (b) from December 31, 1998 to the date of this Agreement, the Company has conducted its business only in the ordinary course, and during such period there has not been: (i) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to any Company Common Stock or any repurchase for value by the Company of any Company Common Stock; (ii) any split, combination or reclassification of any Company Common Stock or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of Company Common Stock; or (iii) any change in accounting methods, principles or practices by the Company or any Company Subsidiary materially affecting the consolidated assets, liabilities or results of operations of the Company, except insofar as may have been required by a change in GAAP. SECTION 3.09. Taxes. (a) Each of the Company and each Company Subsidiary has timely filed, or has caused to be timely filed on its behalf, all Tax Returns required to be filed by it (or requests for extensions to file such Tax Returns have been timely filed and granted and have not expired), and all such Tax Returns are true, complete and accurate, except to the extent any failure to file or any inaccuracies in any filed Tax Returns would not, individually or in the aggregate, have a Company Material Adverse Effect. All Taxes shown to be due on such Tax Returns, or otherwise owed by the Company or any Company Subsidiary, have been timely paid, except to the extent that any failure to pay, individually or in the aggregate, has not had and could not reasonably be expected to have a Company Material Adverse Effect. (b) Except as set forth in the Company Disclosure Letter, the most recent financial statements contained in the Filed Company SEC Documents reflect an adequate reserve for all current Taxes payable by the Company and the Company Subsidiaries (in addition to any reserve for deferred Taxes established to reflect timing differences between book and Tax income) for all Taxable periods and portions thereof through the date of such financial statements. Except as set forth in the Company Disclosure Letter, no deficiency with respect to any Taxes has, to the best knowledge of the Company, been proposed, asserted or assessed against the Company or any Company Subsidiary, and no requests for waivers of the time to assess any such Taxes are pending, except to the extent any such deficiency or request for waiver, individually or in the aggregate, has not had and could not reasonably be expected to have a Company Material Adverse Effect. (c) The Federal income Tax Returns of the Company and each Company Subsidiary consolidated in such Returns have been examined by and settled with the United States Internal Revenue Service for all years through 1995. Except as set forth in the Company Disclosure Letter, all material assessments for Taxes due with respect to such completed and settled examinations or any concluded litigation have been fully paid. (d) There are no material Liens for Taxes (other than for current Taxes not yet due and payable) on the assets of the Company or any Company Subsidiary. Except as set forth in the Company Disclosure Letter, neither the Company nor any Company Subsidiary is bound by any agreement with respect to Taxes. (e) The Company and each Company Subsidiary have complied with all applicable statutes, laws, ordinances, rules and regulations relating to the payment and withholding of taxes (including withholding of taxes pursuant to Sections 1441, 1442, 3121 and 3402 of the Code or similar provisions under any Federal, A-12

state or local laws, domestic and foreign) and have, within the time and in the manner prescribed by law, withheld from and paid over to the proper governmental authorities all amounts required to be so withheld and paid over under applicable laws, except to the extent that any failure to withhold or to pay, individually or in the aggregate, has not had and could not reasonably be expected to have a Company Material Adverse Effect. (f) The Company knows of no fact and neither the Company nor any Company Subsidiary has taken or agreed to take any action that could reasonably be expected to prevent (i) the Merger from constituting transactions described in Section 351 of the Code or (ii) the Second Step Merger from constituting a transaction described in Section 368(a) of the Code. (g) For purposes of this Agreement:

           "Taxes" includes all forms of taxation, whenever created or imposed, and whether of the United States or elsewhere, and whether imposed by a local, municipal, state, foreign, Federal or other Governmental Entity, or in connection with any agreement with respect to Taxes, including all interest, penalties and additions imposed with respect to such amounts.
           "Tax Return" means all Federal, state, local, provincial and foreign Tax returns, declarations, statements, reports, schedules, forms and information returns and any amended Tax return required to be filed with any taxing authority with respect to Taxes.

SECTION 3.10. Absence of Changes in Benefit Plans. Except as disclosed in the Company Disclosure Letter, from December 31, 1998 to the date of this Agreement, there has not been any adoption or amendment in any material respect by the Company or any Company Subsidiary of (a) any collective bargaining agreements, (b) any bonus, pension, profit sharing, deferred compensation, incentive compensation, stock ownership, stock purchase, stock option, phantom stock, retirement, vacation, severance, disability, death benefit, hospitalization, medical or other plan, program, policy, arrangement or understanding (whether or not legally binding) providing benefits to any current or former employee, officer or director of the Company or any Company Subsidiary or any beneficiary or dependent thereof, that is sponsored or maintained by the Company or any Company Subsidiary or to which the Company or any Company Subsidiary contributes or is obligated to contribute (collectively, "Company Benefit Plans") or (c) any Company Employment Arrangements (as defined herein). Except as disclosed in the Company Disclosure Letter, as of the date of this Agreement there are not any employment, consulting, indemnification, change-of-control, severance or termination agreements or arrangements between the Company or any Company Subsidiary and any current or former employee, officer or director of the Company or any Company Subsidiary (collectively, the "Company Employment Arrangements"). SECTION 3.11. ERISA Compliance; Excess ParachutePayments. (a) The Company Disclosure Letter includes a complete list of all material Company Benefit Plans and Company Employment Arrangements as of the date of this Agreement. With respect to each Company Benefit Plan (other than a multiemployer plan within the meaning of Section 4001(a)(3) of ERISA) and Company Employment Arrangement, the Company has delivered to Parent true, complete and correct copies of (i) each such Company Benefit Plan or Company Employment Arrangement (or, in the case of any unwritten plan or arrangement, a description thereof), (ii) the most recent annual report on the applicable Form 5500 series filed with the Internal Revenue Service (if any such report was required), including all schedules and attachments thereto, (iii) the most recent summary plan description (if a summary plan description is required) and all summaries of material modifications thereto, (iv) each trust agreement, group annuity contract or other funding vehicle relating to any such Company Benefit Plan or Company Employment Arrangement, (v) the most recent actuarial report or valuation relating thereto and (vi) the most recent determination letters issued by the Internal Revenue Service with respect to Company Benefit Plans that are intended to be qualified and exempt from Federal income taxes under Sections 401(a) and 501(a), respectively, of the Code ("Qualified Plans") and letters of recognition of exemption with respect to any Company Benefit Plan or related trust that is intended to meet the requirements of Section 501(c)(9) of the Code. A-13

_ _ _ _-I - (b) With respect to the Company Benefit Plans and Company Employment Arrangements, individually and in the aggregate, no event has occurred and, to the knowledge of the Company, there exists no condition or set of circumstances, in connection with which the Company or any Company Subsidiary could be subject to any liability that has had or could reasonably be expected to have a Company Material Adverse Effect (except liability for benefits claims and funding obligations payable in the ordinary course) under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the Code or any other applicable law. For purposes of this Section 3.11 (b), the term "Company Benefit Plan" shall also include any employee benefit plan within the meaning of Section 3(3) of ERISA that, within the last six years, was sponsored or maintained by any entity which would be treated under Section 414 of the Code as a single employer with the Company or any Company Subsidiary or to which any such entity contributed or was obligated to contribute. (c) Each Company Benefit Plan and each Company Employment Arrangement has been administered in accordance with its terms except for any failures so to administer any Company Benefit Plan or Company Employment Arrangement as have not had and could not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company, all Company Subsidiaries and all the Company Benefit Plans and Company Employment Arrangements are in compliance with the applicable provisions of ERISA, the Code and all other applicable laws and the rules and regulations thereunder and the terms of all applicable collective bargaining agreements, except for any failures to be in such compliance as have not had and could not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Except as disclosed in the Company Disclosure Letter, there are no pending or, to the knowledge of the Company, threatened or anticipated claims under or with respect to any Company Benefit Plan or Company Employment Arrangement by or on behalf of any current or former employee, officer or director, or dependent or beneficiary thereof, or otherwise (other than routine claims for benefits). (d) Except as disclosed in the Company Disclosure Letter, (i) no current or former employee, officer or director of the Company or any Company Subsidiary will be entitled to any additional rights or benefits or any acceleration of the time of payment or vesting of any benefits under any Company Benefit Plan or Company Employment Arrangement, and no trustee under any "rabbi trust", or similar arrangement maintained in connection with any Company Benefit Plan or Company Employment Arrangement will be entitled to any payment, as a result (either alone or upon the occurrence of any additional or further acts or events) of the execution of this Agreement or the consummation, announcement or other actions relating to the Transactions and (ii) no amount payable to any current or former employee, officer or director of the Company or any Company Subsidiary will fail to be deductible by reason of Section 280G of the Code. (e) Each Company Benefit Plan intended to be a Qualified Plan has received a favorable determination letter from the Internal Revenue Service that it is so qualified and nothing has occurred since the date of such letter that could reasonably be expected to affect the qualified status of such Company Benefit Plan. (f) The aggregate accumulated benefit obligations of each Company Benefit Plan subject to Title IV of ERISA (as of the date of the most recent actuarial valuation prepared for such Company Benefit Plan) do not exceed the fair market value of the assets of such plan (as of the date of such valuation). (g) All contributions and other payments required to have been made for any completed historical period by the Company or any Company Subsidiary to any Company Benefit Plan or Company Employment Arrangement (or to any person pursuant to the terms thereof) have been timely made or paid in full, or, to the extent not required to be made or paid for such period, have been reflected in the consolidated financial statements of the Company. (h) Except as disclosed in the Company Disclosure Letter, no Company Benefit Plan is a multiemployer plan within the meaning of Section 4001(a)(3) of ERISA, and none of the Company or any Company Subsidiary has, at any time during the last six years, contributed to or been obligated to contribute to any such multiemployer plan. For purposes of the representations and warranties made in the last sentence of Section 3.1 l(c) and in Sections 3.1 l(e) and (f), the term "Company Benefit Plan" shall be deemed to exclude any such multiemployer plan. A-14

SECTION 3.12. Litigation. Except as disclosed in the Filed Company SEC Documents or in the Company Disclosure Letter, there is no suit, action or proceeding pending or, to the knowledge of the Company, threatened against the Company or any Company Subsidiary that, individually or in the aggregate, has had or could reasonably be expected to have a Company Material Adverse Effect, nor is there any Judgment outstanding against the Company or any Company Subsidiary that has had or could reasonably be expected to have a Company Material Adverse Effect. SECTION 3.13. Compliance with Applicable Laws; Permits. (a) Except as disclosed in the Filed Company SEC Documents or in the Company Disclosure Letter, the Company and the Company Subsidiaries are in compliance with the terms of all Company Permits (as defined in Section 3.13(b)) and all Applicable Laws, except for instances of noncompliance that, individually and in the aggregate, have not had and could not reasonably be expected to have a Company Material Adverse Effect. This Section 3.13 does not relate to matters with respect to Taxes, which are the subject of Section 3.09, Environmental Laws, which are the subject of Section 3.17, benefits plans, which are the subject of Section 3.11 and the operation of nuclear power plants, which are the subject of Section 3.19. (b) Except as disclosed in the Filed Company SEC Documents or in the Company Disclosure Letter, the Company and the Company Subsidiaries own or have sufficient rights and consents to use under existing franchises, permits, easements, leases, and license agreements (the "Company Permits") all properties, rights and assets necessary for the conduct of their business and operations as currently conducted, except where the failure to own or have sufficient rights to such properties, rights and assets, individually or in the aggregate, have not had and could not reasonably be expected to have a Company Material Adverse Effect. Except as provided in the Illinois Electric Customer Choice and Rate Relief Law of 1997, to the knowledge of the Company, no other private corporation can commence electric public utility operations in any part of the respective territories now served by the Company or any Company Subsidiary, without obtaining a certificate of public convenience and necessity from the applicable state utility commission. SECTION 3.14. Brokers; Schedule of Fees and Expenses. No broker, investment banker, financial advisor or other person, other than Wasserstein Perella & Co. and Goldman Sachs & Co., the fees and expenses of which will be paid by the Company, is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the Second Step Merger and the other Transactions based upon arrangements made by or on behalf of the Company. SECTION 3.15. Opinion of FinancialAdvisor. The Company has received the opinion of Wasserstein Perella & Co., dated as of January 6, 2000, to the effect that, as of such date, the Company Merger Consideration is fair to the holders of Company Common Stock from a financial point of view, a signed copy of which opinion has been delivered to Parent. SECTION 3.16. Year 2000. The Company SEC Documents fairly summarize the status of the Company's computer applications and components, modification or readiness plan, communications with suppliers and vendors, contingency plans and estimated cost of remediation as they relate to the Year 2000 issue. The Company has made available to Parent copies of all correspondence between the Company and its third party suppliers and vendors concerning their Year 2000 compliance. SECTION 3.17. Environmental Matters. (a) Compliance. Except as set forth in the Filed Company SEC Documents or in the Company Disclosure Letter, the Company and each of the Company Subsidiaries is and has been in compliance with all applicable Environmental Laws (as defined below), except where the failure to so comply, individually or in the aggregate, has not had and could not reasonably be expected to have a Company Material Adverse Effect. (b) Environmental Permits. Except as set forth in the Filed Company SEC Documents or in the Company Disclosure Letter, (i) the Company and each of the Company Subsidiaries has obtained or has applied for all Environmental Permits (as defined below) necessary for the construction of their facilities or the A-15

conduct of their operations, except where the failure to so obtain, individually or in the aggregate, has not had and could not reasonably be expected to have a Company Material Adverse Effect and (ii) all such Environmental Permits are in good standing or, where applicable, a renewal application has been timely filed and is pending agency approval, except where the failure of such Environmental Permits to be in good standing or to have filed a renewal application on a timely basis has not had and could not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. (c) Environmental Claims. Except as set forth in the Filed Company SEC Documents or in the Company Disclosure Letter, there are no Environmental Claims (as defined below) that have had or could reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, pending or, to the knowledge of the Company, threatened against the Company or any of the Company Subsidiaries. (d) Releases. Except as set forth in the Filed Company SEC Documents or in the Company Disclosure Letter, there have been no Releases (as defined below) of any Hazardous Materials (as defined below) that could be reasonably likely to form the basis of any Environmental Claim against the Company or any of the Company Subsidiaries, except for any Environmental Claim which, individually or in the aggregate, has not had and could not reasonably be expected to have a Company Material Adverse Effect. (e) Assumed and Retained Liabilities. Except as disclosed in the Filed Company SEC Documents or in the Company Disclosure Letter, none of the Company or the Company Subsidiaries has retained or assumed either contractually or by operation of law any liabilities or obligations that could reasonably be likely to form the basis for any Environmental Claim, which has had and could reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. (f) Definitions. As used in this Agreement: (i) "Environmental Claims" means, in respect of any person, any and all administrative, regulatory or judicial actions, suits, orders, decrees, suits, demands, directives, claims, liens, investigations, proceedings or notices of noncompliance or violation by any person, alleging potential liability (including potential responsibility or liability for enforcement costs, investigatory costs, cleanup costs, governmental response costs, removal costs, remedial costs, mining restoration or rehabilitation costs, natural resources damages, property damages, personal injuries or penalties) arising out of, based on or resulting from (A) the presence or Release of any Hazardous Materials at any location, whether or not owned, operated, leased or managed by such person; or (B) circumstances forming the basis of any violation or alleged violation of any Environmental Law or (C) any and all claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from the presence, Release of, or exposure to, any Hazardous Materials. (ii) "Environmental Laws" means all federal, state, local and foreign laws (including international conventions, protocols and treaties), common law, rules, regulations, orders, decrees, judgments, binding agreements or Environmental Permits issued, promulgated or entered into by or with any Governmental Entity, relating to pollution or the environment (including ambient air, surface water, groundwater, land surface or subsurface strata), including laws and regulations relating to noise levels, nuclear operations, Releases of Hazardous Materials, or otherwise relating to the generation, manufacture, processing, distribution, use, treatment, storage, transport or handling of Hazardous Materials. (iii) "Environmental Permits" means all permits, licenses, registrations and other governmental authorizations required under applicable Environmental Laws. (iv) "Hazardous Materials" means (A) any petroleum or petroleum products, radioactive materials or wastes, spent nuclear fuel, coal ash, asbestos in any form that is or could become friable, urea formaldehyde foam insulation and polychlorinated biphenyls ("PCBs"); (B) any chemicals, materials, substances or wastes which are defined as or included in the definition of "hazardous substances,"

     "hazardous wastes," "hazardous materials," "extremely hazardous wastes," "restricted hazardous A-16

wastes," "pollutant," "toxic substances," "source," "special nuclear," and "byproducts" or words of similar import under any Environmental Law; and (C) any chemical, material, substance or waste that is prohibited, limited or regulated pursuant to any Environmental Law. (v) "Release" means any actual or threatened release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into the environment (including ambient air, surface water, groundwater, land surface or subsurface strata) or within any building, structure, facility or fixture. SECTION 3.18. Labor and Employee Relations. (a) Except as set forth in the Company Disclosure Letter, (i) neither the Company nor any of the Company Subsidiaries is a party to any collective bargaining agreement or other labor agreement with any union or labor organization and (ii) to the knowledge of the Company, there is no current union representation question involving employees of the Company or any of the Company Subsidiaries, nor does the Company have knowledge of any activity or proceeding of any labor organization (or representative thereof) or employee group to organize any such employees, except to the extent it, individually or in the aggregate, has not had and could not reasonably be expected to have a Company Material Adverse Effect. (b) Except as set forth in the Company Disclosure Letter, or except to the extent the following, individually or in the aggregate, have not had and could not reasonably be expected to have a Company Material Adverse Effect, (A) there is no unfair labor practice, employment discrimination or other charge, claim, suit, action or proceeding against the Company or any of the Company Subsidiaries pending, or to the knowledge of the Company, threatened before any court, governmental department, commission, agency, instrumentality or authority or any arbitrator and (B) there is no strike, lockout or material dispute, slowdown or work stoppage pending or, to the knowledge of the Company, threatened against or involving the Company. SECTION 3.19. Operationsof Nuclear Power Plants. Except as set forth in the Filed Company SEC Documents or in the Company Disclosure Letter, (a) the operations of the nuclear generation stations (collectively, the "Company Nuclear Facilities") currently or formerly owned, in whole or part, by the Company or any of its affiliates are and have been conducted in compliance with all Applicable Laws and Company Permits, except for such failures to comply that, individually or in the aggregate, have not had and could not reasonably be expected to have a Company Material Adverse Effect, (b) each of the Company Nuclear Facilities maintains, and is in compliance with, (i) emergency plans designed to respond to an unplanned Release therefrom of radioactive materials, (ii) plans for the decommissioning of each of the Company Nuclear Facilities, (iii) plans for the storage and disposal of spent nuclear fuel, and each such plan enumerated in (i) through (iii) conform with the requirements of Applicable Law, and (c) the Company has funded consistent with reasonable budget projections the current or future decommissioning of each Company Nuclear Facility and the storage and disposal of spent nuclear fuel. SECTION 3.20. ParentShare Ownership. Neither the Company nor any Company Subsidiary owns any shares of Parent Capital Stock or other securities convertible into Parent Capital Stock. SECTION 3.21. Regulation as a Utility. ComrEd is regulated as a public utility by the State of Illinois. Commonwealth Edison Company of Indiana, Inc., an Indiana corporation, is regulated as a public utility by the State of Indiana and by no other state. Except as set forth in the previous sentence, neither the Company nor any "subsidiary company" or "affiliate" of the Company is subject to regulation as a public utility or public service company (or similar designation) by any other state in the United States or any foreign country. The Company and CornEd are public utility holding companies as defined by PUHCA, but currently claim exemptions from registration under PUHCA under Sections 3(a)(1) and 3(a)(2), respectively, of PUHCA pursuant to orders of the SEC issued thereunder. SECTION 3.22. Contracts; No Default. Except as disclosed in the Filed Company SEC Documents or entered into after the date of this Agreement without violating any covenant of this Agreement, there are no contracts or agreements that are material to the business, properties, assets, condition (financial or otherwise), A-17

results of operations or prospects of the Company and the Company Subsidiaries taken as a whole. Neither the Company nor any of the Company Subsidiaries is in violation of or in default under (nor does there exist any condition which upon the passage of time or the giving of notice would cause such a violation of or default under) any loan or credit agreement, note, bond, mortgage, indenture, lease, permit, concession, franchise, license or any other contract, agreement, arrangement or understanding, to which it is a party or by which it or any of its properties or assets is bound, except for violations or defaults that have not had and could not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. SECTION 3.23. Title to Properties. Except as set forth in the Company Disclosure Letter each of the Company and each of the Company Subsidiaries has good and sufficient title to its physical properties and assets, or valid leasehold interests, easements or other appropriate interests therein or thereto sufficient to conduct its business as presently conducted or intended to be conducted, except for such as are no longer used or useful in the conduct of its businesses or as have been disposed of in the ordinary course of business and except for Liens, defects in title, easements, restrictive covenants and similar encumbrances or impediments set forth in the Company Disclosure Letter or that, in the aggregate, do not and will not materially interfere with its ability to conduct its business as currently conducted or intended to be conducted. SECTION 3.24. Intellectual Property. The Company and the Company Subsidiaries own, or are validly licensed or otherwise have the right to use, all patents, patent rights, trademarks, trademark rights, trade names, trade name rights, service marks, service mark rights, copyrights and other proprietary intellectual property rights and computer programs (collectively, "Intellectual Property Rights") which are material to the conduct of the business of the Company and the Company Subsidiaries, taken as a whole. Except as set forth in the Company Disclosure Letter, no claims are pending or, to the knowledge of the Company, threatened that the Company or any of the Company Subsidiaries is infringing or otherwise adversely affecting the rights of any person with regard to any Intellectual Property Right. To the knowledge of the Company, except as set forth in the Company Disclosure Letter, no person is infringing the rights of the Company or any of the Company Subsidiaries with respect to any Intellectual Property Right except as has not had and could not reasonably be expected to have a Company Material Adverse Effect. SECTION 3.25. Hedging. Except as set forth in the Company Disclosure Letter, none of the Company or the Company Subsidiaries engages in any natural gas, electricity or other futures or options trading or is a party to any price swaps, hedges, futures or similar instruments, except for transactions and agreements entered into, or hedge contracts, for the purchase or sale of electricity or hydrocarbons to which the Company or any Company Subsidiary is a party that are in accordance with the general practices of other similarly situated companies in the industry. SECTION 3.26. Regulatory Proceedings. Except as set forth in the Company Disclosure Letter, and other than fuel adjustment or purchase gas adjustment or similar adjusting rate mechanisms, none of the Company or the Company Subsidiaries all or part of whose rates or services are regulated by a Governmental Entity (a) is a party to any rate proceeding before a Governmental Entity that would reasonably be expected to result in orders having a Company Material Adverse Effect or (b) has rates that have been or are being collected subject to refund, pending final resolution of any rate proceeding pending before a Governmental Entity or on appeal to a court. A-18

ARTICLE IV Representations and Warranties of Parent and Newco Parent and Newco, jointly and severally, represent and warrant to the Company as follows: SECTION 4.01. Organization,Standing and Power. Each of Parent and each of its subsidiaries, including Newco (the "Parent Subsidiaries"),is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized and has full corporate power and authority and possesses all governmental franchises, licenses, permits, authorizations and approvals necessary to enable it to own, lease or otherwise hold its properties and assets and to conduct its businesses as conducted as of the date of this Agreement, other than such franchises, licenses, permits, authorizations and approvals the lack of which, individually or in the aggregate, has not had and could not reasonably be expected to have a Material Adverse Effect on Parent (a "Parent MaterialAdverse Effect"). Parent and each Parent Subsidiary is duly qualified to do business in each jurisdiction where the nature of its business or their ownership or leasing of its properties make such qualification necessary, other than such qualifications the lack of which, individually or in the aggregate, has not had and could not reasonably be expected to have a Parent Material Adverse Effect. Parent has made available to the Company true and complete copies of the amended and restated articles of incorporation of Parent, as amended to the date of this Agreement (as so amended, the "Parent Charter"),and the By-laws of Parent, as amended to the date of this Agreement (as so amended, the "Parent By-laws"), and the comparable charter or organizational documents of Newco and each other Parent Subsidiary, in each case as amended through the date of this Agreement. SECTION 4.02. ParentSubsidiaries;Equity Interests. (a) The letter, dated as of the date of this Agreement, from Parent to the Company (the "Parent DisclosureLetter") lists each Parent Subsidiary and its jurisdiction of organization and specifies each of the Parent Subsidiaries that is, and as of the date of this Agreement AmerGen (as hereinafter defined is not), (i) a "public-utility company", a "holding company", a "subsidiary company", an "affiliate" of any public-utility company, an "exempt wholesale generator" or a "foreign utility company" within the meaning of Section 2(a)(5), 2(a)(7), 2(a)(8), 2(a)(11), 32(a)(1) or 33(a)(3) of PUHCA, respectively, (ii) a "public utility" within the meaning of Section 201(e) of the Power Act or (iii) a "qualifying facility" within the meaning of PURPA, or that owns such a qualifying facility. All the outstanding shares of capital stock of each Parent Subsidiary have been validly issued and are fully paid and nonassessable and, except as set forth in Parent Disclosure Letter, are owned by Parent, by another Parent Subsidiary or by Parent and another Parent Subsidiary, free and clear of all Liens. (b) Except for its interests in Parent Subsidiaries and except for the ownership interests set forth in Parent Disclosure Letter or interests acquired after the date of this Agreement without violating any covenant of this Agreement, Parent does not own, directly or indirectly, any capital stock, membership interest, partnership interest, joint venture interest or other equity interest with a fair market value as of the date of this Agreement in excess of $500,000 in any person, as reasonably determined by Parent. (c) Since the date of its incorporation, Newco has not carried on any business or conducted any operations other than the execution of this Agreement, the performance of its obligations hereunder and thereunder and matters ancillary thereto. As of the date of this Agreement, Newco has no material assets or liabilities. SECTION 4.03. Capital Structure. (a) The authorized capital stock of Parent consists of 500,000,000 shares of Parent Common Stock and shares of preferred stock as set forth in the Parent Disclosure Letter (the "ParentPreferred Stock" and, together with the Parent Common Stock, the "Parent Capital Stock"). At the close of business on August 31, 1999, (i) 203,392,956 shares of Parent Common Stock were issued and outstanding and shares of Parent Preferred Stock were issued and outstanding as set forth in the Parent Disclosure Letter, (ii) 38,721,900 shares of Parent Common Stock were held by Parent in its treasury and (iii) 5,800,841 shares of Parent Common Stock were subject to outstanding Parent Employee Stock Options (as defined in Section 6.04) and 5,166,533 additional shares of the Parent Common Stock were reserved for issuance pursuant to Parent Stock Plans (as defined in Section 6.04). A-19

(b) Except as set forth in clause (a) of this Section 4.03 or in the Parent Disclosure Letter, at the close of business on August 31, 1999, no shares of capital stock or other voting securities of Parent were issued, reserved for issuance or outstanding. (c) All outstanding shares of Parent Capital Stock are, and all such shares that may be issued prior to the Merger Effective Time will be when issued, duly authorized, validly issued, fully paid and nonassessable and not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the PBCL, the Parent Charter, the Parent By-laws or any Contract to which Parent is a party or otherwise bound. (d) There are not any bonds, debentures, notes or other indebtedness of Parent having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which holders of Parent Common Stock may vote ("Voting ParentDebt"). (e) Except as set forth in clause (a) of this Section 4.03 or in the Parent Disclosure Letter, as of the date of this Agreement, there are not any options, warrants, rights, convertible or exchangeable securities, "phantom" stock rights, stock appreciation rights, stock-based performance units, commitments, Contracts, arrangements or undertakings of any kind to which Parent or any Parent Subsidiary is a party or by which any of them is bound (i) obligating Parent or any Parent Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other equity interests in, or any security convertible or exercisable for or exchangeable into any capital stock of or other equity interest in, Parent or of any Parent Subsidiary or any Voting Parent Debt or (ii) obligating Parent or any Parent Subsidiary to issue, grant, extend or enter into any such option, warrant, call, right, security, commitment, Contract, arrangement or undertaking. (f) As of the date of this Agreement, except as described in the Parent Disclosure Letter, there are not any outstanding contractual obligations of Parent or any Parent Subsidiary to repurchase, redeem or otherwise acquire any shares of capital stock of Parent or any Parent Subsidiary. (g) The authorized capital stock of Newco consists of 500,000,000 shares of common stock, no par value, 100,000,000 shares of preferred stock, no par value, and 100,000,000 shares of series preference stock, no par value, of which only 100 shares of common stock have been validly issued, are fully paid and nonassessable and are owned by Parent free and clear of any Lien. SECTION 4.04. Authority; Execution and Delivery; Enforceability. (a) Each of Parent and Newco has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the Transactions. The execution and delivery by each of Parent and Newco of this Agreement and the consummation by it of the Transactions have been duly authorized by all necessary corporate action on the part of Parent and Newco, subject (i) in the case of the Merger and the Share Issuance, to receipt of the Parent Shareholder Approval (as defined in Section 4.04(c)) and (ii) adoption by Parent, as sole shareholder of Newco, of this Agreement. Each of Parent and Newco has duly executed and delivered this Agreement, and this Agreement constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms. (b) The Board of Directors of Parent (the "Parent Board"), at a meeting duly called and held, duly and unanimously adopted resolutions (i) approving this Agreement, the Merger, the Share Issuance and the other Transactions, (ii) determining that the terms of the Merger, the Share Issuance and the other Transactions are fair to and in the best interests of Parent and its shareholders and (iii) directing that this Agreement be submitted to a vote of Parent's shareholders and recommending that they adopt this Agreement and approve the Share Issuance. Such resolutions are sufficient to render inapplicable to this Agreement, the Merger, the Share Issuance and the other Transactions, to the extent otherwise applicable, the provisions of Subchapters D (Section 2538), E, F, G, H, I and J of Chapter 25 of the PBCL and (ii) the provisions of Sections 508 and 509 of the Parent Charter. To Parent's knowledge, no other state takeover statute or similar statute or regulation applies or purports to apply to Parent or Newco with respect to this Agreement, the Merger, the Share Issuance or any other Transaction. A-20

(c) The only vote of holders of any class or series of Parent securities necessary to approve and adopt this Agreement, the Merger, the Share Issuance and the other Transactions is the adoption of this Agreement by the affirmative vote of a majority of the votes cast by all holders of Parent Common Stock entitled to vote (collectively, the "Parent ShareholderApproval"). The affirmative vote of the holders of Parent Capital Stock, or any of them, is not necessary to consummate any Transaction other than the Share Issuance and the Merger. SECTION 4.05. No Conflicts; Consents. (a) Except as set forth in the Parent Disclosure Letter, the execution and delivery by each of Parent and Newco of this Agreement does not, and the consummation of the Merger, the Share Issuance and the other Transactions and compliance with the terms hereof and thereof will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, consent, approval, cancelation or acceleration of any obligation or to loss of a material benefit under, or to increased, additional, accelerated or guaranteed rights or entitlements of any person under, or result in the creation of any Lien upon any of the properties or assets of Parent or any Parent Subsidiary under, any provision of (i) Parent Charter, Parent By-laws or the comparable charter or organizational documents of any Parent Subsidiary, (ii) any Contract to which Parent or any Parent Subsidiary is a party or by which any of their respective properties or assets is bound or (iii) subject to the filings and other matters referred to in Section 4.05(b), any Judgment or Applicable Law or writ, permit or license applicable to Parent or any Parent Subsidiary or their respective properties or assets (other than immaterial consents, approvals, licenses, permits, orders, authorizations, registrations, declarations or filings, including with respect to communications systems, zoning, name changes, occupancy and similar routine regulatory approvals), other than, in the case of clauses (ii) and (iii) above, any such items that, individually or in the aggregate, have not had and could not reasonably be expected to have a Parent Material Adverse Effect. (b) No Consent of, action by or in respect of, or registration, declaration or filing with, or notice to, any Governmental Entity is required to be obtained or made by or with respect to Parent or any Parent Subsidiary in connection with the execution, delivery and performance of this Agreement or the consummation of the Transactions, other than (i) compliance with and filings under the HSR Act, (ii) the filing with the SEC of (A) the Form S-4 and the Proxy Statement and (B) such reports under the Exchange Act, as may be required in connection with this Agreement, the Merger and the other Transactions, (iii) the filing of the Articles of Exchange, Pennsylvania Articles of Merger and the Charter Amendment with the Department of State of the Commonwealth of Pennsylvania, the filing of the Illinois Articles of Merger with, and issuance of a certificate of merger by, the Secretary of State of the State of Illinois and the filing of appropriate documents with the relevant authorities of the other jurisdictions in which the Company is qualified to do business, (iv) notice to, and the consent and approval of, FERC under the Power Act, (v) notice to, and the consent and approval of, the NRC under the Atomic Energy Act, (vi) notice to and the consent and approval of the Pennsylvania Public Utility Commission (the "PPUC"), (vii) the consents, filings and approvals required under PUHCA, (viii) compliance with and such filings as may be required under applicable Environmental Laws, (ix) such filings as may be required in connection with the taxes described in Section 6.09 and (x) such other items as are set forth in the Parent Disclosure Letter (collectively, whether or not legally required to be obtained, the "Parent Required Statutory Approvals"). SECTION 4.06. SEC Documents; Undisclosed Liabilities. Parent has filed all reports, schedules, forms, statements and other documents required to be filed by Parent with the SEC since January 1, 1998 (the "Parent SEC Documents"). Each Parent SEC Document complied in all material respects as of its respective date with the requirements of the Exchange Act or the Securities Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such Parent SEC Document, and except to the extent that information contained in any Parent SEC Document has been revised or superseded by a later filed Parent SEC Document, does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements of Parent included in the Parent SEC Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP A-21

(except, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the consolidated financial position of Parent and its consolidated subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Except as set forth in the Filed Parent SEC Documents (as defined in Section 4.08) or the Parent Disclosure Letter or incurred after the date hereof in the usual, regular and ordinary course of business in substantially the same manner as previously conducted and not prohibited by this Agreement, neither Parent nor any Parent Subsidiary has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) required by GAAP to be set forth on a consolidated balance sheet of Parent and its consolidated subsidiaries or in the notes thereto and that, individually or in the aggregate, could reasonably be expected to have a Parent Material Adverse Effect. None of the Parent Subsidiaries is, or has at any time since January 1, 1998 been, subject to the reporting requirements of Sections 13(a) and 15(d) of the Exchange Act. SECTION 4.07. Information Supplied. None of the information supplied or to be supplied by Parent or Newco for inclusion or incorporation by reference in (i) the Form S-4 will, at the time the Form S-4 is filed with the SEC, at any time it is amended or supplemented or at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or (ii) the Proxy Statement will, at the date it is first mailed to the Company's shareholders or Parent's shareholders or at the time of the Company Shareholders Meeting or the Parent Shareholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Form S-4 will comply as to form in all material respects with the requirements of the Securities Act and the rules and regulations thereunder, except that no representation is made by Parent or Newco with respect to statements made or incorporated by reference therein based on information supplied by or on behalf of the Company for inclusion or incorporation by reference therein. SECTION 4.08. Absence of Certain Changes or Events. Except as disclosed in the Parent SEC Documents filed and publicly available prior to the date of this Agreement (the "Filed Parent SEC Documents") or in the Parent Disclosure Letter: (a) since December 31, 1998, there has not been any event, change, effect or development that, individually or in the aggregate, has had or could reasonably be expected to have a Parent Material Adverse Effect, other than events, changes, effects and developments relating to the economy in general or to Parent's industry in general and not specifically relating to Parent or any Parent Subsidiary; and (b) from December 31, 1998 to the date of this Agreement, Parent has conducted its business only in the ordinary course, and during such period there has not been: (i) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to any Parent Capital Stock or any repurchase for value by Parent of any Parent Capital Stock; (ii) any split, combination or reclassification of any Parent Capital Stock or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of Parent Capital Stock; or (iii) any change in accounting methods, principles or practices by Parent or any Parent Subsidiary materially affecting the consolidated assets, liabilities or results of operations of Parent, except insofar as may have been required by a change in GAAP. SECTION 4.09. Taxes. (a) Each of Parent and each Parent Subsidiary has timely filed, or has caused to be timely filed on its behalf, all Tax Returns required to be filed by it (or requests for extensions to file such A-22

Tax Returns have been timely filed and granted and have not expired), and all such Tax Returns are true, complete and accurate, except to the extent any failure to file or any inaccuracies in any filed Tax Returns would not, individually or in the aggregate, have a Parent Material Adverse Effect. All Taxes shown to be due on such Tax Returns, or otherwise owed by Parent or any Parent Subsidiary, have been timely paid, except to the extent that any failure to pay, individually or in the aggregate, has not had and could not reasonably be expected to have a Parent Material Adverse Effect. (b) Except as set forth in the Parent Disclosure Letter, the most recent financial statements contained in the Filed Parent SEC Documents reflect an adequate reserve for all current Taxes payable by Parent and the Parent Subsidiaries (in addition to any reserve for deferred Taxes established to reflect timing differences between book and Tax income) for all Taxable periods and portions thereof through the date of such financial statements. Except as set forth in the Parent Disclosure Letter, no deficiency with respect to any Taxes has, to the best knowledge of Parent, been proposed, asserted or assessed against Parent or any Parent Subsidiary, and no requests for waivers of the time to assess any such Taxes are pending, except to the extent any such deficiency or request for waiver, individually or in the aggregate, has not had and could not reasonably be expected to have a Parent Material Adverse Effect. (c) The Federal income Tax Returns of Parent and each Parent Subsidiary consolidated in such Returns have been examined by and settled with the United States Internal Revenue Service for all years through 1990. Except as set forth in the Parent Disclosure Letter, all material assessments for Taxes due with respect to such completed and settled examinations or any concluded litigation have been fully paid. (d) There are no material Liens for Taxes (other than for current Taxes not yet due and payable) on the assets of Parent or any Parent Subsidiary. Except as set forth in the Parent Disclosure Letter, neither Parent nor any Parent Subsidiary is bound by any agreement with respect to Taxes. (e) The Parent and each Parent Subsidiary have complied with all applicable statutes, laws, ordinances, rules and regulations relating to the payment and withholding of taxes (including withholding of taxes pursuant to Sections 1441, 1442, 3121 and 3402 of the Code or similar provisions under any Federal, state or local laws, domestic and foreign) and have, within the time and in the manner prescribed by law, withheld from and paid over to the proper governmental authorities all amounts required to be so withheld and paid over under applicable laws, except to the extent that any failure to withhold or to pay, individually or in the aggregate, has not had and could not reasonably be expected to have a Parent Material Adverse Effect. (f) Parent knows of no fact and neither Parent nor any Parent Subsidiary has taken or agreed to take any action that could reasonably be expected to prevent (i) the Merger from constituting transactions described in Section 351 of the Code or (ii) the Second Step Merger from constituting a transaction described in Section 368(a) of the Code. SECTIon 4.10. Absence of Changes in Benefit Plans. Except as disclosed in the Parent Disclosure Letter, from December 31, 1998 to the date of this Agreement, there has not been any adoption or amendment in any material respect by Parent or any Parent Subsidiary of (a) any collective bargaining agreements, (b) any bonus, pension, profit sharing, deferred compensation, incentive compensation, stock ownership, stock purchase, stock option, phantom stock, retirement, vacation, severance, disability, death benefit, hospitalization, medical or other plan, program, policy, arrangement or understanding (whether or not legally binding) providing benefits to any current or former employee, officer or director of Parent or any Parent Subsidiary or any beneficiary or dependent thereof, that is sponsored or maintained by Parent or any Parent Subsidiary or to which Parent or any Parent Subsidiary contributes or is obligated to contribute (collectively, "Parent Benefit Plans") or (c) any Parent Employment Arrangements (as defined herein). Except as disclosed in the Parent Disclosure Letter, as of the date of this Agreement there are not any employment, consulting, indemnification, change-of-control, severance or termination agreements or arrangements between Parent or any Parent Subsidiary and any current or former employee, officer or director of the Parent or any Parent Subsidiary (collectively, the "Parent Employment Arrangements"). A-23

                                                                                                                 -a-----

SECTION 4.11. ERISA Compliance; Excess ParachutePayments. (a) The Parent Disclosure Letter includes a complete list of all material Parent Benefit Plans and Parent Employment Arrangements as of the date of this Agreement. With respect to each Parent Benefit Plan (other than a multiemployer plan within the meaning of Section 4001(a)(3) of ERISA) and Parent Employment Arrangement, Parent has delivered to the Company true, complete and correct copies of (i) each such Parent Benefit Plan or Parent Employment Arrangement (or, in the case of any unwritten plan or arrangement, a description thereof), (ii) the most recent annual report on the applicable Form 5500 series filed with the Internal Revenue Service (if any such report was required), including all schedules and attachments thereto, (iii) the most recent summary plan description (if a summary plan description is required) and all summaries of material modifications thereto, (iv) each trust agreement, group annuity contract or other funding vehicle relating to any such Parent Benefit Plan or Parent Employment Arrangement, (v) the most recent actuarial report or valuation relating thereto and (vi) the most recent determination letters issued by the Internal Revenue Service with respect to Parent Benefit Plans that are intended to be Qualified Plans and letters of recognition of exemption with respect to any Parent Benefit Plan or related trust that is intended to meet the requirements of Section 501(c)(9) of the Code. (b) With respect to the Parent Benefit Plans and Parent Employment Arrangements, individually and in the aggregate, no event has occurred and, to the knowledge of Parent, there exists no condition or set of circumstances, in connection with which Parent or any Parent Subsidiary could be subject to any liability that has had or could reasonably be expected to have a Parent Material Adverse Effect (except liability for benefits claims and funding obligations payable in the ordinary course) under ERISA, the Code or any other applicable law. For purposes of this Section 4.11 (b), the term "Parent Benefit Plan" shall also include any employee benefit plan within the meaning of Section 3(3) of ERISA that, within the last six years, was sponsored or maintained by any entity which would be treated under Section 414 of the Code as a single employer with Parent or any Parent Subsidiary or to which any such entity contributed or was obligated to contribute. (c) Each Parent Benefit Plan and each Parent Employment Arrangement has been administered in accordance with its terms except for any failures so to administer any Parent Benefit Plan or Parent Employment Arrangement as have not had and could not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. Parent, all Parent Subsidiaries and all the Parent Benefit Plans and Parent Employment Arrangements are in compliance with the applicable provisions of ERISA, the Code and all other applicable laws and the rules and regulations thereunder and the terms of all applicable collective bargaining agreements, except for any failures to be in such compliance as have not had and could not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. Except as disclosed in the Parent Disclosure Letter, there are no pending or, to the knowledge of Parent, threatened or anticipated claims under or with respect to any Parent Benefit Plan or Parent Employment Arrangement by or on behalf of any current or former employee, officer or director, or dependent or beneficiary thereof, or otherwise (other than routine claims for benefits). (d) Except as disclosed in the Parent Disclosure Letter, (i) no current or former employee, officer or director of Parent or any Parent Subsidiary will be entitled to any additional rights or benefits or any acceleration of the time of payment or vesting of any benefits under any Parent Benefit Plan or Parent Employment Arrangement, and no trustee under any "rabbi trust", or similar arrangement maintained in connection with any Parent Benefit Plan or Parent Employment Arrangement will be entitled to any payment, as a result (either alone or upon the occurrence of any additional or further acts or events) of the execution of this Agreement or the consummation, announcement or other actions relating to the Transactions and (ii) no amount payable to any current or former employee, officer or director of Parent or any Parent Subsidiary will fail to be deductible by reason of Section 280G of the Code. (e) Each Parent Benefit Plan intended to be a Qualified Plan has received a favorable determination letter from the Internal Revenue Service that it is so qualified and nothing has occurred since the date of such letter that could reasonably be expected to affect the qualified status of such Parent Benefit Plan. A-24

(f) The aggregate accumulated benefit obligations of each Parent Benefit Plan subject to Title IV of ERISA (as of the date of the most recent actuarial valuation prepared for such Parent Benefit Plan) do not exceed the fair market value of the assets of such plan (as of the date of such valuation). (g) All contributions and other payments required to have been made for any completed historical period by Parent or any Parent Subsidiary to any Parent Benefit Plan or Parent Employment Arrangement (or to any person pursuant to the terms thereof) have been timely made or paid in full, or, to the extent not required to be made or paid for such period, have been reflected in the consolidated financial statements of Parent. (h) Except as disclosed in the Parent Disclosure Letter, no Parent Benefit Plan is a multiemployer plan within the meaning of Section 4001(a)(3) of ERISA, and none of Parent or any Parent Subsidiary has, at any time during the last six years, contributed to or been obligated to contribute to any such multiemployer plan. For purposes of the representations and warranties made in the last sentence of Section 4.11(c) and in Sections 4.11 (e) and (f), the term "Parent Benefit Plan" shall be deemed to exclude any such multiemployer plan. SECTION 4.12. Litigation. Except as disclosed in the Filed Parent SEC Documents or in the Parent Disclosure Letter, there is no suit, action or proceeding pending or, to the knowledge of Parent, threatened against Parent or any Parent Subsidiary that, individually or in the aggregate, has had or could reasonably be expected to have a Parent Material Adverse Effect, nor is there any Judgment outstanding against Parent or any Parent Subsidiary that has had or could reasonably be expected to have a Parent Material Adverse Effect. SECTION 4.13. Compliance with Applicable Laws; Permits. (a) Except as disclosed in the Filed Parent SEC Documents or in the Parent Disclosure Letter, Parent and Parent Subsidiaries are in compliance with the terms of all applicable Parent Permits (as defined in Section 4.13(b)) and all Applicable Laws, except for instances of noncompliance that, individually and in the aggregate, have not had and could not reasonably be expected to have a Parent Material Adverse Effect. This Section 4.13 does not relate to matters with respect to Taxes, which are the subject of Section 4.09, Environmental Laws, which are the subject of Section 4.17, benefits plans, which are the subject of Section 4.11 and the operation of nuclear power plants which are the subject of Section 4.19. (b) Except as disclosed in the Filed Parent SEC Documents or in the Parent Disclosure Letter, Parent and the Parent Subsidiaries own or have sufficient rights and consents to use under existing franchises, permits, easements, leases, and license agreements (the "ParentPermits") all properties, rights and assets necessary for the conduct of their business and operations as currently conducted, except where the failure to own or have sufficient rights to such properties, rights and assets, individually or in the aggregate, have not had and could not reasonably be expected to have a Parent Material Adverse Effect. Except as provided in the Pennsylvania Electricity Generation Customer Choice and Competition Act of 1996 (the "Pennsylvania Competition Act"), to the knowledge of Parent, no other private corporation can commence electric public utility operations in any part of the respective territories now served by Parent or any Parent Subsidiary, without obtaining a certificate of public convenience and necessity from the applicable state utility commission. SECTION 4.14. Brokers; Schedule of Fees and Expenses. No broker, investment banker, financial advisor or other person, other than Salomon Smith Barney Inc. and Morgan Stanley & Company Incorporated, the fees and expenses of which will be paid by Parent, is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the Merger and the other Transactions based upon arrangements made by or on behalf of Parent or Newco. SECTION 4.15. Opinions of FinancialAdvisors. Parent has received the opinions of Salomon Smith Barney Inc. and Morgan Stanley & Company Incorporated, dated as of January 7, 2000, to the effect that, as of such date, the Exchange Consideration is fair to the holders of Parent Common Stock from a financial point of view, signed copies of which opinions have been delivered to the Company. A-25

SECTION 4.16. Year 2000. The Parent SEC Documents fairly summarize the status of Parent's computer applications and components, modification or readiness plan, communications with suppliers and vendors, contingency plans and estimated cost of remediation as they relate to the Year 2000 issue. Parent has made available to the Company copies of all correspondence between Parent and its third party suppliers and vendors concerning their Year 2000 compliance. SECTION 4.17. EnvironmentalMatters.. (a) Compliance. Except as set forth in the Filed Parent SEC Documents or in the Parent Disclosure Letter, Parent and each of the Parent Subsidiaries is and has been in compliance with all applicable Environmental Laws, except where the failure to so comply, individually or in the aggregate, has not had and could not reasonably be expected to have a Parent Material Adverse Effect. (b) Environmental Permits. Except as set forth in the Filed Parent SEC Documents or in the Parent Disclosure Letter, (i) Parent and each of the Parent Subsidiaries has obtained or has applied for all Environmental Permits necessary for the construction of their facilities or the conduct of their operations, except where the failure to so obtain, individually or in the aggregate, has not had and could not reasonably be expected to have a Parent Material Adverse Effect, and (ii) all such Environmental Permits are in good standing or, where applicable, a renewal application has been timely. filed and is pending agency approval, except where the failure of such Environmental Permits to be in good standing or to have filed a renewal application on a timely basis has not had and could not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. (c) Environmental Claims. Except as set forth in the Filed Parent SEC Documents or in the Parent Disclosure Letter, there are no Environmental Claims that have had or could reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, pending or, to the knowledge of Parent, threatened against Parent or any of the Parent Subsidiaries. (d) Releases. Except as set forth in the Filed Parent SEC Documents or in the Parent Disclosure Letter, there have been no Releases of any Hazardous Materials that could be reasonably likely to form the basis of any Environmental Claim against Parent or any of the Parent Subsidiaries, except for any Environmental Claim which, individually or in the aggregate, has not had and could not reasonably be expected to have a Parent Material Adverse Effect. (e) Assumed and Retained Liabilities. Except as disclosed in the Filed Parent SEC Documents or in the Parent Disclosure Letter, none of Parent or the Parent Subsidiaries has retained or assumed either contractually or by operation of law any liabilities or obligations that could reasonably be likely to form the basis for any Environmental Claim, which has had and could reasonably be expected to have; individually or in the aggregate, a Parent Material Adverse Effect. SECTION 4.18. Labor and Employee Relations. (a) Except as set forth in the Parent Disclosure Letter, (i) neither Parent nor any of the Parent Subsidiaries is a party to any collective bargaining agreement or other labor agreement with any union or labor organization and (ii) to the knowledge of Parent, there is no current union representation question involving employees of Parent or any of the Parent Subsidiaries, nor does Parent have knowledge of any activity or proceeding of any labor organization (or representative thereof) or employee group to organize any such employees, except to the extent it, individually or in the aggregate, has not had and could not reasonably be expected to have a Parent Material Adverse Effect. (b) Except as set forth in the Parent Disclosure Letter, or except to the extent the following, individually or in the aggregate, have not had and could not reasonably be expected to have a Parent Material Adverse Effect, (A) there is no unfair labor practice, employment discrimination or other charge, claim, suit, action or proceeding against Parent or any of the Parent Subsidiaries pending, or to the knowledge of Parent, threatened before any court, governmental department, commission, agency, instrumentality or authority or any arbitrator and (B) there is no strike, lockout or material dispute, slowdown or work stoppage pending or, to the knowledge of Parent, threatened against or involving Parent. A-26

SECTION 4.19. Operations of Nuclear Power Plants. (a) Except as set forth in the Filed Parent SEC Documents or in the Parent Disclosure Letter, (a) the operations of the nuclear generation stations (collectively, the "ParentNuclear Facilities")currently or formerly owned, in whole or part, by Parent or any of its affiliates are and have been conducted in compliance with all Applicable Laws and Parent Permits, except for such failures to comply that, individually or in the aggregate, have not had and could not reasonably be expected to have a Parent Material Adverse Effect, (b) each of the Parent Nuclear Facilities maintains, and is in compliance with, (i) emergency plans designed to respond to an unplanned Release therefrom of radioactive materials, (ii) plans for the decommissioning of each of the Parent Nuclear Facilities, (iii) plans for the storage and disposal of spent nuclear fuel, and each such plan enumerated in (i) through (iii) conform with the requirements of Applicable Law, and (c) Parent has funded consistent with reasonable budget projections the current or future decommissioning of each Parent Nuclear Facility and the storage and disposal of spent nuclear fuel. (b) To the best knowledge of Parent, recognizing that AmerGen does not as of the date of this Agreement, own, or hold any operating licenses for, nuclear generating stations, (i) the operations of the nuclear generation stations which are the subject of an existing purchase, operating or similar agreement by AmerGen or any of its affiliates or assignees (the "AmerGen Nuclear Facilities") are and have been conducted in compliance with all Applicable Laws and necessary permits of Governmental Entities, except for such failures to comply that, individually or in the aggregate, have not had and could not reasonably be expected to have a Parent Material Adverse Effect, (ii) each of the AmerGen Nuclear Facilities maintains, and is in compliance with, (A) emergency plans designed to respond to an unplanned Release therefrom of radioactive materials, (B) plans for the decommissioning of each of the AmerGen Nuclear Facilities and (C) plans for the storage and disposal of spent nuclear fuel, and each such plan enumerated in (A) through (C) conform with the requirements of Applicable Law, and (iii) the current owner has funded consistent with reasonable budget projections the current or future decommissioning of each AmerGen Nuclear Facility and the storage and disposal of spent nuclear fuel. (c) Parent hereby makes each of the representations and warranties contained in Sections 4.05(a), 4.05(b), 4.12, 4.13 and 4.17 with respect to AmerGen, as if AmerGenwere a Parent Subsidiary as defined in this Agreement, it being understood that the Company acknowledges and agrees that as of the date hereof AmerGen is not a subsidiary and therefore no representation or warranty is made concerning AmerGen or its business or operations except as expressly set forth in this Section 4.19(c) and the first sentence of Section 4.02(a) and Section 4.19(b), and each such representation and warranty pertaining to AmerGen is qualified to the best knowledge of Parent recognizing that AmerGen does not as of the date of this Agreement, own, or hold any operating licenses for, nuclear generating stations. SECTION 4.20. Company Share Ownership. Neither Parent nor any Parent Subsidiary owns any shares of Company Common Stock or other securities convertible into Company Common Stock. SECTION 4.21. Regulation as a Utility. Parent is regulated as a public utility by the Commonwealth of Pennsylvania and by no other state. Except as set forth in the previous sentence, neither Parent nor any "subsidiary company" or "affiliate" of Parent is subject to regulation as a public utility or public service company (or similar designation) by any other state in the United States or any foreign country. Parent is a public utility holding company as defined by PUHCA, but currently claims exemption under Section 3(a)(2) of PUHCA pursuant to orders of the'SEC thereunder. SECTION 4.22. Contracts;No Default. Except as disclosed in the Filed Parent SEC Documents or entered into after the date of this Agreement without violating any covenant of this Agreement, there, are no contracts or agreements that are material to the business, properties, assets, condition (financial or otherwise), results of operations or prospects of Parent and the Parent Subsidiaries taken as a whole. Neither Parent nor any of the Parent Subsidiaries is in violation of or in default under (nor does there exist any condition which upon the passage of time or the giving of notice would cause such a violation of or default under) any loan or credit agreement, note, bond, mortgage, indenture, lease, permit, concession, franchise, license or any other contract, A-27

agreement, arrangement or understanding, to which it is a party or by which it or any of its properties or assets is bound, except for violations or defaults that have not had and could not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. SECTION 4.23. Title to Properties. Except as set forth in the Parent Disclosure Letter each of Parent and each of the Parent Subsidiaries has good and sufficient title to its physical properties and assets, or valid leasehold interests, easements or other appropriate interests therein or thereto sufficient to conduct its business as presently conducted or intended to be conducted, except for such as are no longer used or useful in the conduct of its businesses or as have been disposed of in the ordinary course of business and except for defects in title, easements, restrictive covenants and similar encumbrances or impediments set forth in the Parent Disclosure Letter or that, in the aggregate, do not and will not materially interfere with its ability to conduct its business as currently conducted or intended to be conducted. SECTION 4.24. Intellectual Property. Parent and the Parent Subsidiaries own, or are validly licensed or otherwise have the right to use, all Intellectual Property Rights which are material to the conduct of the business of Parent and the Parent Subsidiaries taken as a whole. Except as set forth in the Parent Disclosure Letter, no claims are pending or, to the knowledge of Parent, threatened that Parent or any of the Parent Subsidiaries is infringing or otherwise adversely affecting the rights of any person with regard to any Intellectual Property Right. To the knowledge of Parent, except as set forth in the Parent Disclosure Letter, no person is infringing the rights of Parent or any of the Parent Subsidiaries with respect to any Intellectual Property Right except as has not had and could not reasonably be expected to have a Parent Material Adverse Effect. SECTION 4.25. Hedging. Except as set forth in the Parent Disclosure Letter, none of Parent or the Parent Subsidiaries engages in any natural gas, electricity or other futures or options trading or is a party to any price swaps, hedges, futures or similar instruments, except for transactions and agreements entered into, or hedge contracts, for the purchase or sale of electricity or hydrocarbons to which Parent or any Parent Subsidiary is a party that are in accordance with the general practices of other similarly situated companies in the industry. SECTION 4.26. Regulatory Proceedings. Except as set forth in the Parent Disclosure Letter and other than fuel adjustment or purchase gas adjustment or similar adjusting rate mechanisms, none of Parent or the Parent Subsidiaries all or part of whose rates or services are regulated by a Governmental Entity (a) is a party to any rate proceeding before a Governmental Entity that would reasonably be expected to result in orders having a Parent Material Adverse Effect or (b) has rates that have been or are being collected subject to refund, pending final resolution of any rate proceeding pending before a Governmental Entity or on appeal to a court. ARTICLE V Covenants Relating to Conduct of Business SECTION 5.01. Conduct of Business. (a) Conduct of Business by the Company. Except for matters set forth in the Company Disclosure Letter or otherwise expressly contemplated by this Agreement, from the date of this Agreement to the Merger Effective Time the Company shall, and shall cause each Company Subsidiary to, conduct its business in all material respects in the usual, regular and ordinary course in substantially the same manner as previously conducted and use reasonable best efforts to preserve intact its current business organization in all material respects, subject to prudent management of work force and business needs, keep available the services of its current officers and key employees and keep its relationships with Governmental Entities, customers, suppliers, licensors, licensees, distributors and others having business dealings with them to the end that its goodwill and ongoing business shall be unimpaired in all material respects at the Merger Effective Time. In addition, and without limiting the generality of the foregoing, except for matters set forth in A-28

the Company Disclosure Letter or otherwise expressly contemplated by this Agreement, from the date of this Agreement to the Merger Effective Time, the Company shall not, and shall not permit any Company Subsidiary to, do any of the following without the prior written consent of Parent: (i) (A) declare, set aside or pay any dividends on, or make any other distributions in respect of, any of its capital stock, other than (1) dividends and distributions by a direct or indirect wholly owned subsidiary of the Company to its parent, (2) regular quarterly cash dividends with respect to the Company Common Stock, not in excess of $0.40 per share, in accordance with the Company's past dividend policy, and (3) regular cash dividends with respect to preferred stock of the Company or its subsidiaries in accordance with the current terms thereof, (B) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, or (C) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any Company Subsidiary or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities; (ii) issue, deliver, sell or grant (A) any shares of its capital stock, (B) any Voting Company Debt or other voting securities, (C) any securities convertible into or exchangeable for, or any options, warrants or rights to acquire, any such shares, Voting Company Debt, voting securities or convertible or exchangeable securities or (D) any "phantom" stock, "phantom" stock rights, stock appreciation rights or stock-based performance units, other than (1) the issuance of Company Common Stock (and associated Company Rights) upon the exercise of Company Employee Stock Options outstanding on the date of this Agreement and in accordance with their present terms or pursuant to the terms of any Company Benefit Plan or Company Employment Arrangement as in effect on the date of this Agreement or as amended in accordance with or as permitted by its Agreement, (2) the issuance, subject to Section 5.01(a)(v), of up to an additional 5,000,000 Company Employee Stock Options pursuant to the Company Stock Plans in accordance with their present terms and the terms of the Company stock options issued in the ordinary course prior to the date of this Agreement and the issuance of Company Common Stock (and associated Company Rights) upon the exercise of such Company Employee Stock Options, (3) the issuance of "phantom" stock or "phantom" stock rights or, subject to Section 5.01(a)(v), stock appreciation rights or stock-based performance units, pursuant to the terms of any Company Benefit Plan or Company Employment Arrangement in effect on the date of this Agreement or as amended in accordance with or as permitted by this Agreement, and (4) the issuance of Company Common Stock upon the exercise of Company Rights; (iii) amend its certificate of incorporation, by-laws or other comparable charter or organizational documents, except for such amendments to its certificate of incorporation, by-laws and other comparable charter or organizational documents that do not have an adverse affect on the Merger and the other Transactions; (iv) acquire or agree to acquire (A) by merging or consolidating with, or by purchasing a substantial equity interest in or portion of the assets of, or by any other manner, any business or any corporation, partnership, joint venture, association or other business organization or division thereof or (B) any assets that in either case are material, individually or in the aggregate, to the Company and the Company Subsidiaries, taken as a whole; (v) except to the extent required by Applicable Law or by the terms of any Company Benefit Plan, Company Employment Arrangement or collective bargaining agreement in effect as of the date of this Agreement, (A) grant to any current or former employee, officer or director of the Company or any Company Subsidiary any increase in compensation or benefits or new incentive compensation grants, except in the ordinary course of business consistent with prior practice, (B) grant to any current or former employee, officer or director of the Company or any Company Subsidiary any increase in severance, pay to stay or termination pay, except to the extent consistent with past practice and that, in the aggregate, does not result in a material increase in benefits or compensation expenses, (C) enter into or amend any Company Employment Arrangement with any such current or former employee, officer or director, except A-29

to the extent permitted in subsection (B) above, (D) establish, adopt, enter into or amend in any material respect any collective bargaining agreement or Company Benefit Plan, except, with respect to any Company Benefit Plan that is a Qualified Plan, as may be required to facilitate or obtain a determination from the Internal Revenue Service that such Company Benefit Plan is a Qualified Plan or (E) take or permit to be taken any action to accelerate any rights or benefits or the funding thereof, or make or permit to be made any material determinations not in the ordinary course of business consistent with prior practice, under any collective bargaining agreement, Company Benefit Plan or Company Employment Arrangement; provided, however, that notwithstanding anything herein to the contrary, the foregoing shall not restrict the Company or the Company Subsidiaries from (1) entering into or making available to newly hired officers and employees or to officers and employees in the context of promotions based on job performance or workplace requirements in the ordinary course of business consistent with past practice, plans, agreements, benefits and compensation arrangements (including incentive grants) that have, consistent with past practice, been made available to newly hired or promoted officers and employees, or (2) entering into or amending collective bargaining agreements with existing collective bargaining representatives so as to increase compensation or benefits in a manner that does not materially increase the benefits or compensation expenses of the Company and the Company Subsidiaries; (vi)' make any change in accounting methods, principles or practices materially affecting the reported consolidated assets, liabilities or results of operations of the Company, except as required by a change in GAAP; (vii) sell, lease (as lessor), license or otherwise dispose of or subject to any Lien any properties or assets that are material, individually or in the aggregate, to the Company and the Company Subsidiaries, taken as a whole, except sales of inventory and excess or obsolete assets in the ordinary course of business consistent with past practice; (viii) except in the ordinary course of business consistent with prior practice, (A) incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of the Company or any Company Subsidiary, guarantee any debt securities of another person, enter into any "keep well" or other agreement to maintain any financial statement condition of another person or enter into any arrangement having the economic effect of any of the foregoing, in each case, other than in connection with a refinancing on commercially reasonable terms, or (B) make any loans, advances or capital contributions to, or investments in, any other person, other than to or in the Company or any direct or indirect wholly owned subsidiary of the Company; (ix) make or agree to make any new capital expenditure or expenditures other than as permitted under Section 5.01(a)(iv) that, individually, is in excess of $50,000,000 or, in the aggregate during such period, are in excess of $250,000,000, except to the extent made or agreed to be made in order to ensure compliance with the rules and regulations or an order of the NRC or any other Governmental Entity or to ensure compliance with the-terms of any Permit; (x) make any material Tax election or settle or compromise any material Tax liability or refund; (xi) engage in any activities which would cause a change in its status under PUHCA, or that would impair the ability of the Company or CoinEd to claim an exemption as of right under Rule 2 of PUHCA prior to the Merger, other than the application to the SEC under PUHCA contemplated by this Agreement; (xii) enter into or commit to any agreement for the purchase of capacity and/or energy ("Power PurchaseAgreement") except for any Power Purchase Agreement that, in the ordinary course of business, can be entered into without the prior approval of the Board of Directors or a committee thereof of the Company (the threshold for requiring submission to the board or a committee not to be made substantially higher than that in effect on the date hereof) unless the Company consults with Parent regarding such Power Purchase Agreement and the Company has obtained the prior written consent of Parent to such Power Purchase Agreement or such Power Purchase Agreement is fully compliant with criteria to which A-30

Parent has previously given a generic consent, in each case, which consent shall not be unreasonably withheld, it being understood that in such consultation process the Company and Parent shall comply with all Applicable Law and any applicable confidentiality or similar third party agreement; or (xiii) authorize any of, or commit or agree to take any of, the foregoing actions. (b) Conduct of Business by Parent. Except for matters set forth in Parent Disclosure Letter or otherwise expressly contemplated by this Agreement, from the date of this Agreement to the Merger Effective Time Parent shall, and shall cause each Parent Subsidiary to, conduct its business in all material respects in the usual, regular and ordinary course in substantially the same manner as previously conducted and use all reasonable efforts to preserve intact its current business organization in all material respects, subject to prudent management of work force and business needs, keep available the services of its current officers and employees and keep its relationships with Governmental Entities, customers, suppliers, licensors, licensees, distributors and others having business dealings with them to the end that its goodwill and ongoing business shall be unimpaired in all material respects at the Merger Effective Time. In addition, and without limiting the generality of the foregoing, except for matters set forth in the Parent Disclosure Letter or otherwise expressly contemplated by this Agreement, from the date of this Agreement to the Merger Effective Time, Parent shall not, and shall not permit any Parent Subsidiary to, do any of the following without the prior written consent of the Company: (i) (A) declare, set aside or pay any dividends on, or make any other distributions in respect of, any of its capital stock, other than (1) dividends and distributions by a direct or indirect wholly owned subsidiary of Parent to its parent, (2) regular quarterly cash dividends with respect to the Parent Common Stock, not in excess of $0.25 per share, in accordance with Parent's past dividend policy and (3) regular cash dividends with respect to preferred stock of Parent or its subsidiaries in accordance with the current terms thereof, (B) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, or (C) purchase, redeem or otherwise acquire any shares of capital stock of Parent or any Parent Subsidiary or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities; (ii) issue, deliver, sell or grant (A) any shares of its capital stock, (B) any Voting Parent Debt or other voting securities, (C) any securities convertible into or exchangeable for, or any options, warrants or rights to acquire, any such shares, Voting Parent Debt, voting securities or convertible or exchangeable securities or (D) any "phantom" stock, "phantom" stock rights, stock appreciation rights or stock-based performance units, other than (U) the issuance of Parent Common Stock upon the exercise of Parent Employee Stock Options outstanding on the date of this Agreement and in accordance with their present terms or pursuant to the terms of any Parent Benefit Plan or Parent Employment Arrangement as in effect on the date of this Agreement or as amended in accordance with or as permitted by this Agreement, (2) the issuance, subject to Section 5.01(b)(v), of up to an additional 4,900,000 Parent Employee Stock Options and 100,000 shares of restricted stock pursuant to the Parent Stock Plans in accordance with their present terms and the terms of the Parent stock options issued in the ordinary course prior to the date of this Agreement and the issuance of Parent Common Stock upon the exercise of such Parent Employee Stock Options and (3) the issuance of "phantom" stock or "phantom" stock rights or, subject to Section 5.01 (b)(v), stock appreciation rights or stock-based performance units, pursuant to the terms of any Parent Benefit Plan or Parent Employment Arrangement in effect on the date of this Agreement or as amended in accordance with or as permitted by this Agreement; (iii) amend its certificate of incorporation, by-laws or other comparable charter or organizational documents, except for such amendments to its certificate of incorporation, by-laws and other comparable charter or organizational documents that do not have an adverse affect on the Merger and the other Transactions; A-31

(iv) acquire or agree to acquire (A) by merging or consolidating with, or by purchasing a substantial equity interest in or portion of the assets of, or by any other manner, any business or any corporation, partnership, joint venture, association or other business organization or division thereof, (B) any assets that are material, individually or in the aggregate, to Parent and the Parent Subsidiaries, taken as a whole, except Parent or a Parent Subsidiary may acquire or otherwise invest in any assets, other than nuclear plants, so long as Parent consults with the Company concerning any acquisition or investment that is not listed in the Parent Disclosure Letter and involves an expenditure that, individually, is the excess of $50,000,000, or in the aggregate during such period, are in excess of $250,000,000 or (C) any nuclear plants (whether through AmerGen Energy Company, LLC, a limited liability company organized under the laws of Delaware ("AmerGen"), or otherwise) other than those nuclear plants in respect of which Parent or AmerGen has made written offers or has signed agreements as of the date of this Agreement unless (1) Parent involves the Company in any review or consideration of such acquisition of additional nuclear plants, which involvement shall be for the purpose of ensuring that any such acquisition will be consistent with a rate of nuclear generation acquisitions and growth that will not impair Newco's ability to provide and maintain adequate resources and performance focus for the entire Newco fleet and (2) Parent has obtained the express written consent of the Company, which consent shall not be unreasonably withheld, prior to entering into, or permitting any Parent Subsidiary or AmerGen to enter into, the binding contract to acquire any such additional nuclear plant, or otherwise expanding its, or permitting any Parent Subsidiary or AmerGen to expand their, nuclear capacity; (v) except to the extent required by Applicable Law or by the terms of any Parent Benefit Plan, Parent Employment Arrangement or collective bargaining agreement in effect as of the date of this Agreement, (A) grant to any current or former employee, officer or director of Parent or any Parent Subsidiary any increase in compensation or benefits or new incentive compensation grants, except in the ordinary course of business consistent with prior practice, (B) grant to any current or former employee, officer or director of Parent or any Parent Subsidiary any increase in severance, pay to stay or termination pay, except to the extent consistent with past practice and that, in the aggregate, does not result in a material increase in benefits or compensation expenses, (C) enter into or amend any Parent Employment Arrangement with any such current or former employee, officer or director, except to the extent permitted in subsection (B) above, (D) establish, adopt, enter into or amend in any material respect any collective bargaining agreement or Parent Benefit Plan, except, with respect to any Parent Benefit Plan that is a Qualified Plan, as may be required to facilitate or obtain a determination from the Internal Revenue Service that such Parent Benefit Plan is a Qualified Plan or (E) take or permit to be taken any action to accelerate any rights or benefits or the funding thereof, or make or permit to be made any material determinations not in the ordinary course of business consistent with prior practice, under any collective bargaining agreement, Parent Benefit Plan or Parent Employment Arrangement; provided, however, that notwithstanding anything herein to the contrary, the foregoing shall not restrict Parent or the Parent Subsidiaries from (1) entering into or making available to newly hired officers and employees or to officers and employees in the context of promotions based on job performance or workplace requirements in the ordinary course of business consistent with past practice, plans, agreements, benefits and compensation arrangements (including incentive grants) that have, consistent with past practice, been made available to newly hired or promoted officers and employees, or (2) entering into or amending collective bargaining agreements with existing collective bargaining representatives so as to increase compensation or benefits in a manner that does not materially increase the benefits or compensation expenses of Parent and the Parent Subsidiaries; (vi) make any change in accounting methods, principles or practices materially affecting the reported consolidated assets, liabilities or results of operations of Parent, except as required by a change in GAAP; (vii) sell, lease (as lessor), license or otherwise dispose of or subject to any Lien any properties or assets that are material, individually or in the aggregate, to Parent and the Parent Subsidiaries, taken as a whole, except sales of inventory and excess or obsolete assets in the ordinary course of business consistent with past practice; A-32

(viii) except in the ordinary course of business consistent with prior practice, (A) incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of Parent or any Parent Subsidiary, guarantee any debt securities of another person, enter into any "keep well" or other agreement to maintain any financial statement condition of another person or enter into any arrangement having the economic effect of any of the foregoing, in each case, other than in connection with a refinancing on commercially reasonable terms, or (B) make any loans, advances or capital contributions to, or investments in, any other person, other than to or in Parent or any direct or indirect wholly owned subsidiary of Parent; (ix) make or agree to make any new capital expenditure or expenditures other than as permitted by Section 5.01(b)(iv) that, individually, is in excess of $50,000,000 or, in the aggregate, are in excess of

     $250,000,000, except to the extent made or agreed to be made in order to ensure compliance with the rules and regulations or an order of the NRC or any other Governmental Entity or to ensure compliance with the terms of any Permit; (x) make any material Tax election or settle or compromise any material Tax liability or refund; (xi) engage in any activities which would cause a change in its status under PUHCA, or that would impair the ability of Parent to claim an exemption as of right under Rule 2 of PUHCA prior to the Merger, other than the application to the SEC under PUHCA contemplated by this Agreement; (xii) enter into or commit to any Power Purchase Agreement except for any Power Purchase Agreement that, in the ordinary course of business, can be entered into without the prior approval of the Board of Directors or a committee thereof of Parent (the threshold for requiring submission to the board or a committee not to be made substantially higher than that in effect on the date hereof) unless Parent consults with the Company regarding such Power Purchase Agreement and Parent has obtained the prior written consent of the Company to such Power Purchase Agreement or such Power Purchase Agreement is fully compliant with criteria to which the Company has previously given a generic consent, in each case, which consent shall not be unreasonably withheld, it being understood that in such consultation process Parent and the Company shall comply with all Applicable Law and any applicable confidentiality or similar third party agreement; or (xiii) authorize any of, or commit or agree to take any of, the foregoing actions.

(c) Conduct of Business by Newco. Parent shall cause Newco to perform its obligations under this Agreement and shall not permit Newco to take any action other than in furtherance of this Agreement and the Transactions. (d) OtherActions. The Company and Parent shall not, and shall not permit any of their respective subsidiaries to, take any action that would, or that could reasonably be expected to, result in (i) any of the representations and warranties of such party set forth in this Agreement that is qualified as to materiality becoming untrue, (ii) any of such representations and warranties that is not so qualified becoming untrue in any material respect or (iii) except as otherwise permitted by Section 5.02 or 5.03, any condition to the Merger set forth in Article VII not being satisfied. (e) Advice of Changes. The Company and Parent shall promptly advise the other orally and in writing of any change or event that has or could reasonably be expected to have a Company Material Adverse Effect or Parent Material Adverse Effect, as the case may be. (f) Coordinationof Dividends. Each of Parent and the Company shall coordinate with the other regarding the declaration and payment of dividends in respect of Parent Common Stock and Company Common Stock and the record dates and payment dates relating thereto, it being the intention of Parent and the Company that no holder of Parent Common Stock, Company Common Stock or Newco Common Stock shall receive two dividends, or fail to receive one dividend, for any single calendar quarter with respect to its shares of Parent Common Stock or Company Common Stock, as the case may be, and/or any shares of Newco Common Stock any such holder receives in exchange therefor pursuant to the Merger. A-33

(g) Reorganizations. The parties hereto agree that this Agreement shall not in any manner restrict (i) Parent from forming a holding company and such subsidiaries as Parent considers appropriate to separate its regulated and unregulated businesses (the "ParentReorganization") and (ii) the Company from forming such subsidiaries as the Company considers appropriate to separate its regulated and unregulated businesses (the "Company Reorganization"). The parties to this Agreement acknowledge and agree that implementation by Parent of the Parent Reorganization or by the Company of the Company Reorganization shall not constitute (x) a breach of or failure to perform any of the representations, warranties or covenants in this Agreement or (y) otherwise result in the failure of any condition to the obligation of the Company or Parent, as applicable, to consummate the Merger to be satisfied. (h) Transition Bonds. Notwithstanding any provision herein to the contrary, this Agreement shall not restrict Parent from (i) issuing through PECO Energy Trust, a Delaware business trust and a Parent Subsidiary, or through any other special purpose entity which is a Parent Subsidiary, transition bonds in accordance with the Pennsylvania Competition Act in an aggregate principal amount not to exceed $1,000,000,000, (ii) selling, in connection with such issuance, all or any part of the "Intangible Transition Property" (as such term is defined in the Pennsylvania Competition Act) and any other property or rights necessary as collateral to secure such transition bonds and (iii) using the proceeds from such issuances of transition bonds to purchase Parent Common Stock for aggregate consideration of up to $500,000,000 as contemplated by Section 6.15(a), to repay outstanding debt of the Parent or to purchase Parent Preferred Stock. SECTION 5.02. No Solicitation by Company. (a) The Company agrees that, during the term of this Agreement, it shall not, and shall not authorize or permit any of its subsidiaries or any director, officer, employee, agent or representative (collectively, "Representatives") of the Company or any of its subsidiaries, directly or indirectly, to (i) solicit, initiate, encourage or facilitate, or furnish or disclose non-public information in furtherance of, any inquiries or the making of any proposal with respect to a Company Competing Transaction (as defined herein) or (ii) negotiate, explore or otherwise engage in discussions with any person (other than Parent or Newco or their respective Representatives) with respect to any Company Competing Transaction. The term "Company Competing Transaction" means any recapitalization, merger, consolidation or other business combination involving the Company, or acquisition of any material portion of the capital stock or assets (except for (A) acquisitions of assets in the ordinary course of business, (B) acquisitions by the Company that do not and could not reasonably be expected to impede the consummation of the Merger and do not violate any other covenant in this Agreement, (C) transactions disclosed in the Company Disclosure Letter and (D) the Transactions) of the Company, or any combination of the foregoing. The Company will immediately cease all existing activities, discussions and negotiations with any parties conducted heretofore with respect to any of the foregoing and shall use its reasonable best efforts to enforce any confidentiality or similar agreement relating to a Company Competing Transaction. From and after the execution of this Agreement, the Company shall immediately advise Parent in writing of the receipt, directly or indirectly, of any inquiries, discussions, negotiations, or proposals relating to a Company Competing Transaction (including the specific terms thereof), and promptly furnish to Parent a copy of any such proposal or inquiry in addition to any information provided to or by any third party relating thereto and if such proposal or inquiry is not in writing, the identity of the person making such proposal or inquiry. Notwithstanding the foregoing, prior to receipt of the Company Shareholder Approval, the Company may, but only to the extent that the Board of Directors of the Company shall conclude in good faith, based upon the advice of its outside counsel, that failure to take such action could reasonably be expected to constitute a breach of the fiduciary obligations of such Board of Directors under Applicable Law, in response to a proposal for a Company Competing Transaction that constitutes a Qualifying Company Proposal (as defined in Section 5.02(d)) that did not result from the breach or a deemed breach of this Section 5.02, and subject to compliance with the notification provisions of this Section 5.02, (A) furnish non-public information with respect to the Company to the person proposing such Company Competing Transaction and its Representatives pursuant to a confidentiality agreement with terms no less restrictive of such person than those set forth in the Confidentiality Agreement (as defined in Section 6.02) and (B) participate in discussions or negotiations with such person and its Representatives regarding such Company Competing Transaction. Without limiting the foregoing, it is agreed A-34

that any violation of the restrictions set forth in this Section 5.02(a) by any Representative or affiliate of the Company or any Company Subsidiary, whether or not such person is purporting to act on behalf of the Company or any Company Subsidiary or otherwise, shall be deemed to be a breach of this Section 5.02(a) by the Company. (b) Neither the Board of Directors of the Company nor any committee thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a manner adverse to Parent, the approval or recommendation by the Board of Directors of the Company of this Agreement and the Transactions, (ii) approve, or permit or cause the Company to enter into, any definitive agreement providing for the implementation of any Company Competing Transaction (each a "Company Acquisition Agreement") or (iii) approve or recommend, or propose to approve or recommend, any Company Competing Transaction. Notwithstanding the foregoing, prior to receipt of the Company Shareholder Approval, and only to the extent that the Board of Directors of the Company shall conclude in good faith, based upon the advice of its outside counsel, that failure to take such action could reasonably be expected to constitute a breach of the fiduciary obligations of such Board of Directors under Applicable Law in response to a proposal for a Company Competing Transaction that constitutes a Qualifying Company Proposal that did not result from the breach or a deemed breach of this Section 5.02, (A) the Board of Directors of the Company may withdraw or modify its approval or recommendation of this Agreement and the Transactions and, in connection therewith, approve or recommend such Qualifying Company Proposal and (B) the Board of Directors of the Company may approve and the Company may enter into a Company Acquisition Agreement contemporaneously with its termination of this Agreement pursuant to Section 8.01(f). (c) Nothing contained in this Section 5.02 shall prohibit the Company from taking and disclosing to its shareholders a position contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making any disclosure to its shareholders if, in the good faith judgment of the Board of Directors of the Company after consultation with outside counsel, failure to so disclose would be inconsistent with its obligations under Applicable Law. (d) For purposes of this Agreement, "Qualifying Company Proposal" means any proposal made by a third party to acquire all of the equity securities or all or substantially all of the assets of the Company, pursuant to a tender offer, a merger, a consolidation, a recapitalization, a sale of its assets or otherwise, that is (A) for consideration that is comprised solely of cash or marketable securities, or a combination thereof, and not conditioned on financing, (B) on terms which the Board of Directors of the Company determines in its good faith judgment (based on the advice of a nationally recognized independent investment banking firm) to be superior from a financial point of view to the holders of Company Common Stock to the Transactions (taking into account all of the terms of any proposal by Parent to amend or modify the terms of the Transactions) and to be more favorable generally to the Company's shareholders than the Transactions (taking into account all financial and strategic considerations, including relevant legal, financial, regulatory and other aspects of such proposal and the third party making such proposal and the conditions and prospects for completion of such proposal, the strategic direction of and benefits sought by the Company and all of the terms of any proposal by Parent to amend or modify the terms of the Transactions) and (C) reasonably capable of being completed within 18 months of the termination of this Agreement or by the Outside Date, whichever is later, taking into account all legal, financial, regulatory and other aspects of such proposal and the third party making such proposal. SECTION 5.03. No Solicitation by Parent. (a) Parent agrees that, during the term of this Agreement, it shall not, and shall not authorize or permit any of its subsidiaries or any of its or its subsidiaries' Representatives, directly or indirectly, to (i) solicit, initiate, encourage or facilitate, or furnish or disclose non public information in furtherance of, any inquiries or the making of any proposal with respect to a Parent Competing Transaction (as defined herein) or (ii) negotiate, explore or otherwise engage in discussions with any person (other than Company or Newco or their respective Representatives) with respect to any Parent Competing Transaction. The term "Parent Competing Transaction" means any recapitalization, merger, A-35

consolidation or other business combination involving Parent, or acquisition of any material portion of the capital stock or assets (except for (A) acquisitions of assets in the ordinary course of business, (B) acquisitions by Parent that do not and could not reasonably be expected to impede the consummation of the Merger and do not violate any other covenant in this Agreement, (C) transactions disclosed in the Parent Disclosure Letter and (D) the Transactions) of Parent, or any combination of the foregoing. Parent will immediately cease all existing activities, discussions and negotiations with any parties conducted heretofore with respect to any of the foregoing and shall use its reasonable best efforts to enforce any confidentiality or similar agreement relating to a Parent Competing Transaction. From and after the execution of this Agreement, Parent shall immediately advise the Company in writing of the receipt, directly or indirectly, of any inquiries, discussions, negotiations, or proposals relating to a Parent Competing Transaction (including the specific terms thereof), and promptly furnish to the Company a copy of any such proposal or inquiry in addition to any information provided to or by any third party relating thereto and if such proposal or inquiry is not in writing, the identity of the person making such proposal or inquiry. Notwithstanding the foregoing, prior to receipt of the Parent Shareholder Approval, Parent may, but only to the extent that the Board of Directors of Parent shall conclude in good faith, based upon the advice of its outside counsel, that failure to take such action could reasonably be expected to constitute a breach of the fiduciary obligations of such Board of Directors under Applicable Law, in response to a proposal for a Parent Competing Transaction that constitutes a Qualifying Parent Proposal (as defined in Section 5.03(d)) that did not result from the breach or a deemed breach of this Section 5.03, and subject to compliance with the notification provisions of this Section 5.03, (A) furnish non-public information with respect to Parent to the person proposing such Parent Competing Transaction and its Representatives pursuant to a confidentiality agreement with terms no less restrictive of such person than those set forth in the Confidentiality Agreement (as defined in Section 6.02) and (B) participate in discussions or negotiations with such person and its Representatives regarding such Parent Competing Transaction. Without limiting the foregoing, it is agreed that any violation of the restrictions set forth in this Section 5.03(a) by any Representative or affiliate of Parent or any Parent Subsidiary, whether or not such person is purporting to act on behalf of Parent or any Parent Subsidiary or otherwise, shall be deemed to be a breach of this Section 5.03(a) by Parent. (b) Neither the Board of Directors of Parent nor any committee thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a manner adverse to the Company, the approval or recommendation by the Board of Directors of Parent of this Agreement and the Transactions, (ii) approve, or permit or cause Parent to enter into, any definitive agreement providing for the implementation of any Parent Competing Transaction (each a "ParentAcquisition Agreement") or (iii) approve or recommend, or propose to approve or recommend, any Parent Competing Transaction. Notwithstanding the foregoing, prior to receipt of the Parent Shareholder Approval, and only to the extent that the Board of Directors of Parent shall conclude in good faith, based upon the advice of its outside counsel, that failure to take such action could reasonably be expected to constitute a breach of the fiduciary obligations of such Board of Directors under Applicable Law in response to a proposal for a Parent Competing Transaction that constitutes a Qualifying Parent Proposal that did not result from the breach or a deemed breach of this Section 5.03, (A) the Board of Directors of Parent may withdraw or modify its approval or recommendation of this Agreement and the Transactions and, in connection therewith, approve or recommend such Qualifying Parent Proposal and (B) the Board of Directors of Parent may approve and Parent may enter into a Parent Acquisition Agreement contemporaneously with its termination of this Agreement pursuant to Section 8.01(h). (c) Nothing contained in this Section 5.03 shall prohibit Parent from taking and disclosing to its shareholders a position contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making any disclosure to its shareholders if, in the good faith judgment of the Board of Directors of Parent after consultation with outside counsel, failure to so disclose would be inconsistent with its obligations under Applicable Law. (d) For purposes of this Agreement, "Qualifying Parent Proposal" means any proposal made by a third party to acquire all of the equity securities or all or substantially all of the assets of Parent, pursuant to a tender offer, a merger, a consolidation, a recapitalization, a sale of its assets of otherwise, that is (A) for consideration A-36

that is comprised solely of cash or marketable securities, or a combination thereof, and not conditioned on financing, (B) on terms which the Board of Directors of Parent determines in its good faith judgment (based on the advice of a nationally recognized independent investment banking firm) to be superior from a financial point of view to the holders of Parent Common Stock to the Transactions (taking into account all of the terms of any proposal by Company to amend or modify the terms of the Transactions) and to be more favorable generally to Parent's shareholders than the Transactions (taking into account all financial and strategic considerations, including relevant legal, financial, regulatory and other aspects of such proposal and the third party making such proposal and the conditions and prospects for completion of such proposal, the strategic direction of and benefits sought by Parent and all of the terms of any proposal by the Company to amend or modify the terms of the Transactions) and (C) reasonably capable of being completed within 18 months of the termination of this Agreement or by the Outside Date, whichever is later, taking into account all legal, financial, regulatory and other aspects of such proposal and the third party making such proposal. ARTICLE VI Additional Agreements SECTION 6.01. Preparationof the Form S-4 and the Proxy Statement; ShareholdersMeetings, Adoption by Sole Shareholder. (a) The Company, Parent and Newco shall prepare and file with the SEC the Proxy Statement in preliminary form and Parent, the Company and Newco shall prepare and file with the SEC the Form S-4, in which the Proxy Statement will be included as a prospectus. Each of the Company, Parent and Newco shall use its reasonable best efforts to have the Form S-4 declared effective under the Securities Act as promptly as practicable after such filing. Each of the Company, Parent and Newco shall use its reasonable best efforts to cause the Proxy Statement to be mailed to its respective shareholders as promptly as practicable after the Form S-4 is declared effective under the Securities Act. Newco shall also take any action (other than qualifying to do business in any jurisdiction in which it is not now so qualified) required to be taken under any applicable state securities laws in connection with the issuance of Newco Common Stock in the Merger and under the Company Stock Plans and the Parent Stock Plans, and the Company and Parent shall furnish all information concerning the Company or Parent, as applicable, and the holders of the Company Common Stock or Parent Common Stock and rights to acquire Company Common Stock or Parent Common Stock pursuant to the Company Stock Plans or the Parent Stock Plans as may be reasonably requested in connection with any such action. The parties shall notify each other promptly of the receipt of any comments from the SEC or its staff and of any request by the SEC or its staff for amendments or supplements to the Proxy Statement or the Form S-4 or for additional information and shall supply each other with copies of all correspondence between such party or any of its Representatives, on the one hand, and the SEC or its staff, on the other hand, with respect to the Proxy Statement, the Form S-4 or the Merger. (b) If prior to the Merger Effective Time any event occurs with respect to the Company or any Company Subsidiary or any change occurs with respect to information supplied by or on behalf of the Company for inclusion in the Proxy Statement or the Form S-4 which, in each case, is required to be described in an amendment of, or a supplement to, the Proxy Statement or the Form S-4, the Company shall promptly notify Parent of such event, and the Company shall cooperate with Parent and Newco in the prompt filing with the SEC of any necessary amendment or supplement to the Proxy Statement and Form S-4 and, as required by law, in disseminating the information contained in such amendment or supplement to the Company's shareholders and to Parent's shareholders. (c) If prior to the Merger Effective Time any event occurs with respect to Parent or any Parent Subsidiary or any change occurs with respect to information supplied by or on behalf of Parent for inclusion in the Proxy Statement or the Form S-4 which, in each case, is required to be described in an amendment of, or a supplement to, the Proxy Statement or the Form S-4, Parent shall promptly notify the Company of such event, and Parent shall cooperate with Company in the prompt filing with the SEC of any necessary amendment or supplement to the Proxy Statement and the Form S-4 and, as required by law, in disseminating the information contained in such amendment or supplement to the Company's shareholders and to Parent's shareholders. A-37

(d) The Company shall, as soon as practicable following effectiveness of the Form S-4, duly call, give notice of, convene and hold a meeting of its shareholders (the "Company Shareholders Meeting") for the purpose of seeking the Company Shareholder Approval. The Company shall use its reasonable best efforts to cause the Proxy Statement to be mailed to the Company's shareholders as promptly as practicable after the Form S-4 is declared effective under the Securities Act. Subject to Section 5.02(b), the Company shall, through its Board of Directors, recommend to its shareholders that they give the Company Shareholder Approval. Without limiting the generality of the foregoing, the Company agrees that its obligations pursuant to the first two sentences of this Section 6.01(d) shall not be affected by the commencement, public proposal, public disclosure or communication to the Company of any Company Competing Transaction. (e) Parent shall, as soon as practicable following the date of this Agreement, duly call, give notice of, convene and hold a meeting of its shareholders (the "Parent ShareholdersMeeting") the purpose of seeking the Parent Shareholder Approval. The Parent shall use its reasonable best efforts to cause the Proxy Statement to be mailed to the Parent's shareholders as promptly as practicable after the Form S-4 is declared effective under the Securities Act. Subject to Section 5.03(b), Parent shall, through its Board of Directors, recommend to its shareholders that they give the Parent Shareholder Approval. Without limiting the generality of the foregoing, Parent agrees that its obligations pursuant to the first two sentences of this Section 6.01(e) shall not be affected by the commencement, public proposal, public disclosure or communication to Parent of any Parent Competing Transaction. (f) The Company shall use its reasonable best efforts to cause to be delivered to Parent a letter of Arthur Andersen LLP, the Company's independent public accountants, dated a date within two business days before the date on which the Form S-4 shall become effective and addressed to Parent, in form and substance reasonably satisfactory to Parent and customary in scope and substance for letters delivered by independent public accountants in connection with registration statements similar to the Form S-4. (g) Parent shall use its reasonable best efforts to cause to be delivered to the Company a letter of PricewaterhouseCoopers LLP, Parent's independent public accountants, dated a date within two business days before the date on which the Form S-4 shall become effective and addressed to the Company, in form and substance reasonably satisfactory to the Company and customary in scope and substance for letters delivered by independent public accountants in connection with registration statements similar to the Form S-4. (h) Parent, as sole shareholder of Newco, shall adopt this Agreement. SECTION 6.02. Access to Information; Confidentiality. Each of the Company and Parent after reasonable notice shall, and shall cause each of its respective subsidiaries to, afford to the other party and to the officers, employees, accountants, counsel, financial advisors and other representatives of such other party, reasonable access during normal business hours during the period prior to the Merger Effective Time to all their respective properties, books, contracts, commitments, personnel and records and, during such period, each of the Company and Parent shall, and shall cause each of its respective subsidiaries to, furnish promptly to the other party (a) a copy of each report, schedule, registration statement and other document filed by it during such period pursuant to the requirements of Federal or state securities laws and (b) all other information concerning its business, properties and personnel as such other party may reasonably request. Without limiting the generality of the foregoing, each of the Company and Parent shall, within two business days of request therefor, provide to the other the information (x) described in Rule 14a-7(a)(2)(ii) under the Exchange Act, (y) to which a holder of Company Common Stock would be entitled under Section 7.75 of the IBCA (assuming such holder met the requirements of such Section) and (z) to which a holder of Parent Common Stock would be entitled under Section 1508 of the PBCL (assuming such holder met the requirements of such Section). All information exchanged pursuant to this Section 6.02 shall be subject to the confidentiality agreement dated July 15, 1999, between the Company and Parent (the "Confidentiality Agreement"), and this Agreement constitutes a Definitive Agreement as defined therein. A-38

SECTION 6.03. Regulatory Matters; ReasonableBest Efforts. (a) Regulatory Approvals. Upon the terms and subject to the conditions set forth in this Agreement, and subject to actions taken in compliance with Section 5.02(b) or 5.03(b), as the case may be, each of the parties hereto shall cooperate and promptly prepare and file all necessary documentation, to effect all necessary applications, notices, petitions, filings and other documents, and shall use reasonable best efforts to obtain all necessary Consents of all Governmental Entities necessary or advisable to consummate and make effective, in the most expeditious manner practicable, the Merger and the other Transactions, including the Parent Required Statutory Approvals and the Company Required Statutory Approvals. Parent shall have the right to review and approve in advance all characterizations of the information relating to the Company, on the one hand, and the Company shall have the right to review and approve in advance all characterizations of the information relating to Parent, on the other hand, in either case, which appear in any filing made in connection with the Merger or the other Transactions. Parent and the Company agree that they will consult with each other with respect to the obtaining of all such necessary Consents of Governmental Entities. FurtherActions. Upon the terms and subject to the conditions set forth in this Agreement, each of the parties agrees to use reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Merger and the other Transactions, including (i) the obtaining of all necessary consents, approvals or waivers from third parties, (ii) the defending of any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the Transactions, including seeking to have any stay or temporary restraining order entered by any court or other Governmental Entity vacated or reversed, and (iii) the execution and delivery of any additional instruments necessary to consummate the Transactions and to fully carry out the purposes of this Agreement. Notwithstanding the foregoing, the Company and its Representatives and Parent and its Representatives shall not be prohibited under this Section 6.03(b) from taking any actions in compliance with Section 5.02(b) or 5.03(b), respectively. (c) State Anti-Takeover Statutes. In connection with and without limiting the generality of Section 6.03(b), Parent and the Company shall (i) take all action necessary to ensure that no state anti-takeover statute or similar statute or regulation is or becomes applicable to any Transaction or this Agreement and (ii) if any state anti-takeover statute or similar statute or regulation becomes applicable to any Transaction or this Agreement, take all action necessary to ensure that the Merger and the other Transactions may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise to minimize the effect of such statute or regulation on the Merger and the other Transactions. Notwithstanding the foregoing, the Company and its Representatives and Parent and its Representatives shall not be prohibited under this Section 6.03(c) from taking any action permitted by Section 5.02(b) or 5.03(b), respectively. (d) Notices. The Company shall give prompt notice to Parent, and Parent or Newco shall give prompt notice to the Company, of (i) any representation or warranty made by it contained in this Agreement that is qualified as to materiality becoming untrue or inaccurate in any respect or any such representation or warranty that is not so qualified becoming untrue or inaccurate in any material respect or (ii) the failure by it to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement; provided, however, that no such notification shall affect the representations, warranties, covenants or agreements of the parties or the conditions to the obligations of the parties under this Agreement. SECTION 6.04. Company and ParentStock Options and Other Stock Plans. (a) Prior to the Merger Effective Time, the Company Board (or, if appropriate, any committee administering the Company Stock Plans) shall adopt such resolutions or take such other actions as may be required to effect the following: (i) adjust the terms of all outstanding Company Employee Stock Options to provide that, at the Merger Effective Time, each Company Employee Stock Option outstanding immediately prior to the Merger Effective Time shall be deemed to constitute an option to acquire, on the same terms and A-39

conditions as were applicable under such Company Employee Stock Option, the same number of shares of Newco Common Stock as the holder of such Company Employee Stock Option would have been entitled to receive pursuant to the Merger had such holder exercised such Company Employee Stock Option in full immediately prior to the Merger Effective Time, at a price per share equal to (A) the aggregate exercise price for the shares of Company Common Stock otherwise purchasable pursuant to such Company Employee Stock Option immediately prior to the Merger Effective Time (whether or not exercisable) divided by (B) the number of shares of Newco Common Stock deemed purchasable pursuant to such Company Employee Stock Option; provided, however, that in the case of any qualified stock options under Sections 422-424 of the Code, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined in order to comply with Section 424(a) of the Code; provided,further, however, that solely for purposes of making the adjustments to Company Employee Stock Options required by this Section 6.04, the Company Conversion Number shall be 0.95 and the Company Cash Consideration shall be disregarded; (ii) make such other changes to the Company Stock Plans and the terms of any Company Employee Stock Options as it deems appropriate to give effect to the Merger (subject to the approval of Parent, which shall not be unreasonably withheld); and (iii) ensure that, after the Merger Effective Time, no Company Employee Stock Options may be granted under any Company Stock Plan. (b) Prior to the Exchange Effective Time, the Parent Board (or, if appropriate, any committee administering the Parent Stock Plans) shall adopt such resolutions or take such other actions as may be required to effect the following: (i) adjust the terms of all outstanding Parent Employee Stock Options to provide that, at the Exchange Effective Time, each Parent Employee Stock Option outstanding immediately prior to the Exchange Effective Time shall be deemed to constitute an option to acquire, on the same terms and conditions as were applicable under such Parent Employee Stock Option, the same number of shares of Newco Common Stock as the holder of such Parent Employee Stock Option would have been entitled to receive pursuant to the Merger had such holder exercised such Parent Employee Stock Option in full immediately prior to the Exchange Effective Time, at a price per share equal to (A) the aggregate exercise price for the shares of Parent Common Stock otherwise purchasable pursuant to such Parent Employee Stock Option immediately prior to the Exchange Effective Time (whether or not exercisable) divided by (B) the number of shares of Newco Common Stock deemed purchasable pursuant to such Parent Employee Stock Option; provided, however, that in the case of any qualified stock options under Sections 422-424 of the Code, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined in order to comply with Section 424(a) of the Code; (ii) make such other changes to the Parent Stock Plans and the terms of outstanding Parent Employee Stock Options as it deems appropriate to give effect to the Merger (subject to the approval of the Company, which shall not be unreasonably withheld); and (iii) ensure that, after the Exchange Effective Time, no Parent Employee Stock Options may be granted under any Parent Stock Plan. (c) At the Merger Effective Time, and subject to compliance by the Company with Section 6.04(a), Newco shall assume all the obligations of the Company under the Company Stock Plans, each outstanding Company Employee Stock Option and the agreements evidencing the grants thereof. As soon as practicable after the Merger Effective Time, Newco shall deliver to the holders of Company Employee Stock Options appropriate notices setting forth such holders' rights pursuant to the respective Company Stock Plans, and the agreements evidencing the grants of such Company Employee Stock Options shall continue in effect on the same terms and conditions (subject to the adjustments required by this Section 6.04 after giving effect to the A-40

Merger). Newco shall comply with the terms of the Company Stock Plans and ensure, to the extent required by, and subject to the provisions of, such Company Stock Plans, that the Company Employee Stock Options that qualified as qualified stock options prior to the Merger Effective Time continue to qualify as qualified stock options after the Merger Effective Time. (d) At the Exchange Effective Time, and subject to compliance by Parent with Section 6.04(b), Newco shall assume all the obligations of Parent under the Parent Stock Plans, each outstanding Parent Employee Stock Option and Parent SAR the agreements evidencing the grants thereof. As soon as practicable after the Exchange Effective Time, Newco shall deliver to the holders of Parent Employee Stock Options and Parent SARs appropriate notices setting forth such holders' rights pursuant to the respective Parent Stock Plans, and the agreements evidencing the grants of such Parent Employee Stock Options and Parent SARs shall continue in effect on the same terms and conditions (subject to the adjustments required by this Section 6.04 after giving effect to the Merger). Newco shall comply with the terms of the Parent Stock Plans and ensure, to the extent required by, and subject to the provisions of, such Parent Stock Plans, that the Parent Employee Stock Options that qualified as qualified stock options prior to the Exchange Effective Time continue to qualify as qualified stock options after the Exchange Effective Time. (e) With respect to each employee or director benefit or compensation plan, program or arrangement, other than the Company Stock Plans and the Parent Stock Plans, under which Company Common Stock or Parent Common Stock is required to be used for purposes of the payment of benefits, grant of awards or exercise of options (each, a "Stock Plan), (i) the Company and the Parent shall take such action as may be necessary so that, after the Merger Effective Time, such Stock Plan shall provide for issuance or purchase in the open market only of Newco Common Stock rather than Company Common Stock or Parent Common Stock, as the case may be, and otherwise to amend such Stock Plans to reflect this Agreement and the Merger, and (ii) Newco shall take all corporate action necessary or appropriate to obtain shareholder approval with respect to such Stock Plan to the extent such approval is required for purposes of the Code or other Applicable Law. Newco shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Newco Common Stock for delivery upon exercise of the Company Employee Stock Options and Parent Employee Stock Options assumed in accordance with this Section 6.04 or the payment of benefits, grant of awards or exercise of options under such Stock Plans. As soon as reasonably practicable after the Merger Effective Time, Newco shall file one or more registration statements on Form S-8 (or any successor or other appropriate form) with respect to the shares of Newco Common Stock subject to such Company Employee Stock Options and Parent Employee Stock Options or to such Stock Plans and shall use its reasonable best efforts to maintain the effectiveness of such registration statement or registration statements (and maintain the current status of the prospectus or prospectuses contained therein or related thereto) for so long as such Company Employee Stock Options and Parent Employee Stock Options or such benefits or grants of awards remain payable or such options remain outstanding. With respect to those individuals who subsequent to the Merger will be subject to the reporting requirements under Section 16(a) of the Exchange Act, where applicable, Newco shall administer the Company Stock Plans and Parent Stock Plans assumed pursuant to this Section 6.04 and the Stock Plans in a manner that complies with Rule 16b-3 of the SEC to the extent the applicable plan complied with such rule prior to the Merger. Prior to the Merger Effective Time, Parent and Newco shall take all actions as may be reasonably required to cause the acquisition of equity securities of Newco, as contemplated by this Section 6.04, by any person who is or will become a director or officer of Newco to be eligible for exemption under Rule 16b-3(d) of the SEC. (f) In this Agreement:

           "Company Employee Stock Option" means any option to purchase Company Common Stock granted under any Company Stock Plan.
           "Company Stock Plans" means the Long-Term Incentive Plan of the Company as amended from time to time.
           "ParentEmployee Stock Option" means any option to purchase Parent Common Stock granted under any Parent Stock Plan.

A-41

           "Parent Stock Plans" means the PECO Energy Company 1989 Long-Term Incentive Plan and the PECO Energy Company 1998 Stock Option Plan.
           "Parent SAR" means any stock appreciation right linked to the price of Parent Common Stock and granted under any Parent Stock Plan.

SECTION 6.05. Benefit Plans; Workforce Matters. (a) From and after the Merger Effective Time, Newco and its subsidiaries shall honor and perform in accordance with their respective terms (as in effect on the date of this Agreement or as amended in accordance with or as permitted by this Agreement), all the collective bargaining agreements of the Company, Parent or any of their respective subsidiaries disclosed in the Company Disclosure Letter or the Parent Disclosure Letter, respectively; provided, however, that this Section 6.05(a) is not intended to prevent Newco from enforcing such agreements in accordance with their respective terms, including enforcement of any reserved right to amend, modify, suspend, revoke or terminate any such agreement. (b) Subject to Applicable Law and obligations under applicable collective bargaining agreements, it is the current intention of Parent and the Company that any reductions in workforce following the Merger Effective Time in respect of employees of Newco and its subsidiaries shall be made on a fair and equitable basis, in light of the circumstances and the objectives to be achieved, as determined by Newco, without regard to whether employment was with the Company or the Company Subsidiaries or Parent or the Parent Subsidiaries and with due consideration to the applicable employee's previous work history, prior experience and skills and Newco's business needs, and any employee whose employment is terminated or job is eliminated shall be entitled to participate on a fair and equitable basis as determined by Newco in the job opportunity and employment placement programs offered by Newco or any of its subsidiaries. (c) Subject to Applicable Law and obligations under applicable collective bargaining agreements, each Company Benefit Plan, Parent Benefit Plan, Company Employment Arrangement and Parent Employment Arrangement in effect on the date of this Agreement (or as amended or established in accordance with or as permitted by this Agreement) shall be maintained in effect by Newco and its subsidiaries, except as provided in Section 6.04, with respect to their current and former employees, officers or directors of the Company and Company Subsidiaries and Parent and Parent Subsidiaries, respectively, who are covered by such plans or arrangements immediately prior to the Merger Effective Time until Newco determines otherwise on or after the Merger Effective Time. Newco and its subsidiaries shall honor, perform and, with respect to each Company Benefit Plan and Parent Benefit Plan and Company Employment Arrangement and Parent Employment Arrangement that is not a multiemployer benefit plan within the meaning of Section 4001 (a)(3) of ERISA, sponsor and administer, each such Company Benefit Plan and Parent Benefit Plan and Company Employment Arrangement and Parent Employment Arrangement in accordance with their respective terms (as in effect on the date of this Agreement or as amended in accordance with or as permitted by this Agreement), and Newco shall (i) assume as of the Merger Effective Time each Company Benefit Plan and Company Employment Arrangement maintained by the Company immediately prior to the Merger Effective Time and as of the Exchange Effective Time each Parent Benefit Plan and Parent Employment Arrangement maintained by Parent immediately prior to the Exchange Effective Time and (ii) perform the obligations under, sponsor and administer such plan or arrangement in the same manner and to the same extent that the Company or Parent, as the case may be, would be required to perform, sponsor and administer thereunder; provided, however, that nothing contained herein shall limit any reserved right contained in any such Company Benefit Plan, Company Employment Arrangement, Parent Benefit Plan or Parent Employment Arrangement to amend, modify, suspend, revoke or terminate any such plan or arrangement. Without limiting the foregoing, (i) each participant in any Company Benefit Plan or Parent Benefit Plan shall receive credit for purposes of eligibility to participate, vesting and eligibility to receive benefits (but specifically excluding for benefit accrual purposes or where such crediting would result in a duplication of benefits) under any benefit plan of Newco or any of its subsidiaries or affiliates for service credited for the corresponding purpose under any such benefit plan; provided, however, that such crediting of service shall not operate to cause any such plan or arrangement to fail to comply with the applicable provisions of the Code or ERISA, (ii) each benefit plan of Newco or its A-42

subsidiaries which is a medical, dental or health benefit plan shall take into account for purposes of determining a participant's deductibles and out-of-pocket limits thereunder expenses previously incurred by the participant during the same year while participating in any other such Company Benefit Plan or Parent Benefit Plan and shall waive any restrictions and limitations for pre-existing conditions provided therein for any participant to the extent not applicable to the participant in any other such Company Benefit Plan or Parent Benefit Plan in which the participant participated immediately prior to participating in that benefit plan, and (iii) each benefit plan of Newco or its subsidiaries which is a cafeteria plan under Section 125 of the Code shall cause credits and debits in respect of any participant in any flexible spending account thereunder for a plan year to be transferred to and maintained in any such corresponding Company Benefit Plan or Parent Benefit Plan in which such participant may subsequently participate during the same year. The Company and the Parent will cooperate on and after the date hereof to develop appropriate employee benefit plans, programs and arrangements, including but not limited to, executive and incentive compensation, stock option and supplemental executive retirement plans for employees and directors of Newco and its subsidiaries from and after the Merger Effective Time. However, no provision contained in this Section 6.05(c) shall be deemed to constitute an employment contract between Newco and any individual, or a waiver of Newco's right to discharge any employee at any time, with or without cause. SECTION 6.06. Indemnification. (a) Newco shall, to the fullest extent permitted by Applicable Law, honor all the Company's and Parent's respective obligations to indemnify (including any obligations to advance funds for expenses) the current and former directors and officers of the Company or Parent, as the case may be, for acts or omissions by such directors and officers occurring prior to the Merger Effective Time to the extent that such obligations to indemnify exist on the date of this Agreement, whether pursuant to the Company Charter or the Parent Charter, as the case may be, the Company By-laws or the Parent By-laws, as the case may be, individual indemnity agreements or otherwise, and such obligations shall survive the Merger and shall continue in full force and effect in accordance with the terms of the Company Charter or the Parent Charter, as the case may be, the Company By-laws or the Parent By-laws, as the case may be, and such individual indemnity agreements from the Merger Effective Time. (b) For a period of six years after the Merger Effective Time, Newco shall cause to be maintained in effect the current policies of directors' and officers' liability insurance maintained by the Company or Parent or such substantially comparable policies as in effect on the Closing Date, as the case may be, (provided that Newco may substitute therefor policies with reputable and financially sound carriers of at least the same coverage and amounts containing terms and conditions which are no less advantageous) with respect to claims arising from or related to facts or events which occurred at or before the Merger Effective Time. If such insurance coverage cannot be obtained at all, Newco shall maintain the most advantageous policies of directors' and officers' insurance reasonably obtainable. (c) From and after the Merger Effective Time, to the fullest extent permitted by Applicable Law, Newco shall indemnify, defend and hold harmless the present and former officers and directors of the Company and Parent, as the case may be, and their respective subsidiaries and any of their respective employees who act as a fiduciary under any Company Benefit Plan (each an "Indemnified Party) against all losses, claims, damages, liabilities, fees and expenses (including attorneys' fees and disbursements), judgments, fines and amounts paid in settlement (in the case of settlements, with the approval of the indemnifying party (which approval shall not be unreasonably withheld)) (collectively, "Losses' '), as incurred (payable monthly upon written request which request shall include reasonable evidence of the Losses set forth therein) to the extent arising from, relating to, or otherwise in respect of, any actual or threatened action, suit, proceeding or investigation, in respect of actions or omissions occurring at or prior to the Merger Effective Time in connection with such Indemnified Party's duties as an officer, director or employee as aforesaid, in each case, of the Company or Parent or any of their respective subsidiaries, including in respect of this Agreement, the Merger and the other Transactions. SECTION 6.07. Fees and Expenses. (a) Except as provided below, all fees and expenses incurred in connection with the Merger and the other Transactions shall be paid by the party incurring such fees or A-43

expenses, whether or not the Merger is consummated, except that expenses incurred in connection with filing, printing and mailing the Proxy Statement and the Form S-4 shall be shared equally by Parent and the Company. (b) The Company shall pay to Parent a fee of $250,000,000 if: (i) the Company terminates this Agreement pursuant to Section 8.01(f); (ii) Parent terminates this Agreement pursuant to Section 8.01(d); or (iii) any Company Competing Transaction was proposed to the Company or publicly disclosed and thereafter the Company terminates this Agreement pursuant to Section 8.01(b)(i) or either the Company or Parent terminates this Agreement pursuant to Section 8.01(b)(iv) or Parent terminates this Agreement pursuant to Section 8.01(c) (but in the case of termination pursuant to Section 8.01(c), only in the event of termination for a wilful breach of this Agreement or failure to perform this Agreement by the Company) and, in each case, within 18 months of such termination the Company enters into a definitive agreement to consummate or consummates any Company Competing Transaction. Any fee due under this Section 6.07(b) shall be paid by wire transfer of same-day funds on the date of termination of this Agreement (except that in the case of termination pursuant to clause (iii) above such payment shall be made on the date of execution of such definitive agreement or, if earlier, consummation of such transaction or another transaction with the same party or its affiliates). (c) Parent shall pay to the Company a fee of $250,000,000 if: (i) Parent terminates this Agreement pursuant to Section 8.01(h); (ii) the Company terminates this Agreement pursuant to Section 8.01(g); (iii) any Parent Competing Transaction was proposed to Parent or publicly disclosed and thereafter the Parent terminates this Agreement pursuant to Section 8.01(b)(i) or either Parent or the Company terminates this Agreement pursuant to Section 8.01(b)(v) or the Company terminates this Agreement pursuant to Section 8.01(e) (but in the case of termination pursuant to Section 8.01(e), only in the event of termination for a wilful breach of this Agreement or failure to perform this Agreement by Parent) and, in each case, within 18 months of such termination Parent enters into a definitive agreement to consummate or consummates any Parent Competing Transaction. Any fee due under this Section 6.07(c) shall be paid by wire transfer of same-day funds on the date of termination of this Agreement (except that in the case of termination pursuant to clause (iii) above such payment shall be made on the date of execution of such definitive agreement or, if earlier, consummation of such transaction or another transaction with the same party or its affiliates). (d) The Company shall reimburse Parent and Newco for all its out-of-pocket expenses actually incurred in connection with this Agreement, the Merger and the other Transactions, up to a limit of $15,000,000, if a fee becomes payable pursuant to Section 6.07(b) or if this Agreement is otherwise terminated pursuant to Section 8.01(b)(iv) or 8.01(c). Such reimbursement shall be paid upon demand following such termination. (e) Parent shall reimburse the Company for all its out-of-pocket expenses actually incurred in connection with this Agreement, the Merger and the other Transactions, up to a limit of $15,000,000, if a fee becomes payable pursuant to Section 6.07(c) or if this Agreement is otherwise terminated pursuant to Section 8.01(b)(v) or 8.01(e). Such reimbursement shall be paid upon demand following such termination. SECTION 6.08. PublicAnnouncements. Parent and Newco, on the one hand, and the Company, on the other hand, shall consult with each other before issuing, and provide each other the opportunity to review and comment upon, any press release or other public statements with respect to this Agreement, the Merger and the other Transactions and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by Applicable Law, court process or by obligations pursuant to any listing agreement with any national securities exchange. SECTION 6.09. Transfer Taxes. All stock transfer, real estate transfer, documentary, stamp, recording and other similar Taxes (including interest, penalties and additions to any such Taxes) ("Transfer Taxes) incurred in connection with the Transactions shall be paid by the party incurring the Transfer Tax, and the parties hereto shall cooperate with each other in preparing, executing and filing any Tax Returns with respect to such Transfer Taxes. A-44

SECTION 6.10. Affiliates. (a) Promptly following the date of execution of this Agreement, the Company shall deliver to Parent and Newco a letter identifying all persons who are expected by the Company to be on the Closing Date, or were as of the date of this Agreement, "affiliates" of the Company for purposes of Rule 145 under the Securities Act. The Company shall use its reasonable best efforts to cause each such person to deliver to Parent on or prior to the date of mailing of Proxy Statement a written agreement substantially in the form attached as Exhibit C. (b) Promptly following the date of execution of this Agreement, Parent shall deliver to the Company a letter indemnifying all persons who are expected by Parent to be, on the Closing Date, or were as of the date of this Agreement, "affiliates" of Parent for purposes of Rule 145 under the Securities Act. Parent shall use its reasonable best efforts to cause each such person to deliver to the Company on or prior to the date of mailing of the Proxy Statement a written agreement substantially in the form of Exhibit D. SECTION 6.11. Stock Exchange Listing. Parent and the Company shall use all reasonable efforts to cause the shares of Newco Common Stock to be issued in the Merger and under the Company Stock Plans and Parent Stock Plans to be approved for listing on the NYSE, subject to official notice of issuance, prior to the Closing Date. SECTION 6.12. Rights Agreements; Consequences if Rights Triggered. The Company Board shall take all action requested in writing by Parent in order to render the Company Rights inapplicable to the Merger and the other Transactions. Except as approved in writing by Parent or as set forth in the Company Disclosure Letter, the Company Board shall not (i) amend the Company Rights Agreement, (ii) redeem the Company Rights or (iii) take any action with respect to, or make any determination under, the Company Rights Agreement. If any Distribution Date, Stock Acquisition Date or Triggering Event occurs under the Company Rights Agreement at any time during the period from the date of this Agreement to the Merger Effective Time, the Company and Parent shall make such adjustment to the Company Exchange Ratio and the Parent Exchange Ratio as the Company and Parent shall mutually agree so as to preserve the economic benefits that the Company and Parent each reasonably expected on the date of this Agreement to receive as a result of the consummation of the Merger and the other Transactions. SECTION 6.13. Tax Treatment. The parties intend (a) the Merger to constitute transactions described in Section 351 of the Code and (b) the Second Step Merger to constitute a transaction described in Section 368(a) of the Code. Each party and its affiliates shall use reasonable efforts to cause the Merger to so qualify and to obtain (i) the opinion of Cravath, Swaine & Moore to the effect that (A) the Merger will constitute transactions described in Section 351 of the Code and (B) the Second Step Merger will constitute a transaction described in Section 368(a) of the Code and (ii) the opinion of Jones, Day, Reavis & Pogue to the effect that the Second Step Merger will constitute a transaction described in Section 368(a) of the Code. For purposes of the tax opinions described in Sections 7.02(d) and 7.03(d) of this Agreement, each of Parent, Newco and the Company shall provide customary representation letters substantially in the form of Exhibits E, F and G, respectively, each dated on or about the date that is two business days prior to the date the Proxy Statement is mailed to the shareholders of Parent and the Company and reissued as of the Closing Date. Each of Parent, Newco and the Company and each of their respective affiliates shall not take any action and shall not fail to take any action or suffer to exist any condition which action or failure to act or condition would prevent, or would be reasonably likely to prevent, (i) the Merger from constituting transactions described in Section 351 of the Code or (ii) the Second Step Merger from constituting a transaction described in Section 368(a) of the Code. SECTION 6.14. Reorganization and Amendment. The parties to this Agreement acknowledge and agree that in the event Parent implements the Parent Reorganization prior to the Exchange Effective Time, certain changes to the structure of the Merger and the other Transactions will be necessary in order for the Merger and the other Transactions to be consummated as contemplated hereby and for Newco and its subsidiaries to have, following the Merger Effective Time, the corporate structure as contemplated hereby, and the parties to this Agreement agree to negotiate in good faith and enter into an amendment to this Agreement to implement such necessary changes. A-45

SECTION 6.15. Common Stock Repurchases. (a) Subject to the last two sentences of this Section 6.15(a), the Company shall use commercially reasonable best efforts to purchase prior to the Closing at prevailing market prices to the extent possible shares of Company Common Stock for an aggregate consideration of $1,000,000,000, and Parent shall use commercially reasonable best efforts to purchase prior to the Closing at prevailing market prices to the extent possible shares of Parent Common Stock for an aggregate consideration of $500,000,000, which purchases shall, in each case, be in addition to all other purchases permitted by this Agreement (other than Section 6.15(b)) or contemplated in the Company Disclosure Letter or the Parent Disclosure Letter. The Company and Parent shall consult on a regular basis concerning the purchases described in the preceding sentence and cooperate in connection therewith. Neither the Company nor Parent shall purchase shares pursuant to this Section 6.15(a) if it is reasonably likely that such purchases would result in the failure of the closing conditions set forth in Sections 7.02(d) and 7.03(d) or the failure of the Merger and the other Transactions to be treated as a purchase of the Company by Parent under GAAP. (b) Prior to the Merger Effective Time, the Company shall purchase, at prevailing market prices to the extent possible, the minimum number of shares of Company Common Stock necessary in order that, after giving effect to the repurchases contemplated by Section 6.15(a), the Merger and the other Transactions are treated as a purchase of the Company by Parent under GAAP. (c) To the extent the purchases contemplated by this Section 6.15 are inconsistent with any other provision of this Agreement, the Company Disclosure Letter or the Parent Disclosure Letter, such provision shall be deemed to be amended to permit such purchases. SECTION 6.16. Parity of Compensation. At any time during the period from the Merger Effective Time until December 31, 2003 (the "Transition Period")when the Chairman of the Board of Directors, Chief Executive Officer and President of Parent as of the date of this Agreement (the "Parent Chairman") and the Chairman of the Board of Directors, Chief Executive Officer and President of the Company (the "Company Chairman") as of the date of this Agreement are Co-Chief Executive Officers of Newco, each such Co-Chief Executive Officer shall receive the same salary, bonus and other compensation (including option grants and other incentive awards and all other forms of compensation) and enjoy the same other benefits and the same employment security arrangements as the other Co-Chief Executive Officer. SECTION 6.17. Board Seats. The Parent Chairman will retire as an executive of Newco at the end of the Transition Period and shall no longer serve as chairman of the executive committee of the Newco Board, but shall continue as a member of the Newco Board. The Company Chairman shall become the sole Chief Executive Officer of Newco immediately prior to the end of the Transition Period, and at such time shall be the Chairman of the Board of Directors of Newco, if immediately prior to such time he holds the position of Co-Chief Executive Officer. The Newco Board or the nominating committee thereof, as applicable, shall nominate for election the Parent Chairman and the Company Chairman as part of management's slate of candidates at each meeting of the shareholders (if at the time of such meeting the Parent Chairman or the Company Chairman, as applicable, is a member of the Newco Board) at which members of the Newco Board shall be elected as shall be necessary in order that the Parent Chairman or the Company Chairman, as applicable, serve as a director of Newco from the end of the Transition Period until the election of directors first following December 31, 2005. ARTICLE VII Conditions Precedent SECTION 7.01. Conditions to Each Party's Obligation To Effect The Merger. The respective obligation of each party to effect the Merger is subject to the satisfaction or waiver on or prior to the Closing Date of the following conditions: (a) ShareholderApproval. The Company shall have obtained the Company Shareholder Approval, and Parent shall have obtained the Parent Shareholder Approval. A-46

(b) Listing. The shares of Newco Company Stock issuable to the Company's and Parent's respective shareholders pursuant to this Agreement and under the Company Stock Plans and Parent Stock Plans shall have been approved for listing on the NYSE, subject to official notice of issuance. (c) Statutory Approvals. The Parent Required Statutory Approvals and the Company Required Statutory Approvals shall have been obtained (including, in each case, the expiration or termination of the waiting periods (and any extensions thereof) under the HSR Act applicable to the Merger and the Transactions at or prior to the Merger Effective Time, such approvals shall have become Final Orders (as defined below) and such Final Orders shall not impose terms or conditions which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect on Newco and its prospective subsidiaries taken as a whole or which would be materially inconsistent with the agreements of the parties contained herein. A "Final Order" means action by the relevant Governmental Entity which has not been reversed, stayed, enjoined, set aside, annulled or suspended, with respect to which any waiting period prescribed by law before the transactions contemplated hereby may be consummated has expired, and as to which all conditions to the consummation of such transactions prescribed by law, regulation or order have been satisfied. (d) No Injunctions or Restraints. No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Merger shall be in effect; provided, however, that prior to asserting this condition, subject to Section 6.03, each of the parties shall have used all reasonable efforts to prevent the entry of any such injunction or other order and to appeal as promptly as possible any such injunction or other order that may be entered. (e) Form S-4. The Form S-4 shall have become effective under the Securities Act and shall not be the subject of any stop order or proceedings seeking a stop order, and Newco shall have received all state securities or "blue sky" authorizations necessary to issue Newco Common Stock pursuant to the Merger. (f) Other Consents and Approvals. The consent or approval (other than Parent Required Statutory Approvals and Company Required Statutory Approvals) of each person whose consent or approval is required in order to consummate the Merger and the other Transactions shall have been obtained, except for those consents and approvals which, if not obtained, could not reasonably be expected to have a Material Adverse Effect on Newco and its prospective subsidiaries taken as a whole or on the ability of Parent or the Company to consummate the Merger and the other Transactions. SECTION 7.02. Conditions to Obligations of Parentand Newco. The obligations of Parent and Newco to effect the Merger are further subject to the following conditions: (a) Representations and Warranties. The representations and warranties of the Company in this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on the Closing Date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct on and as of such earlier date), other than for such failures to be true and correct that, individually and in the aggregate, have not had and could not reasonably be expected to have aCompany Material Adverse Effect. Parent shall have received a certificate signed on behalf of the Company by the chief executive officer or the chief financial officer of the Company to such effect. For purposes of determining the satisfaction of this condition, the representations and warranties of the Company shall be deemed not qualified by any references therein to materiality generally or to whether or not any breach results or may result in a Company Material Adverse Effect. (b) Performance of Obligations of the Company. The Company shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date, and Parent shall have received a certificate signed on behalf of the Company by the chief executive officer and the chief financial officer of the Company to such effect. A-47

__ I (c) Letters from Company Affiliates. Parent shall have received from each person named in the letter referred to in Section 6.10(a) an executed copy of an agreement substantially in the form of Exhibit C. (d) Tax Opinion. Parent shall have received a written opinion, dated as of the Closing Date, from Cravath, Swaine & Moore, counsel to Parent, to the effect that (i) the Merger will constitute transactions described in Section 351 of the Code and (ii) the Second Step Merger will constitute a transaction described in Section 368(a) of the Code; it being understood that in rendering such opinion, such tax counsel shall be entitled to rely upon customary representations provided by the parties hereto substantially in the form of Exhibits E, F and G. SECTION 7.03. Conditions to Obligations of the Company. The obligation of the Company to effect the Merger is further subject to the following conditions: (a) Representations and Warranties. The representations and warranties of Parent and Newco in this Agreement shall be true and correct as of the date of this Agreement and on the Closing Date as though made on the Closing Date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct on and as of such earlier date), other than for such failures to be true and correct that, individually and in the aggregate, have not had and could not reasonably be expected to have a Parent Material Adverse Effect. The Company shall have received a certificate signed on behalf of Parent by the chief executive officer or the chief financial officer of Parent to such effect. For purposes of determining the satisfaction of this condition, the representations and warranties of Parent and Newco shall be deemed not qualified by any references therein to materiality generally or to whether or not any breach results or may result in a Parent Material Adverse Effect. (b) Performance of Obligations of Parentand Newco. Parent and Newco shall have performed in all material respects all obligations required to be performed by them under this Agreement at or prior to the Closing Date, and the Company shall have received a certificate signed on behalf of Parent by the chief executive officer and the chief financial officer of Parent to such effect. (c) Lettersfrom ParentAffiliates. The Company shall have received from each person named in the letter referred to in Section 6.10(b) an executed copy of an agreement substantially in the form of Exhibit D. (d) Tax Opinion. The Company shall have received a written opinion, dated as of the Closing Date, from Jones, Day, Reavis & Pogue, counsel to the Company, to the effect that the Second Step Merger will constitute a transaction described in Section 368(a) of the Code; it being understood that in rendering such opinion, such tax counsel shall be entitled to rely upon customary representations provided by the parties hereto substantially in the form of Exhibits E, F and G. (e) FirstStep Exchange. The First Step Exchange shall have been consummated. ARTICLE VHI Termination, Amendment and Waiver SECTION 8.01. Termination. This Agreement may be terminated at any time prior to the Exchange Effective Time, whether before or after receipt of the Company Shareholder Approval or the Parent Shareholder Approval: (a) by mutual written consent of Parent, Newco and the Company; (b) by either Parent or the Company: (i) if the Second Step Merger is not consummated on or before March 31, 2001 (the "Outside Date"), unless the failure to consummate the Merger is the result of a breach of this Agreement by A-48

the party seeking to terminate this Agreement; provided, however, that the passage of such period shall be tolled for any part thereof during which any party shall be subject to a nonfinal order, decree, ruling or action restraining, enjoining or otherwise prohibiting the consummation of the Merger; (ii) if any Governmental Entity issues an order, decree or ruling or takes any other action permanently enjoining, restraining or otherwise prohibiting the Merger and such order, decree, ruling or other action shall have become final and nonappealable; (iii) if any condition to the obligation of such party to consummate the Merger set forth in Section 7.02 (in the case of Parent) or 7.03 (in the case of the Company) becomes incapable of satisfaction prior to the Outside Date; provided, however, that the failure of such condition to be met is not the result of a material breach of this Agreement by the party seeking to terminate this Agreement; (iv) if, upon a vote at a duly held meeting to obtain the Company Shareholder Approval, the Company shareholder Approval is not obtained; or (v) if, upon a vote at a duly held meeting of Parent to obtain the Parent Shareholder Approval, the Parent Shareholder Approval is not obtained; (c) by Parent, if the Company breaches or fails to perform in any material respect any of its representations, warranties or covenants contained in this Agreement, which breach or failure to perform (i) would give rise to the failure of a condition set forth in Section 7.02(a) or 7.02(b), and (ii) cannot be or has not been cured within 30 days after the giving of written notice to the Company of such breach (provided that Parent is not then in breach of any representation, warranty or covenant contained in this Agreement); (d) by Parent, if (i) the Company Board or any committee thereof withdraws or modifies, or publicly proposes to withdraw or modify, in a manner adverse to Parent or Newco, its approval or recommendation of this Agreement or the Transactions or approves or recommends, or publicly proposes to approve or recommend, any Company Competing Transaction or (ii) the Company otherwise breaches, or is deemed to be in breach of, any of its covenants in Section 5.02 in any material respect; (e) by the Company, if Parent breaches or fails to perform in any material respect of any of its representations, warranties or covenants contained in this Agreement, which breach or failure to perform (i) would give rise to the failure of a condition set forth in Section 7.03(a) or 7.03(b), and (ii) cannot be or has not been cured within 30 days after the giving of written notice to Parent of such breach (provided that the Company is not then in breach of any representation, warranty or covenant in this Agreement); (f) by the Company, if prior to receipt of the Company Shareholder Approval, (i) the Company has received a proposal for a Company Competing Transaction that constitutes a Qualifying Company Proposal that was not solicited or encouraged by the Company or its Representatives and that did not otherwise result from the breach or a deemed breach of Section 5.02, (ii) the Board of Directors of the Company has determined in good faith, based upon the advice of its outside counsel that failure to take such action could reasonably be expected to constitute a breach of the fiduciary obligations of such Board of Directors under Applicable Law, that it is necessary to (A) withdraw or modify its approval or recommendation of this Agreement and the Transactions, (B) terminate this Agreement pursuant hereto and (C) enter into a Company Acquisition Agreement in connection with such Company Competing Transaction in order to comply with its fiduciary obligations under Applicable Law, (iii) the Company has notified Parent in writing of the determination described in clause (ii) above, (iv) at least ten business days following receipt by Parent of the notice referred to in clause (iii) above, and taking into account any proposal made by Parent since receipt of such notice to amend or modify the terms of the Transactions, such Qualifying Company Proposal remains a Qualifying Company Proposal and the Board of Directors of the Company has again made the determination referred to in clause (ii) above, (v) the Company is in compliance with Section 5.02, (vi) the Company has paid in advance the fee due under Section 6.07(b) to A-49

Parent, and (vii) the Board of Directors of the Company concurrently approves, and the Company concurrently enters into, a Company Acquisition Agreement providing for the implementation of such Qualifying Company Proposal; (g) by the Company, if (i) the Parent Board or any committee thereof withdraws or modifies, or publicly proposes to withdraw or modify, in a manner adverse to the Company, its approval of this Agreement or the Transactions or approves or recommends, or publicly proposes to approve or recommend, any Parent Competing Transaction or (ii) Parent otherwise breaches, or is deemed to be in breach of, any of its covenants in Section 5.03 in any material respect; or (h) by Parent, if prior to receipt of the Parent Shareholder Approval, (i) Parent has received a proposal for a Parent Competing Transaction that constitutes a Qualifying Parent Proposal that was not solicited or encouraged by Parent or its Representatives and that did not otherwise result from the breach or a deemed breach of the Section 5.03, (ii) the Board of Directors of Parent has determined in good faith, based upon the advice of its outside counsel that failure to take such action could reasonably be expected to constitute a breach of the fiduciary obligations of such Board of Directors under Applicable Law, that it is necessary to (A) withdraw or modify its approval or recommendation of this Agreement and the Transactions, (B) terminate this Agreement pursuant hereto and (C) enter into a Parent Acquisition Agreement in connection with such Parent Competing Transaction in order to comply with its fiduciary obligations under Applicable Law, (iii) Parent has notified the Company in writing of the determination described in clause (ii) above, (iv) at least ten business days following receipt by the Company of the notice referred to in clause (iii) above, and taking into account any proposal made by the Company since receipt of such notice to amend or modify the terms of the Transactions, such Qualifying Parent Proposal remains a Qualifying Parent Proposal and the Board of Directors of Parent has again made the determination referred to in clause (ii) above, (v) Parent is in compliance with Section 5.03, (vi) Parent has paid in advance the fee due under Section 6.07(c) to the Company, and (vii) the Board of Directors of Parent concurrently approves, and Parent concurrently enters into, a Parent Acquisition Agreement providing for the implementation of such Qualifying Parent Proposal. SECTION 8.02. Effect of Termination. In the event of termination of this Agreement by either the Company or Parent as provided in Section 8.01, this Agreement shall forthwith become void and have no effect, without any liability or obligation on the part of Parent, Newco or the Company, other than Section 3.14, Section 4.14, the last two sentences of Section 6.02, Section 6.07, this Section 8.02 and Article IX, which provisions shall survive such termination, and except to the extent that such termination results from the wilful breach by a party of any representation, warranty or covenant set forth in this Agreement, in which case such termination shall not relieve any party of any liability or damages resulting from its wilful breach of this Agreement (including any such case in which a fee is payable by such party pursuant to Section 6.07(b) or (c), or any expenses of the other party are reimbursed by such party pursuant to Section 6.07(d) or (e), to the extent any such liability or damage suffered by such other party exceeds such amounts payable pursuant to Section 6.07(b), (c), (d) or (e)). The Confidentiality Agreement shall, in accordance with its terms, survive termination of this Agreement. SECTION 8.03. Amendment. This Agreement may be amended by the parties at any time before or after receipt of the Company Shareholder Approval or the Parent Shareholder Approval; provided, however, that after receipt of the Company Shareholder Approval or the Parent Shareholder Approval, there shall be made no amendment that by Applicable Law requires further approval by the shareholders of the Company or Parent without the further approval of such shareholders. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties. SECTION 8.04. Extension; Waiver. At any time prior to the Merger Effective Time, the parties may (a) extend the time for the performance of any of the obligations or other. acts of the other parties, (b) waive any inaccuracies in the representations and warranties contained in this Agreement or in any document delivered pursuant to this Agreement or (c) subject to the proviso of Section 8.03, waive compliance with any A-50

of the agreements or conditions contained in this Agreement. Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of'such rights. SECTION 8.05. Procedurefor Termination, Amendment, Extension or Waiver. A termination of this Agreement pursuant to Section 8.01, an amendment of this Agreement pursuant to Section 8.03 or an extension or waiver pursuant to Section 8.04 shall, in order to be effective, require in the case of Parent, Newco or the Company, action by its Board of Directors or the duly authorized designee of its Board of Directors. ARTICLE IX General Provisions SECTION 9.01. Nonsurvival of Representations and Warranties. None of the representations and warranties in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Merger Effective Time. This Section 9.01 shall not limit any covenant or agreement of the parties which by its terms contemplates performance after the Merger Effective Time. SECTION 9.02. Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given upon receipt by the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) if to Parent or Newco, to PECO Energy Company 2301 Market Street P.O. Box 8699 Philadelphia, PA 19101-8699 Telecopy No: (215) 841-4282 Attention: General Counsel with a copy to: Cravath, Swaine & Moore 825 Eighth Avenue New York, New York 10019 Telecopy No: (212) 474-3700 Attention: Philip A. Gelston (b) if to the Company, to Unicom Corporation 10 S.

Dearborn,

37th Floor Chicago, IL 60603 Telecop y No: (312) 394-4488 Attention: General Counsel with a copy to: Jones, Day, Reavis & Pogue 77 West Walker Drive Chicago, Illinois 60001 Telecopy No: (312) 782-8585 Attention: Paul T. Ruxin Robert A. Yolles A-,51

I I SECTION 9.03. Definitions. For purposes of this Agreement: An "affiliate" of any person means another person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person. A "Material Adverse Effect" means, in respect of any person, a material adverse effect on (a) the business, assets, condition (financial or otherwise), prospects or results of operations of such person and its subsidiaries, taken as a whole or (b) the ability of such person to perform its obligations under this Agreement or on the ability of such person to consummate the Merger and the other Transactions. A "person" means any individual, firm, corporation, partnership, company, limited liability company, trust, joint venture, association, Governmental Entity or other entity. A "subsidiary" of any person means another person, an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect a majority of its Board of Directors or other governing body (or, if there are no such voting interests, more than 50% of the equity interests of which) is owned directly or indirectly by such first person. SECTION 9.04. Interpretation;DisclosureLetters. When a reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation". Any matter disclosed in any section of either the Company Disclosure Letter or the Parent Disclosure Letter shall be deemed disclosed for all purposes and all sections of the Company Disclosure Letter or Parent Disclosure Letter, as applicable to the extent that it is reasonably apparent from a reading of such disclosure item that it would qualify or apply to such other sections, and otherwise shall be deemed disclosed only for the purposes of the specific Sections of this Agreement to which such section relates. Notwithstanding the amendment and restatement of this Agreement, as between September 22, 1999 and January 7, 2000, the representations and warranties of the Company set forth in Article III and of Parent and Newco set forth in Article IV will be deemed for purposes of Section 7.02(a) and Section 7.03(a), as applicable, and otherwise to have been made as of September 22, 1999, and not as of January 7, 2000, and such amendment and restatement will not otherwise affect the other requirements in Sections 7.02(a) and Section 7.03(a). SECTION 9.05. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule or Applicable Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent possible. SECTION 9.06. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective 'Whenone or more counterparts have been signed by each of the parties and delivered to the other parties..... SECTION 9.07. Entire Agreement; No Third-PartyBeneficiaries. This Agreement, taken together with the Company Disclosure Letter, the Parent Disclosure Letter and the Confidentiality Agreement, (a) constitute the entire agreement, and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the Transactions and (b) except for the provisions of Article II and Sections 6.06, 6.16 and 6.17 are not intended to confer upon any person other than the parties any rights or remedies. A-52

SECTION 9.08. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof, except to the extent the laws of Pennsylvania or Illinois are mandatorily applicable to the Merger. SECTION 9.09. Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties, except that Newco may assign, in its sole discretion, any of or all its rights, interests and obligations under this Agreement to Parent or to any direct or indirect wholly owned subsidiary of Parent, but no such assignment shall relieve Newco of any of its obligations under this Agreement. Any purported assignment without such consent shall be void. Subject to the preceding sentences, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. SECTION 9.10. Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any New York state court or any Federal court located in the State of New York, this being in addition to any other remedy to which they are entitled at law or in equity. In addition, each of the parties hereto (a) consents to submit itself to the personal jurisdiction of any New York state court or any Federal court located in the State of New York in the event any dispute arises out of this Agreement or any Transaction, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (c) agrees that it will not bring any action relating to this Agreement or any Transaction in any court other than any New York state court or any Federal court sitting in the State of New York and (d) waives any right to trial by jury with respect to any action related to or arising out of this Agreement or any Transaction. SECTION 9.11. Newco Obligations. Parent and the Company hereby agree to take such actions as shall be necessary in order that Newco shall assume any obligation under this Agreement that by its terms is to be performed by Newco after the Closing. A-53

IN WITNESS WHEREOF, Parent, Newco and the Company have duly executed this Agreement, all as of the date first written above. PEco ENERGY COMPANY, By: /s/ CORBIN A. MCNEILL Name: Corbin A. McNeill, Jr.

Title:

Chairman of the Board, President,and Chief Executive Officer NEWHOLDCO CORPORATION, By: /s/ CORBIN A. McNEiIL Name: Corbin A. McNeill, Jr.

Title:

Chairman of the Board, President,and Chief Executive Officer UNICOM CORPORATION, By: /s/ JOHN W. ROWE Name: John W. Rowe

Title:

Chairman of the Board, President, and Chief Executive Officer A-54

EXHIBIT A ARTICLE X Governance of the Corporation During the Transition Period SECTION 10.01. Definitions. For purposes of this Article: (1) "PECO CEO" means Corbin A. McNeill, Jr. (2) "PECO Directors" means (i) those directors of the corporation designated by PECO Energy pursuant to Section 1.06(b) of the Merger Agreement and (ii) any Replacement PECO Director (as defined in Section 10.03(b) of these by-laws). (3) "PECO Energy" means PECO Energy Company, a Pennsylvania corporation and a subsidiary of the corporation. (4) "Independent Director" means. a disinterested, independent person (determined in accordance with customary standards for independent directors applicable to U.S. public companies). (5) "Merger Agreement" means the Agreement and Plan of Exchange and Merger dated as of September 22, 1999, among PECO Energy, the corporation and Unicorn. (6) "Merger Effective Time" shall have the meaning assigned to such term in the Merger Agreement. (7) "Transition Period" means the period from the Merger Effective Time until December 31, 2003. (8) "Unicom" means Unicorn Corporation, an Illinois corporation. (9) "Unicom CEO" means John W. Rowe. (10) "Unicomr Directors" means (i) those directors of the corporation designated by Unicorn pursuant to Section 1.06(b) of the Merger Agreement and (ii) any Replacement Unicorn Director (as defined in Section 10.03(b) of these by-laws). (11) "ComEd" means Commonwealth Edison Company, an Illinois corporation and a subsidiary of the corporation. SECTION 10.02. CorporateOffices. At least for the duration of the Transition Period, the corporation shall maintain (a) in Chicago, Illinois offices serving as its corporate headquarters, (b) in southeastern Pennsylvania offices serving as the headquarters of the generation and power marketing businesses of the corporation and its subsidiaries, and (c) offices in Chicago, Illinois and southeastern Pennsylvania as the headquarters of CornEd and PECO Energy, respectively. SECTION 10.03. Board of Directors. (a) Effective immediately at the Merger Effective Time and during the Transition Period, the board of directors shall consist of sixteen (16) directors. At the Merger Effective Time, 8 directors shall be PECO Directors and 8 directors shall be Unicorn Directors. The term of a class of the board of directors comprised of 6 directors shall expire at the first annual meeting of shareholders following the Merger Effective Time, a second class comprised of 5 directors shall expire at the second annual meeting of shareholders following the Merger Effective Time and a third class comprised of 5 directors shall expire at the third annual meeting of shareholders following the Merger Effective Time, and representation of PECO Directors and Unicorn Directors in each class shall be as nearly equal in numbers as possible. (b) (i) During the Transition Period the board of directors of the corporation shall consist of equal numbers of PECO Directors and Unicom Directors. A-55

L-(ii) During the Transition Period, the board of directors (subject to the fiduciary duties of the directors in the case of approval of any individual) shall take all action necessary to ensure that any vacancy of a position on the board of directors to be filled by the Board (A) that was held by an PECO Director is filled promptly by a person designated to fill such seat by a majority of the PECO Directors remaining on the board of directors (a "Replacement PECO Director") and (B) that was held by a Unicorn Director is filled promptly by a person designated to fill such seat by a majority of the Unicom Directors remaining on the board of directors (a "Replacement Unicorn Director"). (iii) With respect to each election of directors by shareholders during the Transition Period, the board of directors or the applicable committee thereof shall nominate for election (subject to the fiduciary duties of the directors in the case of approval of any individual), a PECO Director to fill any position held prior to such election by a PECO Director and a Unicorn Director to fill any position held prior to such election by a Unicorn Director. (c) During the Transition Period, the executive committee of the board of directors shall have 6 members, 2 of which will be the Co-Chief Executive Officers of the corporation (or if either Co-Chief Executive Officer ceases to serve as such, another officer of the corporation selected by the PECO Directors in the case of a replacement for the PECO CEO or by the Unicorn Directors in the case of a replacement for the Unicorn CEO), 2 of which shall be Independent Directors who are PECO Directors and 2 of which shall be Independent Directors who are Unicom Directors. For the duration of the first half of the Transition Period so long as he is a Co-Chief Executive Officer, the Unicorn CEO shall be the chairman of the executive committee of the board of directors, and as of the first day of the second half of the Transition Period, the PECO CEO, if he is a Co-Chief Executive Officer at such time, shall succeed to such position and hold it for the duration of the Transition Period. If at any time during the Transition Period either the Unicom CEO or the PECO CEO, whichever is at such time the chairman of the executive committee, is unwilling or unable to hold such office, the other shall succeed to such office for the duration of the Transition Period if he continues at such time to hold the office of Co-Chief Executive Officer or Chief Executive Officer of the corporation. (d) During the Transition Period, each other committee of the Board shall consist of equal numbers of PECO Directors and Unicom Directors and the chairmen of the committees of the board of directors (other than the executive committee) shall be PECO Directors and Unicomr Directors in as nearly equal numbers as possible. (e) During the Transition Period, the board of directors shall hold between 6 and 8 regular meetings each fiscal year, with no less than 2 of such meetings each year to be held in the Philadelphia, Pennsylvania area and no less than 2 of such meetings each year to be held in the Chicago, Illinois area. SECTION 10.04. Chairman of the Board of Directors. (a) As of the Merger Effective Time and for the duration of the first half of the Transition Period so long as he is a Co-Chief Executive Officer or Chief Executive Officer at such time, the PECO CEO shall hold the position of Chairman of the board of directors, and so long as he is a Co-Chief Executive Officer or the Chief Executive Officer at such time, the Unicom CEO shall succeed to the position of Chairman of the board of directors and hold it for the duration of the Transition Period. If at any time during the Transition Period either the PECO CEO or the Unicom CEO, whichever is at such time the Chairman of the board of directors, is unwilling or unable to hold such office, the board of directors shall elect the other to such office if he continues to hold the office of Co-Chief Executive Officer of the Corporation at such time. (b) The Chairman shall chair all meetings of the board of directors and stockholders at which he is present. SECTION 10.05. Co-ChiefExecutive Officers; President. (a) (i) As of the Merger Effective Time and for the duration of the Transition Period, each of the PECO CEO and the Unicom CEO shall hold the position of Co-Chief Executive Officers of the A-56

corporation and (ii) as of the Merger Effective Date and for the duration of the first half of the Transition Period, the Unicorn CEO shall hold the position of President of the corporation. If at any time during the Transition Period either of the Co-Chief Executive Officers is unable or unwilling to hold such office, the other Co-Chief Executive Officer, if he is either the PECO CEO or the Unicorn CEO, shall become the sole Chief Executive Officer of the corporation. The Unicorn CEO shall become the sole Chief Executive Officer immediately prior to the end of the Transition Period if immediately prior to such time he holds the position of Co-Chief Executive Officer. (b) The corporation's generation and wholesale marketing and trading businesses shall report to the PECO CEO in his capacity as a Co-Chief Executive Officer, and the corporation's transmission and distribution and unregulated ventures businesses shall report to the Unicom CEO in his capacity as a Co-Chief Executive Officer. The corporation's financial, legal, human resources and other staff functions shall report to the office of the Co-Chief Executive Officers. (c) The Co-Chief Executive Officers shall each maintain offices in both southeastern Pennsylvania and Chicago, Illinois. SECTION 10.06. Management Changes. (a) Until the expiration of the Transition Period, so long as either the PECO CEO or the Unicorn CEO is a Co-Chief Executive Officer or the Chief Executive Officer of the corporation, (i) the election of any other person to the position of Chairman of the board of directors, chairman of the executive committee of the board of directors, Co-Chief Executive Officer or Chief Executive Officer or, as to the first half of the Transition Period, President or (ii) the removal, replacement or demotion of the PECO CEO or the Unicorn CEO from one or more of such positions, in each case, shall require the affirmative vote of at least two-thirds of the members of the board of directors(except as expressly provided in this Article X). (b) Until the expiration of the Transition Period, none of the senior officers of the corporation specified in Exhibit D of the Merger Agreement shall be removed, replaced or demoted without either (i) the consent of both Co-Chief Executive Officers or (ii) the affirmative vote of two-thirds of the members of the Newco Board. SECTION 10.07. Amendment. Until the end of the Transition Period (a) the provisions of this Article X may not be amended, altered, repealed or waived in any respect, and the board of directors or the corporation shall not otherwise take any action or fail to take any action which would have the effect of eliminating, limiting, restricting, avoiding or otherwise modifying the effect of, or waiving compliance with the provisions of this Article X (e.g., by creating a holding company structure if the certificate of incorporation, by-laws or similar document of such holding company does not contain equivalent provisions), without the affirmative vote of at least two-thirds of the directors or (b) in the case of any amendment proposed by shareholders without such vote of directors, the affirmative vote of holders of shares representing at least two-thirds of the votes eligible to be cast in a general election of directors. SECTION 10.08. Successors. For the duration of the Transition Period, the provisions of this Article shall be applicable to (i) any successor to the corporation as the result of a merger, consolidation or other business combination, whether or not the corporation is the surviving company in such transaction, or otherwise and (ii) any corporation or other entity with respect to which the corporation or its successor is or becomes a direct or indirect subsidiary, and, in each case, the board of directors shall not permit the corporation to be a party to any transaction which would not comply with the foregoing without the affirmative vote of at least two-thirds of the directors. SECTION 10.09. Effectiveness of this Article X. The provisions of this Article X shall become null and void and be of no further effect after the Transition Period. A-57

EXHIBIT B Senior Officers of Newco Co-Chief Executive Officer: Corbin A. McNeill, Jr. Co-Chief Executive Officer: John W. Rowe Chief Financial Officer: Michael J. Egan Chief Transition/ Integration Officer: Michael J. Egan Senior Vice President, Finance: Ruth Ann M. Gillis General Counsel: Pamela B. Strobel Chief Nuclear Officer: Oliver D. Kingsley, Jr. Nuclear Operations President: Gerald R. Rainey PECO Distribution President: Kenneth G. Lawrence Commonwealth Edison Distribution President: Carl J. Croskey Unregulated Retail/ New Business President: Paul A. Elbert Senior Vice President, Human Resources: S. Gary Snodgrass A-58

EXHIBIT C PECO Energy Company. P.O. Box 8699 2301 Market Street Philadelphia, PA 19101 Form of Company Affiliate Letter

Dear Sirs:

The undersigned refers to the Amended and Restated Agreement and Plan of Exchange and Merger (the "Merger Agreement") dated as of September 22, 1999, as amended and restated as of January 7, 2000, among PECO Energy Company, a Pennsylvania corporation, Newholdco Corporation, a Pennsylvania corporation, and Unicom Corporation, an Illinois corporation. Capitalized terms used but not defined in this letter have the meanings give such terms in the Merger Agreement. The undersigned, a holder of shares of Company Common Stock, is entitled to receive in connection with the Merger shares of Newco Common Stock. The undersigned acknowledges that the undersigned may be deemed an "affiliate" of the Company within the meaning of Rule 145 ("Rule 145") promulgated under the Securities Act, although nothing contained herein should be construed as an admission of such fact. If in fact the undersigned were an affiliate under the Securities Act, the undersigned's ability to sell, assign or transfer the Newco Common Stock received by the undersigned in exchange for any shares of Company Common Stock pursuant to the Merger may be restricted unless such transaction is registered under the Securities Act or an exemption from such registration is available. The undersigned (i) understands that such exemptions are limited and that Newco is not under any obligation to effect any such registration and (ii) has obtained advice of counsel as to the nature and conditions of such exemptions, including information with respect to the applicability to the sale of such securities of Rules 144 and 145(d) promulgated under the Securities Act. The undersigned hereby represents to and covenants with Parent and Newco that the undersigned will not sell, assign or transfer any of the Newco Common Stock received by the undersigned in exchange for shares of Company Common Stock pursuant to the Merger except (i) pursuant to an effective registration statement under the Securities Act or (ii) in a transaction that, in the opinion of counsel reasonably satisfactory to Newco or as described in a "no-action" or interpretive letter from the Staff of the SEC, is not required to be registered under the Securities Act. In the event of a sale or other disposition by the undersigned pursuant to Rule 145, of Newco Common Stock received by the undersigned in the Merger, the undersigned will supply Newco with evidence of compliance with such Rule, in the form of a letter in the form of Annex I hereto and the opinion of counsel or no-action letter referred to above. The undersigned understands that Newco may instruct its transfer agent to withhold the transfer of any Parent securities disposed of by the undersigned, but that upon receipt of such evidence of compliance the transfer agent shall effectuate the transfer of the Newco Common Stock sold as indicated in the letter. The undersigned acknowledges and agrees that (i) the Newco Common Stock issued to the undersigned will all be in certificated form and (ii) appropriate legends will be placed on certificates representing Newco Common Stock received by the undersigned in the Merger or held by a transferee thereof, which legends will be removed by delivery of substitute certificates upon receipt of an opinion in form and substance reasonably satisfactory to Newco from counsel reasonably satisfactory to Newco to the effect that such legends are no longer required for purposes of the Securities Act. A-59

The undersigned acknowledges that (i) the undersigned has carefully read this letter and understands the requirements hereof and the limitations imposed upon the distribution, sale, transfer or other disposition of Newco Common Stock and (ii) the receipt by Parent and Newco of this letter is an inducement and a condition to Parent's and Newco's respective obligations to consummate the Merger. Very truly yours, Dated: A-60

ANNEX I TO EXHIBIT C Newholdco Corporation 37th Floor, 10 South Dearborn Street Post Office Box A-3005 Chicago, IL 60690-3005 On , the undersigned sold the securities of Newhqldco Corporation ("Newco") described below in the space provided for that purpose (the "Securities"). The Securities were received by the undersigned in connection with the merger of Unicorn Corporation with and into Newco. Based upon the most recent report or statement filed by Parent with the Securities and Exchange Commission, the Securities sold by the undersigned were within the prescribed limitations set forth in Rule 144(e) promulgated. under the Securities Act of 1933, as amended (the "Securities Act"). The undersigned hereby represents that the Securities were sold in "brokers' transactions" within the meaning of Section 4(4) of the Securities Act or in transactions directly with a "market maker" as that term is defined in Section 3(a)(38) of the Securities Exchange Act of 1934, as amended. The undersigned further represents that the undersigned has not solicited or arranged for the solicitation of orders to buy the Securities, and that the undersigned has not made any payment in connection with the offer or sale of the Securities to any person other than to the broker who executed. the order in respect of such sale. Very truly yours, Dated: [Space to be provided for description of securities.] A-61

EXHIBIT D Unicorn Corporation 37th Floor 10 South Dearborn Street Post Office Box A-3005 Chicago, IL 60690-3005 Form of Parent Affiliate Letter

Dear Sirs:

The undersigned refers to the Amended and Restated Agreement and Plan of Exchange and Merger (the "Merger Agreement") dated as of September: 22, 1999, as amended and restated as of January 7, 2000, among PECO Energy Company, a Pennsylvania corporation, Newholdco Corporation, a Pennsylvania corporation, and Unicom Corporation, an Illinois corporation. Capitalized terms used but not defined in this letter have the meanings give such terms in the Merger Agreement. The undersigned,' a holder of shares of Parent Common Stock, is entitled to receive in connection with the Merger shares of Newco Common Stock. The undersigned acknowledges that the undersigned may be deemed an "affiliate" of Parent withinthe meaning of Rule 145 ("Rule,145") promulgated under the Securities Act, although nothing contained herein should be construed as an admission of such fact. If in fact the undersigned were an affiliate under the Securities Act, the undersigned's ability to sell, assign or transfer the Newco Common Stock received by the undersigned in exchange for any shares of Parent Common Stock pursuant to the Merger may be restricted unless such transaction is registered under the Securities Act or an exemption from such registration is available. The undersigned (i) understands that such exemptions are limited and that Newco is not under any obligation to effect any such registration and (ii) has obtained advice of counsel as to the nature and conditions of such exemptions, including information with respect to the applicability to the sale of such securities of Rules 144 and 145(d) promulgated under the Securities Act. The undersigned hereby represents to and covenants with the Company and Newco that the undersigned will not sell, assign or transfer any of the Newco Common Stock received by the undersigned in exchange for shares of Parent Common Stock pursuant to the Merger except (i) pursuant to an effective registration statement under the Securities Act or (ii) in a transaction that, in the opinion of counsel reasonably satisfactory to Newco or as described in a "no-action" or interpretive letter from the Staff of the SEC, is not required to be registered under the Securities Act. In the event of a sale or other disposition by the undersigned pursuant to Rule 145, of Newco Common Stock received by the undersigned in the Merger, the undersigned will supply Newco with evidence of compliance with such Rule, in the form of a letter in the form of Annex I hereto and the opinion of counsel or no-action letter referred to above. The undersigned understands that Newco may instruct its transfer agent to withhold the transfer of any Parent securities disposed of by the undersigned, but that upon receipt of such evidence of compliance the transfer agent shall effectuate the transfer of the Newco Common Stock sold as indicated in the letter. The undersigned acknowledges and agrees that (i) the Newco Common Stock issued to the undersigned will all be in certificated form and (ii) appropriate legends will be placed on certificates representing Newco Common Stock received by the undersigned in the Merger or held by a transferee thereof, which legends will be removed by delivery of substitute certificates upon receipt of an opinion in form and substance reasonably satisfactory to Newco from counsel reasonably satisfactory to Newco to the effect that such legends are no longer required for purposes of the Securities Act. A-62

The undersigned acknowledges that (i) the undersigned has carefully read this letter and understands the requirements hereof and the limitations imposed upon the distribution, sale, transfer or other disposition of Parent Common Stock and (ii) the receipt by the Company and Newco of this letter is an inducement and a condition to Company's obligations to consummate the Merger. Very truly yours, Dated: A-63

ANNEX I TO EXHIBIT D Newholdco Corporation 37th Floor, 10 South Dearborn Street Post Office Box A-3005 Chicago, IL 60690-3005 On , the undersigned sold the securities of Newholdco Corporation ("Newco") described below in the space provided for that purpose (the "Securities"). The Securities were received by the undersigned in connection with the mandatory share exchange between PECO Energy Company and Newco. Based upon the most recent report or statement filed by Parent with the Securities and Exchange Commission, the Securities sold by the undersigned were within the prescribed limitations set forth in Rule 144(e) promulgated under the Securities Act of 1933, as amended (the "Securities Act"). The undersigned hereby represents that the Securities were sold in "brokers' transactions" within the meaning of Section 4(4) of the Securities Act or in transactions directly with a "market maker" as that term is defined in Section 3(a)(38) of the Securities Exchange Act of 1934, as amended. The undersigned further represents that the undersigned has not solicited or arranged for the solicitation of orders to buy the Securities, and that the undersigned has not made any payment in connection with the offer or sale of the Securities to any person other than to the broker who executed the order in respect of such sale. Very truly yours, Dated: [Space to be provided for description of securities.] A-64

EXHIBIT E [Letterhead of Parent] [Date] Cravath, Swaine & Moore 825 Eighth Avenue New York, New York 10019 Jones, Day, Reavis & Pogue 77 West Walker Drive Chicago, Illinois 60001 Ladies and Gentlemen: In connection with the opinions to be delivered pursuant to Sections 7.02(d) and 7.03(d) of the Amended and Restated Agreement and Plan of Exchange and Merger (the "Exchange and Merger Agreement") dated as of September 22, 1999, as amended and restated as of January 7, 2000, among PECO Energy Company, a Pennsylvania corporation ("Parent"), Newholdco Corporation, a Pennsylvania corporation and a wholly owned subsidiary of Parent ("Newco") and Unicom Corporation, an Illinois corporation (the "Company"), and in connection with the filing with the Securities and Exchange Commission (the "SEC") of the registration statement on Form S-4 (the "Registration Statement"), which includes the proxy statement/prospectus of Parent and the Company, each as amended and supplemented through the date hereof, the undersigned certifies and represents on behalf of Parent and as to Parent, after due inquiry and investigation, as follows (any capitalized term used but not defined herein having the meaning given to such term in the Exchange and Merger Agreement):

1. The Merger will be consummated in accordance with the Exchange and Merger Agreement and as described in the Registration Statement. The facts relating to the Merger as described in the Registration Statement and the documents referenced in the Registration Statement are, insofar as such facts relate to Parent, true, correct and complete in all material respects.

2. The formula set forth in the Exchange and Merger Agreement pursuant to which each issued and outstanding share of common stock, no par value, of Parent (the "Parent Common Stock") will be converted into common shares, no par value, of Newco (the "Newco Common Stock") is the result of arm's length bargaining. The aggregate fair market value of the Newco Common Stock to be received by each holder of Parent Common Stock in the First Step Exchange will be approximately equal to the fair market value of the Parent Common Stock surrendered in exchange therefor.

3. Parent has not made and does not have any present plan or intention to make any distributions to holders of Parent Common Stock (other than dividends in the ordinary course of business) prior to, in contemplation of, or otherwise in connection with, the Merger.

4. Newco has not acquired, nor, except as a result of the First Step Exchange will it acquire, nor has it owned in the past five years, any Parent Common Stock.

5. Parent, Newco and the holders of Parent Common Stock will each pay their respective expenses, if any, incurred in connection with the First Step Exchange. Parent has not agreed to assume, nor will it directly or indirectly assume, any expense or other liability, whether fixed or contingent, of any holder of Parent Common Stock. Parent has not entered into any arrangement pursuant to which Newco has agreed to assume, directly or indirectly, any expense or other liability, whether fixed or contingent, incurred or to be incurred by Parent or any holder of Parent Common Stock in connection with or as part of the First Step Exchange or any related transactions, nor will any of the Parent Common Stock that is acquired by Newco in connection with the First Step Exchange be subject to any liabilities.

A-65

6. Parent is not an investment company as defined in Section 368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code of 1986, as amended (the "Code"), Section 351(e)(1) of the Code or Treasury Regulation Section 1.351-1(c)(1)(ii).

7. Parent will not take, and, to the best knowledge of the management of Parent there is no present plan or intention of any holders of Parent Common Stock to take, any position on any Federal, state or local income or franchise tax return, or take any other tax reporting position, that is inconsistent (i) with the treatment of the Merger as transactions described in Section 351 of the Code or (ii) with the treatment of the Second Step Merger as a reorganization within the meaning of Section 368(a) of the Code, in each case unless otherwise required by a "detenrination" (as defined in Section 1313(a)(1) of the Code) or by applicable state or local tax law (and then only to the extent required by such applicable state or local tax law).

8. None of the compensation received by any stockholder-employee of Parent in respect of periods ending on or prior to the Exchange Effective Time represents separate consideration for any of his or her Parent Common Stock. None of the Newco Common Stock that will be received by any stockholder employee of Parent in the Merger represents separately bargained for consideration which is allocable to any employment agreement or arrangement. The compensation paid to any stockholder-employees will be for services actually rendered and will be determined by bargaining at arm's-length.

9. There is no intercorporate indebtedness existing between Newco and Parent.

10. Parent is not under the jurisdiction of a court in a Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the Code.

11. On the date of the First Step Exchange, the fair market value of the assets of Parent will exceed the sum of its liabilities, plus the amount of liabilities, if any, to which such assets are subject.

12. To the best knowledge of the management of Parent, there is no present plan or intention on the part of the, holders of Parent Common Stock to sell, exchange or otherwise dispose of, or to enter into any contract or other arrangement with respect to, any interest in the shares of Newco Common Stock received in the First Step Exchange in exchange for such Parent Common Stock such that the former holders of Company Common Stock and the former holders of Parent Common Stock, in the aggregate, would not own (i) Newco Common Stock having at least 80% of the total combined voting power of all classes of Newco stock entitled to vote and (ii) at least 80% of the total number of shares of each other class of Newco Stock.

13. None of the holders of Parent Common Stock will retain any rights in the Parent Common Stock transferred to Newco pursuant to the First Step Exchange.

14. Newco will not receive any accounts receivable in the First Step Exchange.

15. To the best knowledge of the management of Parent and taking into account any issuance of additional shares of Newco Common Stock, any issuance of Newco Common Stock for services, the exercise: of any Newco stock rights, options, warrants or subscriptions, any public offerings of Newco stock, and the sale, exchange, transfer by gift or other disposition of any Newco Common Stock received by holders of Parent Common Stock in the Merger, the holders of Parent Common Stock and Company Common Stock will collectively be in "control" of Newco immediately after the Merger. For purposes of this representation letter, "control" shall mean the ownership of (i) stock possessing at least 80% of the total combined voting power of all classes of Newco stock entitled to vote and (ii) at least 80% of the total number of shares of each other class of Newco stock.

16. The Exchange and Merger Agreement, the Registration Statement and the other documents described in the Registration Statement represent the entire understanding of Parent with respect to the Merger and there are no other written or oral agreements regarding the Merger.

A-66

17. The Merger is being undertaken for purposes of enhancing the business of Parent and for other good and valid business purposes of Parent as described in the proxy statement/prospectus of Parent and the Company included in the Registration Statement.

18. The undersigned is authorized to make all the representations set forth herein on behalf of Parent.

The undersigned acknowledges that (i) the opinions to be delivered pursuant to Sections 7.02(d) and 7.03(d) of the Exchange and Merger Agreement will be based on the accuracy of the representations set forth herein and on the accuracy of the representations and warranties and the satisfaction of the covenants and obligations contained in the Exchange and Merger Agreement and the various other documents related thereto, and (ii) such opinions will be subject to certain limitations and qualifications including that they may not be relied upon if any such representations or warranties are not accurate or if any such covenants or obligations are not satisfied in all material respects. The undersigned acknowledges that such opinions will not address any tax consequences of the Merger or any action taken in connection therewith except as expressly set forth in such opinions. Very truly yours, PECO ENERGY COMPANY, By: Name: Corbin A. McNeill, Jr.

Title:

Chairman,of the Board, President,and Chief Executive Officer A-67

EXHIBIT F [Letterhead of Newco] [Date] Cravath, Swaine & Moore 825 Eighth Avenue New York, New York 10019 Jones, Day, Reavis & Pogue 77 West Walker Drive Chicago, Illinois 60001 Ladies and Gentlemen: In connection with the opinions to be delivered pursuant to Sections 7.02(d) and 7.03(d) of the Amended and Restated Agreement and Plan of Exchange and Merger (the "Exchange and Merger Agreement") dated as of September 22, 1999, as amended and restated as of January 7, 2000, among PECO Energy Company, a Pennsylvania corporation ("Parent"), Newholdco Corporation, a Pennsylvania corporation and a wholly owned subsidiary of Parent ("Newco") and Unicorn Corporation, an Illinois corporation (the "Company"), and in connection with the filing with the Securities and Exchange Commission (the "SEC") of the registration statement on Form S-4 (the "Registration Statement"), which includes the proxy statement/prospectus of Parent and the Company, each as amended and supplemented through the date hereof, the undersigned certifies and represents on behalf of Newco and as to Newco, after due inquiry and investigation, as follows (any capitalized term used but not defined herein having the meaning given to such term in the Exchange and Merger Agreement):

1. The Merger will be consummated in accordance with the Exchange and Merger Agreement and as described in the Registration Statement. The facts relating to the Merger as described in the Registration Statement and the documents referenced in the Registration Statement are, insofar as such facts relate to Newco, true, correct and complete in all material respects.

2. The formulae set forth in the Exchange and Merger Agreement pursuant to which each issued and outstanding share of common stock, no par value, of Parent (the "Parent Common Stock") will be converted into common shares, no par value, of Newco (the "Newco Common Stock") and each issued and outstanding share of common stock, no par value, of the Company (the "Company Common Stock")

will be converted into Newco Common Stock and cash are the result of arm's length bargaining. The aggregate fair market value of the Newco Common Stock to be received by holders of Parent Common Stock in the Merger will be approximately equal to the fair market value of the Parent Common Stock surrendered in exchange therefor. The aggregate fair market value of the Newco Common Stock and cash to be received by holders of Company Common Stock in the Merger will be approximately equal to the fair market value of the Company Common Stock surrendered in exchange therefor.

3. Cash payments, if any, to be made to holders of Company Common Stock in lieu of fractional shares of Newco Common Stock that would otherwise be issued to such holders in the Second Step Merger will be made for the purpose of saving Newco the expense and inconvenience of issuing and transferring fractional shares of Newco Common Stock, and do not represent separately bargained for consideration. The total cash consideration that will be paid in the Second Step Merger to holders of Company Common Stock in lieu of fractional shares of Newco Common Stock is not expected to exceed one percent of the total consideration that will be issued in the Second Step Merger to such holders in exchange for their shares of Company Common Stock.

4. (i) Newco has no present plan or intention, following the Merger, to reacquire, or to cause any corporation that is related to Newco to acquire, directly or indirectly, any Newco Common Stock issued in A-68

the Merger, except for repurchases of Newco Common Stock by Newco in connection with [describe specific parameters of any repurchase program to be adopted by Newco]. No corporation that is related to Newco has a plan or intention to purchase any of the Newco Common Stock issued in the Merger. (ii) For purposes of this representation letter, a corporation shall be treated as related to Newco if such corporation is related to Newco within the meaning of Treasury Regulation Section 1.368-1(e)(3).

5. Newco has not acquired, nor, except as a result of the First Step Exchange will it acquire, nor has it owned in the past five years, any Parent Common Stock. Newco has not acquired, nor, except as a result of the Second Step Merger will it acquire, nor has it owned in the past five years, any Company Common Stock.

6. Newco has.no present plan or intention to make any distributions after the Merger to holders of Newco Common, Stock (other than dividends made in the ordinary course of business).

7. At the Merger Effective Time, the value of the Newco Common Stock to be issued to holders of Company Common Stock in the Second Step Merger will represent at least 50% of the value of the total consideration to be issued to such holders in the Second Step Merger in exchange for their shares of Company Common Stock. Further, no liabilities of Parent or any of the holders of Parent Common Stock and no liabilities of any of the holders of Company Common Stock will be assumed by Newco, nor will any of the Parent Common Stock or Company Common Stock acquired by Newco in connection with the Merger be subject to any liabilities.

8. Parent, Newco, the Company and holders of Parent Common Stock and Company Common Stock will each pay their respective expenses, if any, incurred in connection with the Merger. Newco has not paid, directly or indirectly, nor has it agreed to assume any expense or other liability, whether fixed or contingent, incurred or to be incurred by Parent, any holder of Parent Common-Stock or any holder of Company Common Stock in connection with or as part of the Merger or any related transactions.

9. Following the Second Step Merger, Newco or Newco's "qualified group" of corporations (as defined in Treasury Regulation Section 1.368-1(d)(4)(ii)) will continue the "historic business" of the Company or use a significant portion of the Company's "historic business assets" in a business (as such terms are defined in Treasury Regulation Section 1.368-1(d)). Following the First Step Exchange, Newco will cause Parent to continue its historic business or to use a significant portion of its historic business assets in a trade or business.

10. Newco is not an investment company as defined in Section 368(a)(2)(F)(iii) and (iv) of the Code, Section 351(e)(1) of the Code or Treasury Regulation Section 1.351-1(c)(1)(ii).

11. Newco will not take any position on any Federal, state or local income or franchise tax return, or take any other tax reporting position, that is inconsistent (i) with the treatment of the Merger as transactions described in Section 351 of the Code or (ii) with the treatment of the Second Step Merger as a reorganization within the meaning of Section 368(a) of the Code, in each case unless otherwise required by a "determination" (as defined in Section 1313(a)(1) of the Code) or by applicable state or local tax law (and then only to the extent required by such applicable state or local tax -law).

12. None of the compensation received by any stockholder-employee of Parent in respect of periods ending on or prior to the Exchange Effective Time represents separate consideration for any of his or her Parent Common Stock. None of the compensation received by any stockholder-employee of the Company in respect of periods ending on or prior to the Merger Effective Time represents separate consideration for any of his or her Company Common Stock. None of the Newco Common Stock that will be received by any stockholder-employee of Parent or the Company in the Merger represents separately bargained for consideration which is allocable to any employment agreement or arrangement. The compensation paid to any stockholder-employees will be for services actually rendered and will be determined by bargaining at arm's-length.

A-69

13. There is no intercorporate indebtedness existing between (i) Newco and Parent or (ii) Newco (or any of its subsidiaries) and the Company (or any of its subsidiaries).

14. Newco is not under the jurisdiction of a court in a Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the Code.

15. To the best knowledge of the management of Newco and taking into account any issuance of additional shares of Newco Common Stock, any issuance of Newco Common Stock for services, the exercise of any Newco stock rights, options, warrants or subscriptions, any public offerings of Newco stock, and the sale, exchange, transfer by gift or other disposition of any Newco Common Stock received in the Merger, the holders of Parent Common Stock and Company Common Stock will collectively be in "control" of Newco immediately after the Merger. For purposes of this representation letter, "control" shall mean the ownership of (i) stock possessing at least 80% of the total combined voting power of all classes of Newco stock entitled to vote and (ii) at least 80% of the total number- of shares of each other class of Newco stock.

16. Newco has no present plan or intention to, or to cause any of its affiliates to, (i) liquidate Newco or Parent, (ii) merge (other than in connection with the Second Step Merger), liquidate or consolidate Newco or Parent with or into any other entity (including, without limitation, any affiliate), (iii) sell, transfer, distribute or otherwise dispose of the Parent Common Stock or interests in any of its material affiliates or (iv), sell, transfer, distribute or otherwise dispose of any of the material assets of Parent, the Company or their affiliates acquired in the Merger (other than in the ordinary course of business or transfers described in Section 368(a)(2)(C) of the Code or Treasury Regulation Section 1.368-2(k) that also qualify as transactions described in Section 351 of the Code).

17. The Newco Common Stock issued in the Merger will constitute all of Newco's outstanding stock immediately after the Merger. Except as specifically set forth in the Exchange and Merger Agreement, Newco will not issue any Newco Common Stock in connection with the Merger in consideration for services rendered to or for the benefit of Newco or any of its affiliates, or in consideration for the transfer of any property other than Parent Common Stock or Company assets.

18. The Exchange and Merger Agreement, the Registration Statement and the other documents described in the Registration Statement represent the entire understanding of Newco with respect'to the Merger and there are no other written or oral agreements regarding the Merger.'

19. The Merger is being undertaken for purposes of enhancing the business of Newco and for other good and valid business purposes of Newco as described in the proxy statement/prospectus of Parent and the Company included in the Registration Statement.

20. Newco is not a personal service corporation within the meaning of Section 269A of the Code.

21. The undersigned is authorized to make all the representations set forth herein on behalf of Newco.

The undersigned acknowledges that (i) the opinions to be delivered pursuant to Sections 7.02(d) and 7.03(d) of the Exchange and Merger Agreement will be based on the accuracy of the representations set forth herein and on the accuracy of the representations and warranties and the satisfaction of the covenants and obligations contained in the Exchange and Merger Agreement and the various other documents related thereto, and (ii) such opinions will be subject to certain limitations and qualifications including that they may not be relied upon if any such representations or warranties are not accurate or if any such covenants or obligations are not satisfied in all material respects. A-70

The undersigned acknowledges that such opinions will not address any tax consequences of the Merger or any action taken in connection therewith except as expressly set forth in such opinions. Very truly yours, NEWHOLDCO CORPORATION, By: Name: Corbin A. McNeill

Title:

Chairmanof the Board, President,and Chief Executive Officer A-71

EXHIBIT G [Letterhead of the Company] [Date] Jones, Day, Reavis & Pogue 77 West Walker Drive Chicago, Illinois 60001 Cravath, Swaine & Moore 825 Eighth Avenue New York, New York 10019 Ladies and Gentlemen: In connection with the opinions to be delivered pursuant to Sections 7.02(d) and 7.03(d) of the Amended and Restated Agreement and Plan of Exchange and Merger (the "Exchange and Merger Agreement") dated as of September 22, 1999, as amended and restated as of January 7, 2000, among PECO Energy Company, a Pennsylvania corporation ("Parent"), Newholdco Corporation, a Pennsylvania corporation and a wholly owned subsidiary of Parent ("Newco") and Unicorn Corporation, an Illinois corporation (the "Company"), and in connection with the filing with the Securities and Exchange Commission (the "SEC") of the registration statement on Form S-4 (the "Registration Statement"), which includes the proxy statement/prospectus of Parent and the Company, each as amended and supplemented through the date hereof, the undersigned certifies and represents on behalf of the Company and as to the Company, after due inquiry and investigation, as follows (any capitalized term used but not defined herein having the meaning given to such term in the Exchange and Merger Agreement):

1. The Merger will be consummated in accordance with the Exchange and Merger Agreement and as described in the Registration Statement. The facts relating to the Merger as described in the Registration Statement and the documents referenced in the Registration Statement are, insofar as such facts relate to the Company, true, correct and complete in all material respects.

2. The formula set forth in the Exchange and Merger Agreement pursuant to which each issued and outstanding share of common stock, no par value, of the Company (the "Company Common Stock") will be converted into common shares, no par value, of Newco (the "Newco Common Stock") and cash is the result of arm's length bargaining. The aggregate fair market value of the Newco Common Stock and cash to be received by each holder of Company Common Stock in the Second Step Merger will be approximately equal to the fair market value of the Company Common Stock surrendered in exchange therefor.

3. Cash payments, if any, to be made to holders of Company Common Stock in lieu of fractional shares of Newco Common Stock that would otherwise be issued to such holders in the Second Step Merger will be made for the purpose of saving Newco the expense and inconvenience of issuing and transferring fractional shares of Newco Common Stock, and do not represent separately bargained for consideration. The total cash consideration that will be paid in the Second Step Merger to holders of Company Common Stock in lieu of fractional shares of Newco Common Stock is not expected to exceed one percent of the total consideration that will be issued in the Second Step Merger to such holders in exchange for their shares of Company Common Stock.

4. (i) Except to the extent specifically contemplated under the Exchange and Merger Agreement, neither the Company nor any corporation related to the Company has acquired or has any present plan or intention to acquire, directly or indirectly, any Company Common Stock in contemplation of the Merger, or otherwise as part of a plan of which the Merger is a part.

(ii) For purposes of this representation letter, a corporation shall be treated as related to the Company if such corporation is related to the Company within the meaning of Treasury Regulation Section 1.368 1(e)(3) (determined without regard to Treasury Regulation Section 1.368-1(e)(3)(i)(A)). A-72

5. The Company has not made and does not have any present plan' or intention to make any distributions (other than dividends made in the ordinary course of business) to holders of Company Common Stock prior to, in contemplation of, or otherwise in connection with, the Merger.

6. Newco, the Company and holders of Company Common, Stock will each pay their respective expenses, if any, incurred in connection with the Second Step Merger. The Company has not agreed to assume, nor will it directly or indirectly assume, any expense or other liability, whether fixed or contingent, of any holder of Company Common Stock. Further, no liabilities of any of the holders of Company Common Stock will be assumed by Newco, nor will any of the Company Common Stock acquired by Newco in connection with the Merger be subject to any liabilities.

7. Any liabilities of the Company that will be assumed by Newco pursuant to the Merger, and any liabilities to which the assets of the Company that will be transferred to Newco pursuant to the Merger are subject, were incurred in the ordinary course of business and are associated with the assets of the Company.

8. At the Merger Effective Time, the value of the Newco Common Stock issued to the holders of Company Common Stock in the Second Step Merger will represent at least 50% of the value of the total consideration issued to such holders in the Second Step Merger in exchange for their shares of Company Common Stock.

9. The Company is not an investment company as defined in Section 368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code of 1986, as amended (the "Code"), Section 351(e)(1) of the Code or Treasury Regulation Section 1.351-1(c)(1)(ii).

10. The Company will not take, and to the best knowledge of the management of the Company there is no present plan or intention by holders of Company Common Stock to take, any position on any Federal, state or local income or franchise tax return, or to take any other tax reporting position, that is inconsistent (i) with the treatment of the Merger as transactions described in Section 351 of the Code or (ii) with the treatment of the Second Step Merger as a reorganization within the meaning of Section 368(a) of the Code, in each case unless otherwise required by a "determination" (as defined in Section 1313(a)(1) of the Code) or by applicable state or local tax law (and then only to the extent required by such applicable state or local tax law).

11.. None Of the compensation received by any stockholder-employee of the Company in respect of periods ending on or prior to the Merger Effective Time represents separate consideration for any of his or her Company Common Stock. None of the Newco Common Stock that will be received by any stockholder-employee of the Company in the Merger represents separately bargained for consideration which is allocable to any employment agreement or arrangement. The compensation paid to any stockholder-employees will be for services actually rendered and will be determined by bargaining at arm's-length.

12. There is no intercorporate indebtedness existing between Newco (or any of its subsidiaries, including Parent) and the Company (or any of its subsidiaries).

13. The Company is not under the jurisdiction of a court in a Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the Code.

14. No assets of the Company have been sold, transferred or otherwise disposed of which would prevent Newco or Newco's "qualified group" of corporations (as defined in Treasury Regulation Section 1.368-1(d)(4)(ii)) from continuing the "historic business" of the Company or from using a significant portion of the "historic business assets" of the Company in a business following the Merger (as such terms are defined in Treasury Regulation Section 1.368-1(d)).

15. At the Merger Effective Time, the fair market value of the assets of the Company transferred to Newco pursuant to the Second Step Merger will exceed the sum of its liabilities assumed by Newco pursuant to the Second Step Merger, plus the amount of liabilities, if any, to which such assets are subject.

A-73

16. To the best knowledge of the management of the Company, there is no present plan or intention on the part of the holders of Company Common Stock to sell, exchange or otherwise dispose of, or to enter into any contract or other arrangement with respect to, any interest in the shares of Newco Common Stock received in the Second Step Merger in exchange for such Company Common Stock such that the former holders of Company Common Stock and the former holders of Parent Common Stock, in the aggregate, would not own (i) Newco Common Stock having at least 80% of the total combined voting power of all classes of Newco stock entitled to vote and (ii) at least 80% of the total number of shares of each other class of Newco Stock.

17. The Company will not retain any rights in the Company assets transferred to Newco pursuant to the Second Step Merger.

18. None of the stock of any Company Subsidiary being transferred in the Second Step Merger is Section 306 stock within the meaning of Section 306(c) of the Code.

19. Neither the Company nor any Company Subsidiary has been a "distributing corporation" or a "controlled corporation" in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code (i) at any time during the two-year period prior to the date of the Exchange and Merger Agreement, (ii) at any time during the period commencing on the date of the Exchange and Merger Agreement and ending on the date hereof or (iii) which could otherwise constitute part of a "plan" or "series of related transactions" (within the meaning of Section 355(e) of the Code) in conjunction with and including the Merger.

20. To the best knowledge of the management of the Company and taking into account any issuance of additional shares of Newco Common Stock, any issuance of Newco Common Stock for services, the exercise of any Newco stock rights, options, warrants or subscriptions, any public offerings of Newco stock, and the sale, exchange, transfer by gift or other disposition of any Newco Common Stock received by holders of Company Common Stock in the Merger, the holders of Parent Common Stock and Company Common Stock will collectively be in "control" of Newco immediately after the Merger. For purposes of this representation letter, "control" shall mean the ownership of (i) stock possessing at least 80% of the total combined voting power of all classes of Newco stock entitled to vote and (ii) at least 80% of the total number of shares of each other class of Newco stock.

21. The Merger is being undertaken for purposes of enhancing the business of the Company and for other good and valid business purposes of the Company as described in the proxy statement/prospectus of Parent and the Company included in the Registration Statement.

22. The Exchange and Merger Agreement, the Registration Statement and the other documents described in the Registration Statement represent the entire understanding of the Company with respect to the Merger and there are no other written or oral agreements regarding the Merger.

23. The undersigned is authorized to make all the representations set forth herein on behalf of the Company.

The undersigned acknowledges that (i) the opinions to be delivered pursuant to Sections 7.02(d) and 7.03(d) of the Exchange and Merger Agreement will be based on the accuracy of the representations set forth herein and on the accuracy of the representations and warranties and the satisfaction of the covenants and obligations contained in the Exchange and Merger Agreement and the various other documents related thereto, and (ii) such opinions will be subject to certain limitations and qualifications including that they may not be relied upon if any such representations or warranties are not accurate or if any of such covenants or obligations are not satisfied in all material respects. A-74

The undersigned acknowledges that such opinions will not address any tax consequences of the Merger or any action taken in connection therewith except as expressly set forth in such opinions. Very truly yours, UNICOM CORPORATION By: Name: John W. Rowe

Title:

Chairman of the Board, President, and Chief Executive Officer A-75

[THIS PAGE INTENTIONALLY LEFT BLANK] ANNEX B [LETTERHEAD OF MORGAN STANLEY DEAN WITTER] January 7, 2000 Board of Directors PECO Energy Company 2301 Market Street Philadelphia, PA 19103 Members of the Board: We understand that PECO Energy Company, a Pennsylvania corporation ("PECO Energy"), Exelon Corporation, a Pennsylvania corporation ("Exelon") and a wholly owned subsidiary of PECO Energy, and Unicorn Corporation, an Illinois corporation ("Unicom"), have entered into an Amended and Restated Agreement and Plan of Exchange and Merger dated January 7, 2000 (as Amended the "Merger Agreement"), which provides, among other things, (i) for a mandatory share exchange (the "Exchange") whereby each outstanding share of common stock, no par value, of PECO Energy (the "PECO Common Stock"), other than shares owned by PECO, shall be acquired by Exelon in exchange for common stock, no par value, of Exelon (the "Exelon Common Stock", as determined pursuant to the terms and conditions of the Merger Agreement, (ii) immediately thereafter, Unicorn will, on the terms and subject to the conditions set forth in the Merger Agreement, merge with and into Exelon (the ,"Merger", and together with the Exchange, the "Transaction"), whereby each share of common stock, no par value, of Unicorn (the "Unicorn Common Stock") other than shares owned by Unicorn or Exelon and Company Dissent Shares (as defined in the Merger Agreement) will be converted into the right to receive Exelon Common Stock and cash, as determined pursuant to the terms and conditions of the Merger Agreement, (iii) the holders of PECO Common Stock and Unicorn Common Stock will together own all of the outstanding shares of Exelon Common Stock and (iv) each share of each other class of capital stock of PECO Energy and Unicorn shall be unaffected and remain outstanding. The terms and conditions of the Transaction are more fully set forth in the Merger Agreement. You have asked for our opinion as to whether the consideration to be received in the Transaction by the holders of PECO Common Stock is fair from a financial point of view to such holders. For purposes of the opinion set forth herein, we have: (i) reviewed certain publicly available financial statements and other information of Unicorn and PECO Energy; (ii) reviewed certain internal financial statements and other financial and operating data concerning Unicorn prepared by the management of Unicom; (iii) reviewed certain financial projections prepared by the management of Unicorn; (iv) reviewed and discussed with senior executives of PECO Energy and Unicom an analysis prepared by PECO Energy and Unicorn regarding estimates of the amount and timing of certain strategic, financial, and operational benefits anticipated from the Transaction; (v) discussed the Past and current operations and financial condition and the prospects of Unicom; (vi) reviewed certain internal financial statements and other financial operating data concerning PECO Energy prepared by the management of PECO Energy; (vii) reviewed certain financial projections prepared by the management of PECO Energy; (viii) discussed the past and current operations and financial condition and the prospects of PECO Energy, and reviewed the pro forma impact of the Transaction on PECO Energy's earnings and cash flow per share, consolidated capitalization and financial ratios; B-1

(ix) reviewed the reported prices and trading activity for the Common Stock of both Unicorn and PECO Energy; (x) compared the financial performance of Unicom and the prices and trading activity of Unicorn Common Stock with that of certain other comparable publicly-traded companies and their securities; (xi) compared the financial performance of PECO Energy and the prices and trading activity of PECO Common Stock with that of certain other comparable publicly-traded companies and their securities; (xii) reviewed the financial terms, to the extent publicly available, of certain comparable merger transactions; (xiii) reviewed and discussed with the management of PECO Energy and Unicorn proposed uses of the proceeds from the sale of Unicorn's fossil fuel generation assets; (xiv) participated in discussions and negotiations among representatives of PECO Energy and Unicorn and their financial and legal advisors; (vx) reviewed the Merger Agreement; and (xvi) performed such other analyses as we have deemed appropriate. We have assumed and relied upon without independent verification the accuracy and completeness of the information reviewed by us for the purposes of this opinion. With respect to the financial projections, we have assumed that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of the future financial performance of Unicom and PECO Energy. In addition, we have assumed that the Transaction will be treated as a tax-free reorganization and/or exchange to PECO Energy and Unicorn, pursuant to the Internal Revenue Code of 1986, and will be consummated in accordance with the terms set forth in the Merger Agreement. We have not made any independent valuation or appraisal of the assets or liabilities of Unicom and PECO Energy, nor have we been furnished with any such appraisals. With respect to the analysis of the strategic, financial and operational benefits estimated and expected to result from the Transaction, we have assumed that such analysis has been reasonably prepared on bases reflecting the best currently available estimates and judgments of such benefits and the future financial performance of the combined company, and have relied upon, without independent verification, such analysis. Our opinion is necessarily based on economic, market and other conditions as in effect on, and the information made available to us as of, the date hereof. Morgan Stanley has assumed that, in connection with the receipt of all the necessary regulatory approvals for the proposed Transaction, no restrictions will be imposed that would have any material adverse effect on the contemplated benefits to be derived in the proposed Transaction. We note that we are not legal or regulatory experts and have relied upon, without independent verification, the assessment of PECO Energy's legal and regulatory advisors with respect to the legal and regulatory matters related to the Transaction. We have acted as financial advisor to PECO Energy in connection with this transaction and will receive a fee for our services. In the past, Morgan Stanley & Co. Incorporated and its affiliates have provided financial advisory and financing services for PECO Energy and have received fees for the rendering of these services. It is understood that this letter is for the information of the Board of Directors of PECO Energy, and may not be used for any other purpose without our prior written consent, except that this opinion may be included in its entirety in any filing made by PECO Energy with the Securities and Exchange Commission in respect of the Transaction. In addition, this opinion does not in any manner address the prices at which the Exelon Common Stock will trade following consummation of the Transaction, and Morgan Stanley expresses no opinion or recommendation as to how shareholders of PECO Energy should vote at the shareholder's meeting held in connection with the Transaction. B-2

Based on the foregoing, we are of the opinion on the date hereof that the consideration to be received in the Transaction by the holders of PECO Common Stock is fair from the financial point of view to such holders. Very truly yours, MORGAN STANLEY & CO. INCORPORATED By: /s/ JEFFREY R. HOLZSCHUH Jeffrey R, Holzschuh Managing Director B-3

[THIS PAGE INTENTIONALLY LEFT BLANK] ANNEX C [LETTERHEAD OF SALOMON SMITH BARNEY] January 7, 2000 Board of Directors PECO Energy Company 2301 Market Street Philadelphia, PA 19103 Members of the Board: You have requested our opinion as to the fairness, from a financial point of view, to the holders of shares of the common stock PECO Energy Company, a Pennsylvania corporation ("PECO"), of the consideration to be received in the Transaction (defined below) by such holders pursuant to the terms and subject to the conditions set forth in the Amended and Restated Agreement and Plan of Exchange and Merger (the "Agreement") to be entered into by and among PECO, Exelon Corporation, a Pennsylvania corporation and a wholly owned subsidiary of PECO ("Newco"), and Unicorn Corporation and Illinois corporation ("Unicorn"). As more fully described in the Agreement, each outstanding share of the common stock, no par value, of PECO (the "PECO Common Stock"), other than shares owned by PECO, will be acquired by Newco (the "Exchange") in, exchange for common stock, no par value, of Newco (the "Newco Common Stock"). Immediately thereafter, in accordance with the terms of and subject to the conditions set forth in the Agreement, Unicom will merge with and into Newco (the "Merger," and together with the Exchange, the "Transaction"), and each share of common stock, no par value, of Unicorn (the "Unicorn Common Stock") (other than shares owned by Unicorn or Newco and Company Dissent Shares (as defined in the Agreement)) will be converted into the right to receive Newco Common stock and cash, as more fully described in the Agreement. In arriving at our opinion, reviewed the terms of a draft dated January 5 of the Agreement and held discussions with certain senior officers, directors and other representatives and advisors of PECO and certain senior officers and other representatives and advisors and Unicorn concerning the businesses, operations and prospectus of PECO and Unicorn. We examined certain publicly available business and financial information relating to PECO and Unicom as well as certain financial forecasts and other information and data for PECO and Unicorn which were provided to or otherwise discussed with us by the respective managements of PECO and Unicorn. We reviewed and discussed with senior officers of PECO and Unicorn an analysis prepared by PECO and Unicorn regarding the estimates of the amount and timing of certain strategic, financial and operation benefits expected to be derived from the Transaction. We reviewed and discussed with the managements of PECO and Unicom proposed uses of the proceeds from the sale of Unicorn's fossil fuel generation assets. In addition to the foregoing, we conducted such other analyses and examinations and considered such other financial, economic and market criteria as we deemed appropriate in arriving at our opinion. In rendering our opinion, we have assumed and relied, without independent verification, upon the accuracy and completeness of all financial and other information and data publicly available or furnished to or otherwise reviewed by or discussed with us. With respect to financial forecasts and other information and data provided to or otherwise reviewed by our discussed with us, we have been advised by the managements of PECO and Unicorn that such forecasts and other information dna data were reasonably prepared reflecting the vest currently available estimates and judgments of the respective managements of PECO and Unicorn as to the future financial performance of PECO and Unicorn. With respect to the analysis regarding the strategic, financial and operational benefits expected to be derived from the Transaction, we have assumed that such analysis has been reasonably prepared on bases reflecting the best currently available estimates and judgments of such benefits and the future financial performance of the combined company and we have relied upon, C-1

without independent verification, such analysis. We have assumed, with your consent, that the Transaction will be effected in all material respects in accordance with the terms of the Agreement and that the Transaction will be treated as a tax-free reorganization and/or exchange to PECO and Unicom for federal income tax purposes and, in the course of obtaining the necessary regulatory approvals for the Transaction, no limitations, restrictions or conditions will be imposed that would have a material adverse effect on PECO, Unicorn, Newco or the combined company or the contemplated benefits anticipated to result from the Transaction. We are not expressing any opinion as to what the value of the Newco Common Stock actually will be when issued to PECO and Unicom stockholders pursuant to the Transaction or the price at which the Newco Common Stock will trade subsequent to the consummation of the Transaction. We have not made or been provided with an independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of PECO or Unicom nor have we made any physical inspection of the properties or assets of PECO or Unicorn. In connection with our engagement, we were not requested to, and we did not, solicit third party indications of interest in the acquisition of all or a part of PECO. We express no view as to, and our opinion does not address, the relative merits of the Transaction as compared to any alternative business strategies that might exist for PECO or the effect of any other transaction in which PECO might engage. Our opinion is necessarily based upon information available to us, and financial, stock market and other conditions and circumstances existing and disclosed to us, as of the date hereof Salomon Smith Barney Inc. has been engaged to render financial advisory services to PECO in connection with'the Transaction and will receive a fee for such services, a significant portion of which is contingent upon consummation of the Transaction. We have in the past provided investment banking services to PECO and Unicorn unrelated to the proposed Transaction, for which services we have received compensation. In the ordinary course of our business, we and our affiliates may actively trade or hold the securities of PECO and Unicom for our own account or fdr the account of our customers and, accordingly may at time hold a long or short position in such securities. In addition, we and our affiliates (including 'Citigroup Inc. and its affiliates) may maintain relationships with PECO, Unicorn and their respective affiliates. Our advisory services and the opinion expressed herein are provided for the information of the Board of Directors of PECO in its evaluation of the proposed Transaction, and our opinion is not intended to be and does not constitute a recommendation to any shareholder as to how such shareholder should vote on any matters relating to the proposed Transaction. Based upon and subject to the foregoing, our experience as investment bankers, our work as described above and other factors we deemed relevant, 'weare of the opinion that, as of the date hereof, the consideration to be received in the Transaction by the holders of shares of PECO Common Stock is fair, from a financial point of view, to such holders. Very truly yours,

                                                                   /S/  SALOMON SMITH BARNEY INC.

SALOMON SMITH BARNEY INC. C-2

ANNEX D [LETTERHEAD OF WASSERSTEIN PERELLA & CO.] January 6, 2000 Board of Directors Unicorn Corporation 10 South Dearborn Street Chicago, IL 60690 Members of the Board of Directors: You have asked us to advise you with respect to the fairness, from a financial point of view, to the shareholders of Unicorn Corporation (the "Company") of the Aggregate Company Consideration (as defined below) provided for pursuant to the terms of the Amended and Restated Agreement and Plan of Exchange and Merger, dated as of January 7, 2000 (the "Merger Agreement"), among Peco Energy Company ("Parent"), Newholdco Corporation, a wholly-owned subsidiary of Parent ("Newco"), and the Company. The Merger Agreement provides for, among other things, a business combination pursuant to which (a) Parent and Newco will effect a mandatory share exchange (the "First Step Exchange") whereby each outstanding share of common stock, no par value, of Parent (the "Parent Common Stock") shall be acquired by Newco in exchange for one share of common stock, no par value, of Newco (the "Newco Common Stock") and (b) immediately thereafter, the Company will merge with and into Newco ("the Second Step Merger" and, together with the First Step Exchange, the "Merger"), whereby each share of common stock, no par value, of the Company (the "Company Common Stock") will be converted into the right to receive 0.875 shares (the "Company Conversion Number") of Newco Common Stock plus $3.00 in cash (the "Company Cash Consideration"). The aggregate number of shares of Newco Common Stock to be issued in the First Step Exchange are referred to herein as the "Aggregate Parent Consideration." The aggregate number of shares of Newco Common Stock to be issued, together with the aggregate Company Cash Consideration to be distributed, in the Second Step Merger are referred to herein as the "Aggregate Company Consideration." The Merger Agreement also contemplates that, prior to the effective time of the Merger, the Company shall effect the repurchase of shares of Company Common Stock (the "Company Common Stock Repurchase") and Parent shall effect the repurchase of shares of Parent Common Stock (the "Parent Common Stock Repurchase"). The terms and conditions of the Merger are set forth in more detail in the Merger Agreement. In connection with rendering our opinion, we have reviewed a draft of the Merger Agreement, and for purposes hereof we have assumed that the final form thereof will not differ in any material respect from the draft provided to us. We have also, among other things:

1. Reviewed certain publicly available business and financial information relating to the Company and Parent that we deemed to be relevant;

2. Reviewed certain internal financial information, including financial projections, forecasts, and analyses relating to the business, earnings, cash flow, assets, liabilities and prospects of the Company and Parent, in each case prepared and furnished to us by the Company and Parent, and considered current expectations for the dividend policy for Newco;

3. Conducted discussions with members of senior management and representatives of the Company and Parent concerning the matters described in clauses 1 and 2 above, as well as the respective businesses, regulatory environments and prospects of the Company and Parent before and after giving effect to the Merger; D-1

4. Reviewed the market prices and valuation multiples of Company Common Stock and Parent Common Stock and compared such data with similar data of certain publicly-traded companies that we deemed to be relevant;

5. Reviewed the results of operations of the Company and Parent for recent periods and compared such results with those of certain publicly-traded companies that we deemed to be relevant;

6. Compared the proposed financial terms of the Merger with the financial terms of certain other business combination transactions that we deemed to be reasonably comparable to the Merger or otherwise relevant;

7. Reviewed the pro forma financial impact of the Merger, and

8. Performed such other financial studies, analyses and investigations and reviewed such other information as we considered appropriate for purposes of this opinion.

In our review and analysis and in formulating our opinion, we have assumed and relied upon the accuracy and completeness of all of the financial and other information provided to or discussed with us or publicly available, and we have not assumed any responsibility for independent verification of any of such information. We have also assumed and relied upon the reasonableness and accuracy of the financial projections, forecasts and analyses provided to us, and we have assumed that such projections, forecasts and analyses were reasonably prepared in good faith. and on bases reflecting the best currently available judgments and estimates of the Company's and Parent's managements. We have also, with your consent, factored in an assumed level of financial synergies from the Merger that management of the Company has provided to us. We express no opinion with respect to such projections, forecasts, analyses and assumed level of financial synergies or the assumptions upon which they are based. In addition, we have not reviewed any of the books and records of the Company or Parent, or assumed any responsibility for conducting a physical inspection of the properties or facilities of the Company or Parent, or for making or obtaining an independent valuation or appraisal of the assets or liabilities of the Company or Parent, and no such independent valuation or appraisal was provided to us. We note that (i) the Merger is intended to qualify as a tax free reorganization for United States Federal tax purposes in which gain (if any) will be recognized only to the extent of the Company Cash Consideration, and we have assumed that the Merger will so qualify and (ii) the Merger is intended to be accounted for as a purchase of the Company by Parent, and we have assumed that the Merger will be so accounted for. We also have assumed that obtaining all regulatory and other approvals and third-party consents required for consummation of the Merger will not have an adverse impact on the Company or Parent or on the anticipated benefits of the Merger, and we have assumed that the transactions described in the Merger Agreement will be consummated without waiver or modification of any of the material terms or conditions contained therein by any party thereto. Our opinion is necessarily based on economic and market conditions and other circumstances as they exist and can be evaluated by us as of the date hereof. We are not expressing any opinion herein as to the prices at which any securities of Parent, the Company or Newco will actually trade at any time. In the ordinary course of our business, we may actively trade the debt and equity securities of. the Company and Parent for our own account and for the accounts of customers and accordingly may at any time hold a long or short position 'in such securities. We are acting as. financial advisor to the Company in connection with the proposed Merger and will receive a fee for our services, a significant portion of which is contingent upon the consummation of the Merger. Our opinion addresses only the fairness from a financial point of view to the shareholders of the Company of the Aggregate Company Consideration provided for pursuant to the Merger Agreement. We do not express any views on any other aspect of the Merger or any other terms of the Merger Agreement. Specifically, our opinion does not address the Company Common Stock Repurchase, the Parent Common Stock Repurchase or the Company's underlying business decision to enter into the amendments reflected in the Merger Agreement D-2

or to effect the transactions contemplated by the Merger Agreement, nor does our opinion address any alternative transaction or business strategy that may be available to the Company. It is understood that this letter is for the benefit and use of the Board of Directors of the Company in its consideration of the Merger and, except for inclusion in its entirety in any registration statement or proxy statement required to be circulated to shareholders of the Company relating to the Merger, may not be quoted, referred to or reproduced at any time or in any manner without our prior written consent. This opinion does not constitute a recommendation to any shareholder of the Company as to how such shareholder should (i) vote with respect to the Second Step Merger, (ii) act in respect of the Company Common Stock Repurchase or (iii) otherwise act in respect of the Merger, and should not be relied upon by any shareholder as such. Based upon and subject to the foregoing, including the various assumptions and limitations set forth herein, it is our opinion that, as of the date hereof, the Aggregate Company Consideration provided for pursuant to the Merger Agreement is fair to the shareholders of the Company from a financial point of view. Very truly yours,

                                                                /S/  WASSERSTEIN PERELLA     & CO. INC.

D-3

[THIS PAGE INTENTIONALLY LEFT BLANK] ANNEX E

§ 805 ILCS 5/11.65. Right to dissent Sec. 11.65. Right to dissent. (a) A shareholder of a corporation is entitled to dissent from, and obtain payment for his or her shares in the event of any of the following corporate actions:

(1) consummation of a plan of merger or consolidation or a plan of share exchange to which the corporation is a party if (i) shareholder authorization is required for the merger or consolidation or the share exchange by Section 11.20 [805 ILCS 5/11.20] or the articles of incorporation or (ii) the corporation is a subsidiary that is merged with its parent or another subsidiary under Section 11.30 [805 ILCS 5/11.30]; (2) consummation of a: sale, lease or exchange of all, or substantially all, of the property and assets of the corporation other than in the usual and regular course of business; (3) an amendment of the articles of incorporation that materially and adversely affects rights in respect of a dissenter's shares because it: (i) alters or abolishes a preferential right of such shares; (ii) alters or abolishes a right in respect of redemption, including a provision respecting a sinking fund for the redemption or repurchase, of such shares; (iii) in the case of a corporation incorporated prior to January 1, 1982, limits or eliminates cumulative voting rights with respect to such shares; or (4) any other corporate action taken pursuant to a shareholder vote if the articles of incorporation, by-laws, or a resolution of the board of directors provide that shareholders are entitled to dissent and obtain payment for their shares in accordance with the procedures set forth in Section 11.70 [805 ILCS 5/11.70] or as may be otherwise provided in the articles, by-laws or resolution. (b) A shareholder entitled to dissent and obtain payment for his or her shares under this Section may not challenge the corporate action creating his or her entitlement unless the action is fraudulent with respect to the shareholder or the corporation or constitutes a breach of a fiduciary duty owed to the shareholder. (c) A record owner of shares may assert dissenters' rights as to fewer than all the shares recorded in such person's name only if such person dissents with respect to all shares beneficially owned by any one person and notifies the corporation in writing of the name and address of each person on whose behalf the record owner asserts dissenters' rights. The rights of a partial dissenter are determined as if the shares as to which dissent is made and the other shares were recorded in the names of different shareholders. A beneficial owner of shares who is not the record owner may assert dissenters' rights as to shares held on such person's behalf only if the beneficial owner submits to the corporation the record owner's written consent to the dissent before or at the same time the beneficial owner asserts dissenters' rights. (Source: P.A. 85-1269.) Note. This section was Ill.Rev.Stat., Ch. 32, Para. 11.65. § 805 ILCS 5/11.70. Procedure to Dissent Sec. 11.70. Procedure to Dissent. (a) If the corporate action giving rise to the right to dissent is to be approved at a meeting of shareholders, the notice of meeting shall inform the shareholders of their right to dissent and the procedure to dissent. If, prior to the meeting, the corporation furnishes to the shareholders material information with respect to the transaction that will objectively enable a shareholder to vote on the transaction and to determine whether or not to exercise dissenters' rights, a shareholder may assert dissenters' rights only if the shareholder delivers to the corporation before the vote is taken a written demand for payment for his or her shares if the proposed action is consummated, and the shareholder does not vote in favor of the proposed action. E-1

(b) If the corporate action giving rise to the right to dissent is not to be approved at a meeting of shareholders, the notice to shareholders describing the action taken under Section 11.30 or Section 7.10 [805 ILCS 5/11.30 or 805 ILCS 5/7.10] shall inform the shareholders of their right to dissent and the procedure to dissent. If, prior to or concurrently with the notice, the corporation furnishes to the shareholders material information with respect to the transaction that will objectively enable a shareholder to determine whether or not to exercise dissenters' rights, a shareholder may assert dissenter's rights only if he or she delivers to the corporation within 30 days from the date of mailing the notice a written demand for payment for his or her shares. (c) Within 10 days after the date on which the corporate action giving rise to the right to dissent is effective or 30 days after the shareholder delivers to the corporation the written demand for payment, whichever is later, the corporation shall send each shareholder who has delivered a written demand for payment a statement setting forth the opinion of the corporation as to the estimated fair value of the shares, the corporation's latest balance sheet as of the end of a fiscal year ending not earlier than 16 months before the delivery of the statement, together with the statement of income for that year and the latest available interim financial statements, and either a commitment to pay for the shares of the dissenting shareholder at the estimated fair value thereof upon transmittal to'the corporation of the certificate or certificates, or other evidence of ownership, with respect to the shares, or instructions to the dissenting shareholder to sell his or her shares within 10 days after delivery of the corporation's statement to the shareholder. The corporation may instruct the shareholder to sell only if there is a public market for the shares at which the shares may be readily sold. If the shareholder does not sell within that 10 day period after being so instructed by the corporation, for purposes of this Section the shareholder shall be deemed to have sold his or her shares at the average closing price of the shares, if listed on a national exchange, or the average of the bid and asked price with respect to the shares quoted by a principal market maker, if not listed on a national exchange, during that 10 day period. (d) A shareholder who makes written demand for payment under this Section retains all other rights' of a shareholder until those rights are cancelled or modified by the consummation of the proposed corporate action. Upon consummation of that action, the corporation shall pay to each dissenter who transmits to the corporation the certificate or other evidence of ownership of the shares the amount the corporation estimates to be the fair value of the shares, plus accrued interest, accompanied by a written explanation of how the interest was calculated. (e) If the shareholder does not agree with the opinion of the corporation as to the estimated fair value of the shares or the amount of interest due, the shareholder, within 30 days from the delivery of the corporation's statement of value, shall notify the corporation in writing of the shareholder's estimated fair value and amount of interest due and demand payment for the difference between the shareholder's estimate of fair value and interest due and the amount of the payment by the corporation or the proceeds of sale by the shareholder, whichever is applicable because of the procedure for which the corporation opted pursuant to subsection (c). (f) If, within 60 days from delivery to the corporation of the shareholder notification of estimate of fair value of the shares and interest due, the corporation and the dissenting shareholder have not agreed in writing upon the fair value of the shares and interest due, the corporation shall either pay the difference in value demanded by the shareholder, with interest, or file a petition in the circuit court of the county in which either the registered office or the principal office of the corporation is located, requesting the court to determine the fair value of the shares and interest due. The corporation shall make all dissenters, whether or not residents of this State, whose demands remain unsettled parties to the proceeding as an action against their shares and all parties shall be served with a copy of the petition. Nonresidents may be served by registered or certified mail or by publication as provided by law. Failure of the corporation to commence an action pursuant to this Section shall not limit or affect the right of the dissenting shareholders to otherwise commence an action as permitted by law. E-2

(g) The jurisdiction of the court in which the proceeding is commenced under subsection (f) by a corporation is plenary and exclusive. The court may appoint one or more persons as appraisers to receive evidence and recommend decision on the question of fair value. The appraisers have the power described in the order appointing them, or in any amendment to it. (h) Each dissenter made a party to the proceeding is entitled to judgment for the amount, if any, by which the court finds that the fair value of his or her shares, plus interest, exceeds the amount paid by the corporation or the proceeds of sale by the shareholder, whichever amount is applicable. (i) The court, in a proceeding commenced under subsection (f), shall determine all costs of the proceeding, including the reasonable compensation and expenses of the appraisers, if any, appointed by the court under subsection (g), but shall exclude the fees and expenses of counsel and experts for the respective parties. If the fair value of the shares as determined by the court materially exceeds the amount which the corporation estimated to be the fair value of the shares or if no estimate was made in accordance with subsection (c), then all or any part of the costs may be assessed against the corporation. If the amount which any dissenter estimated to be the fair value of the shares materially exceeds the fair value of the shares as determined by the court, then all or any part of the costs may be assessed against that dissenter. The court may also assess the fees and expenses of counsel and experts for the respective parties, in amounts the court finds equitable, as follows: (1) Against the corporation and in favor of any or all dissenters if the court finds that the corporation did not substantially comply with the requirements of subsections (a), (b), (c), (d), or (f). (2) Against either the corporation or a dissenter and in favor of any other party if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by this Section. If the court finds that the services of counsel for any dissenter were of substantial benefit to other dissenters similarly situated and that the fees for those services should not be assessed against the corporation, the court may award to that counsel reasonable fees to be paid out of the amounts awarded to the dissenters who are benefited. Except as otherwise provided in this Section, the practice, procedure, judgment and costs shall be governed by the Code of Civil Procedure [735 ILCS 5/1-101 et seq.]. (j) As used in this Section: (1) "Fair value", with respect to a dissenter's shares, means the value of the shares immediately before the consummation of the corporate action to which the dissenter objects excluding any appreciation or depreciation in anticipation of the corporate action, unless exclusion would be inequitable. (2) "Interest" means interest from the effective date of the corporate action until the date of payment, at the average rate currently paid by the corporation on its principal bank loans or, if none, at a rate that is fair and equitable under all the circumstances. (Source: P.A. 86-1156.) Note. This section was Ill.Rev.Stat., Ch. 32, Para. 11.70. Cross References. As to the procedure to dissent, by a shareholder of a savings bank under the Savings Bank Act, see 205 ILCS 205/4012. E-3

[THIS PAGE INTENTIONALLY LEFT BLANK] 3930-PM-WC0014 2/2000 COMMONWEALTH OF PENNSYLVANIA m DEPARTMENT OF ENVIRONMENTAL PROTECTION BUREAU OF WATERSHED CONSERVATION REGISTRATION I PERMITTING OF STORAGE TANKS I. PURPOSE OF SUBMITTAL (Check All Those That Apply) INITIAL AMENDED CHANGE OF OWNERSHIP "o Initial 0 Changed Previous info r Sold MERGER "o Registration for Q Added Tank(s) 0 Purchased I All Tanks (Will Remain at Same Facility) Removal of 1" Tank(s) Temporarily Out of Use D Some-Tanks (Will Remain at Same Facility) Unregistered Tank(s) 0 Removed / Closed Tank(s) 0 Some Tanks (Relocated to Another Regulated Facility)

      "El Registration for Un-         0    Exempted Tank(s)                            0 Some Tanks (Relocated to a New Facility and the Registered Tank(s)         1" Changed from Regulated to Closed in Place                                                                 Tanks are to be Registered)

Unregulated Substance or Use STATE USE ONLY Q Relocated Tank(s) II.A. TANK OWNER I APPLICANT INFORMATION (Type or Print Legibly in Ink) Storage Tank Client I.D. No. (State Use Only) DEP Client ID No. Organization Name or Employer ID No. (EIN) Registered Fictitious Name Exelon Generation Company Individual Last Name First Name MI Suffix N/A SSN Mailing Address Line 1 Mailing Address Line 2 200 Exelon Way Address Last Line - City State ZIP+4 Country Kennett Square Phone No. PA 19348 USA TYPE OF OWNER/BUSINESS (610)765-5847 Local Government Corporate Private (Check Only One) Q o Vol. Fire Co./EMS Org. [l County Municipality Q Corporation/PA 0 Corporation/Non-PA [] Partnership/General [o Federal Government Q Partnership/Limited o School District o Assn./Organization 0 Sole Proprietorship o State Government -- Authority Ej Other: LLC/PA E] Individual(s) r- Assn./Organization II.B. CHANGE OF OWNERSHIP (The new owner is to complete all sections of this form including this section if some purchased/transferred.) or all tanks have been Previous Owner Name: PECO Energy Company Date of Purchase/Transfer 01/0112001 Mailing Address Line I Mailing Address Line 2 2301 Market Street Address Last Line - City State ZIP+4 Country Philadelphia Phone No. PA 19101 USA (610)765-5847 Previous Facility ID No. 46-00320 Previous Tank Nos. Same Ill. FACILITY/SITE INFORMATION (Type or PrintLegibly in Ink) A. Storage Tank. 46-00320 Facility/Site Name Limerick Generating Station DEPPSieD# Facility ID No Site ID # Site Location Line 1 Site Location Line 2 Evergreen and Sanatoga Roads Site Location Last Line - City State ZIP+4 EPA ID# Pottstown PA 19464 County Name Municipality Check One Phone No. Montgomery Pottstown City 0 Boro E] Twp E] (610)718-2513 Type of Facility (Check Only One) o] 00 Unknown E 05 Auto Dealership o 10 Federal, Military fl 01 Gas Station El 15 Trucking/Transport El 06 Railroad [ 11 Commercial 0 16 Utility El 02 Petroleum Distributor El 07 Local Government El 12 Industrial [] 03 Air Taxi 017 Farm [] 08 a~~ State Government 5 13 Residential 04 Aircraft Owner ~ ~ ~ 1Reieta018 El 17 Farm 0 09 Federal, Non-Military El 14 Contractor Convenience Store B. Fire Safety Permit No. (if applicable) NIA El 99 Other C. Contact (check only one) 0 Send all mail to owner/applicant address 0 Send all mail to facility/site location SSend all mail to contact address listed below Contact Last Name: Murphy First Name: John Ml J. Suffix: Mailing Address Line 1 Mailing Address Line 2 Limerick Generating Station Address P.O. Box 2300, Evergreen and Sanatoga Roads Last Line - City State ZIP+4 Country Pottstown Phone No. PA 19464 USA (610)718-2513

3930-PM-WC0014 2/2000 FACILITY ID NO. 46-00320 Facility Name Limerick Generating Station IV. DESCRIPTION OF STORAGE TANKS (Type or print legibly each regulated storage tank at this facility under your ownership.) A. ABOVEGROUND TANKS List all tanks. If amending information, identify the Amended Tank(s) with an asterisk (*) to the left of the tank number. S CERCLA Name T T Install Change of Substance (If Hazardous Substance) Exempt Tank A Y Date Status Capacity Code Substance Name CAS No. Reference Number T P (Mo-Day-Yr) Date (Gallons) (Currently or (if Other Petroleum (If Hazardous Code U E (Mo-Day-Yr) Last Stored) Substance Substance) (See Instructions) S or Petroleum-Based Mixture) All A C A A A A A A A A A A A A A Status Codes: C - Currently in Use T - Temporarily Out of Use E - Exempt R - Removed P - Closed in Place Type Codes: M - Manufactured F - Field Constructed B. UNDERGROUND TANKS List all tanks. If amending information, identify the Amended Tank(s) with an asterisk (*) to the left of the tank number. S CERCLA Name T T Install Change of Substance (If Hazardous Substance) Exempt Tank A Y Date Status Capacity Code Substance Name CAS No. Reference Number T P (Mo-Day-Yr) Date (Gallons) (Currently or (If Other Petroleum (IfHazardous Code U E (Mo-Day-Yr) Last Stored) Substance Substance) (See Instructions) S or Petroleum-Based Mixture) All C 4-4-4 4 4 4 4- 4 1 4-4-4 4 4 4 4- 4 1 4-4-4 4 4 4 4-I 1 4 4- 4 1 t 1 4 4

• 4 444 4 4 + 4 4 4 4 4 + 4 4 4-4-4 4 4 4 + 4 4 4-4-4 4 4 4 4 4 4-4-4 4 4 4 4- 1 Status Codes: C - Currently in Use T - Temporarily Out of Use E - Exempt R - Removed P - Closed in Place Type Codes: M - Manufactured F - Field Constructed Detach this entire form and return with all appropriatesignaturesto the Division of Storage Tanks

- 3930-PM-WC0014 212000 FACILITY ID NO. 46-00320 Facility Name Limerick Generating Station V. INFORMATION FOR ABOVEGROUND AND UNDERGROUND NEW TANK INSTALLATIONS (Write the Tank Number(s) and place a check (4) in the appropriate box for each component that was installed.) Tank Tank Tank Tank Tank Tank Tank Tank Tank Tank Tank Number Number Number Number Number Number Number Number Number Number Number TANK CONSTRUCTION AND CORROSION N/A PROTECTION (1) (A) SINGLE WALL UNPROTECTED STEEL 0 11 D r- 0 D D 0 1: 11 [] (B) CATHODICALLY PROTECTED STEEL (GALVANIC) 0 11 El 0 13 0 0 0 0- 0 0] (C) CATHODICALLY PROTECTED STEEL 0 0 El 0l El El El 0l El El r0 (IMPRESSED CURRENT) (D) DOUBLE WALL UNPROTECTED STEEL 0[ 0 0 o 0 o 00 o (E) SINGLE WALL FIBERGLASS 11 0 [ Q El El El 11 El El E (F) DOUBLE WALL FIBERGLASS [ [0 0 0 [] 0 [ [ o0 (G) JACKETED STEEL OR DOUBLE WALL ACT-i 00 11 El ] 11 11 El] El 13 0 0 El (H) STEEL WITH FRP COATING 11 [] 0l El El El ] 0 0 0 0 (I) STEEL WITH LINED INTERIOR 0l 0 0 Q 0 Q Q 0 D Ql (J) CONCRETE 0 51 0 Q1 Q1 El El El D El O1 (0) CATHODICALLY PROTECTED DOUBLE WALL STEEL [] 11 0 0 [ 0 0 0 [ 0 0 (GALVANIC) (p) CATHODICALLY. PROTECTED STEEL WITH LINER 0] El El 0l [] 0 0l 0l El El [] (0) DOUBLE BOTTOM (AST's ONLY) [] El El 0l El El El El 0] El [] (R) MOLDED PLASTIC FORM (AST's ONLY) El El El E El 0] El E El El El (99) OTHER (SPECIFY) El 0l El 0l El El El 0l El El El UNDERGROUND PIPING CONSTRUCTION AND CORROSION PROTECTION (2) (A) BARE STEEL El El El El El El El [] El [] El (B) CATHODICALLY PROTECTED STEEL El El El El El El El 0l El El El (C) COPPER El 0 El El El El El 0l El 0] El (D) FIBERGLASS El 0l El El El El El El El El El (E) FLEXIBLE (NON-METALLIC) l 0 El E E El El E El 0l El (G) NONE [] El El El El El El 0] E 0 [] (I) DOUBLE WALL METALLIC PRIMARY 0 El [] El El El El 0l El El 0] (J) DOUBLE WALL RIGID (FRP) PRIMARY 0l El El El El El 0] El El El - (K) DOUBLE WALL FLEXIBLE PRIMARY [] El El El El El El El [] 0 [[ (L) TRENCH LINER El El El El El El El El 0 El El (M)JACKETED Dl El El El El El El El 0] El El (99) OTHER (SPECIFY) El El El El El El El El El El El ABOVEGROUND PIPING CONSTRUCTION AND CORROSION PROTECTION (3) (A) BARE STEEL El El El 0l E El El 0l 0l El El (B) CATHODICALLY PROTECTED STEEL El El El 0 El El El El [] El El (C) COPPER El El El El [] El El 13 El El 11 (D) FIBERGLASS El E E [] Dl El El [] 0 El 13 (E) FLEXIBLE (NON-METALLIC) El El El 0l [] El [] El 0] El El (G) NONE El El El 0 0l El El [] El El El (99) OTHER (SPECIFY) El [] El [] 0l El El El El El 0 PRODUCT DELIVERY (PIPING) SYSTEM (4) (A) SUCTION: CHECK VALVE AT PUMP El El El El [] El El El 0l El El (B) SUCTION: CHECK VALVE AT TANK El El El 0- -- El El 0l El El El (C) PRESSURE [] 0l El El [] El El El D El El (D) GRAVITYFED El El El l El [ E El 0l El E] (E) NONE 0l El El 0l 0l El El El El El El Detach instructionsand return this entire form with all appropriatesignaturesto the Division of Storage Tanks

" 3930-PM-WC0014 212000 FACILITY ID NO. 46-00320 Facility Name Limerick Generating Station V. INFORMATION FOR ABOVEGROUND AND UNDERGROUND NEW TANK INSTALLATIONS (cont.) (Write the Tank Number(s) and place a check (4)in the appropriate box for each component that was installed.) Tank Tank Tank Tank Tank Tank Tank Tank Tank Tank Tank Number Number Number Number Number Number Number Number Number Number Number SPILL PREVENTION (6) USTs ONLY NIA (Y) YES 0 o o0 0o O (N) NO El El [] El 0l 0l 0 0 0 0 0 (E) FILL IN LESS THAN 25 GALLONS [ 0[ o 0 0o 0o o o OVERFILL PREVENTION PRESENT (7) (Y) YES Q Q 0 0 0 Q 0 [ 50 (N) NO 0 [] 0 0 0 0 0 0 0 0 0 (E) FILL INLESS THAN 25 GALLONS 0 0Q 05 0 05 5 [ 5 VAPOR RECOVERY PRESENT (11) (A) STAGE IINSTALLED 0 0 0 0 5 0 [ 0 5 5 5 (B) STAGE IIINSTALLED [] [] 51 0 [] 5] [ 0 0 0 5 (C) STAGE IAND IIINSTALLED 0 0 0 0 0 5 0 0 0 0 [ (D) NONE 51 0 0 0 0 5 0 0 0 [ 0 EMERGENCY CONTAINMENT (16) ASTs ONLY (Y) YES 0 05 0[] 51 1 051 0 (N) NO 13 D 0 0 0[1 [ 0 0 0 0 SECONDARY CONTAINMENT (17) ASTs ONLY (Y) YES 0 0 5 5 0 5 5 0 [] 0 (N) NO 0 5 51 0 0 0 0 0 5 0 0 VI. ABOVEGROUND AND UNDERGROUND TANK INFORMATION FOR REMOVAL FROM SERVICE (Write the Tank Number(s) and place a check (q) in the appropriate box for each tank that was removed or closed in place.) Tank Tank Tank Tank Tank Tank Tank Tank Tank Tank Tank Number Number Number Number Number Number Number Number Number Number Number NIA TANK REMOVED 0 0 0 E 0 0 0 0 El 0 0 TANK CLOSED INPLACE 0 l l l l E E 0 El E 0 CONTAMINATION SUSPECTED OR OBSERVED AND 0 0 0 0 0 0 0 0 0 0 0 NOTIFICATION OF CONTAMINATION FORM WAS SUBMITTED CLOSURE DOCUMENT SUBMITTED TO THE 0 El El E El El l El E E 0 APPROPRIATE DEP REGIONAL OFFICE CLOSURE DOCUMENT KEPT ON FILE BY OWNER 0 El El 0 El El El El El El El Detach this entire form and return with all appropriatesignatures to the Division of Storage Tanks

"- 3930-PM-WC0014 212000 FACILITY ID NO. 46-00320 Facility Name Limerick Generating Station VII. OWNER CERTIFICATION (Read and sign after completing all applicable sections.) I certify under penalty of law that I have personally examined and am familiar with the information submitted in this and all attached documents, and that based on my inquiry of those individuals immediately responsible for obtaining the information, I believe that the submitted information is true, accurate, and complete. This registration is conditioned upon compliance with provisions of the Storage Tank and Spill Prevention Act of 1989, all applicable regulations, and with the requirements for obtaining and maintaining a permit required under this Act. I certify my responsibility for assuring the following permit requirements: Storage Tank systems are in compliance with applicable administrative, technical and operational requirements as specified in Subchapter E for underground tanks or Subchapter F or G for aboveground tanks. Tank handling and inspection activities are performed by an individual possessing DEP certification in the appropriate category as required in Subchapters A and B. Underground storage tanks meet the applicable financial responsibility requirements of Subchapter H (relating to financial responsibility requirements). A Spill Prevention Response (SPR) Plan must be submitted to the appropriate DEP regional office for facilities that have aboveground storage tanks where the total capacity of all aboveground tanks is greater than 21,000 gallons. My signature represents to the Department that I own the storage tank(s) and am aware of the responsibilities and potential liabilities as an "owner" arising under the Storage Tank and Spill Prevention Act of 1989 and all applicable regulations. I am also advised that this registration is made subject to the penalties of 18 PA. C.S. Section 4904 relating to unsworn falsification to authorities. Name and Title of Owner Signature Date Robert C. Braun, Plant Manager, "/ Limerick Generating Station VIII. INSTALLER/REMOVER CERTIFICATION This section must be completed by the certified tank handler(s) who is responsible for the installation or removal from service of the aboveground and underground storage tank systems listed in Sections V and VI. Do NOT enter the company certification number. Tank modification must be submitted on a "Tank Handling Activities Report" form. (Type or Print legibly) As the certified tank handler responsible for the tank handling activities in the category or categories listed, I certify that all tank handling activities were conducted in compliance with the design, installation and operation standards of the Storage Tank and Spill Prevention Act of 1989 and all applicable regulations. I also certify, under penalty of law as provided in 18 PA C.S.A. 4904 (relating to unswom falsification to authorities), that the information provided therein is true, accurate and complete to the best of my knowledge and belief. Tank Construction Individual Certification Number InstallerlRemover Name Standard Certification No. Category Installer/Remover Signature Date N/A IX. INSPECTOR CERTIFICATION This section must be completed by the certified tank inspector(s) who is responsible for verifying the installation standards for all field constructed tanks and all aboveground tanks greater than 21,000 gallons listed in Section V. (Type or Print legibly) As the certified tank inspector responsible for verifying tank handling activities and construction standards, I certify that the tank(s) listed below are constructed to appropriate industry standards and, if applicable, to manufacturer's specifications; that the tank(s) have been tested as required by industry standards; and that the tank(s) meet or exceed applicable design and operating standards; and are in compliance with the requirements of the Storage Tank and Spill Prevention Act of 1989, and all applicable regulations. I also certify under penalty of law as provided in 18 PA C.S. A. 4904 (relating to unsworn falsification to authorities), that the information provided herein is true, accurate and complete to the best of my knowledge and belief. Tank Construction Individual Certification Number Inspector Name Standard Certification No. Category Inspector Signature Date N/A X. SITE SPECIFIC PERMIT NUMBER (If a site specific permit was required for new tank installation, write the tank number(s) and permit number(s) in the appropriate box.) Site Specific Permit No. Tank Number Tank Number Tank Number Tank Number Tank Numher Thnk Numbr k Numbhr Tank Ihlm. T.nL. KIhK T.,L-

                                                                                                                                                            -r    KI,.

N/A . um er an um er NIA

Form Approved, OMB No. 2050.0028 Expires 12/31102 Please print or type with ELITE type (12 characters per inch) in the unshaded areas only GSA No. 0246-EPA-OT Please refer to section V. Line-by Line Instructions for Completing EPA Form 8700-12 before Nate of ulate(ic Date Received e (For Official Use Only) completing this form. The Waste Activity W Activity PAL rneormeatia*o requested here i, "ruired by law (Sectio 3010. of the Resc-ice consearvno, arnd c ' United States Environmental Protection Agency 1.Installations EPA ID Number (Mark X7in theappropriatebox) A. n o B. Subsequent Notification (complete item C) A....0.7 F C. Installations,EPA ID Number it.Name of Installation (Include company and specific site name) EI Xl EIL O N IL II MI EIR II C KI G I EI NIE IR IA ITII IN IG I Sj1 T I Ill. Location of Installation (Physicaladdress not P.O Box or Route Number) Street P~o.IB o x] Street (Continued) 231oo O I I E IV E RIGR IF N1I A =AN D S LA 1 LTiAhIG A[ R I0 AD S City or Town State I Zip Code P O T.T T=S T OWN P A 1 9 46 4 CountyCode I County Name I I IxIol NI TIGIOIMIF IRIYI I IV. Installation Mailing Address (See instructions) Street or P.O. Box S AoME ME= F ' 71, City or Town State Zip Code

       ! 11111 TI1                                        -IIT lIll                                                 111-I                              I V. Installation Contact (Person to be contacted regarding waste activities at site Name (Last)                                                                      (First)

[ EH K E A M AR Job Title Phone Number (Area Code and Number) C HA..AT COO R 6 11017....12 15.11 . Vt. Installation Contact Address (See Instructions) A. Contact Address LocatIon Malling B.Street or P.O. Box City or,' ITown

           *:o~tIX
                 +~de'* [;         +:;*....

• OI m x I;~ I I I State

+ ++(::Zip Code :+ + +

VtI. Ownership (See instructions) I I A.Name of Installation's Legal Owner E -X IL 0 NI IC El NIE ýRIAI TI I 0 I IC 0 'MIP AIN I I Street, P.O. Box, or Route Number 2O! 0 EI&EFL X 10 '1Ni W1 Y City or Town State Zip Code K EN N E TT S U AS P A 1 9 3 48 Phone NUmber , (Area Code and Number) B. Land Type C.OwnerType D.CDhange of Owner DateChanged Indicator Month Da Year F No 101a 6 I1 01 7 1615 15 18147 T PYesa1 P I Form 8700-12 (Rev. 12/99) of 2- 110 0 1 r2 00 1 EPA EPA Form 8700-12 (Rev. 12/99) of 2 -

Form Approved, OMB No. 2050-0028 Expires 12/31/02 Please print or type with ELITE type (12 characters per inch) in the unshaded areas only GSA No. 0246-EPA-OT I _I_ D - For Off icial Use Oniy_ VIII. Type of Regulated Waste Activity (Mark 'X' in the appropriateboxes. Refer to Instructions) A. Hazardous Waste Activities C. Used Oil Management Activities

1. Generator (See Instructions) LI3. Treater, Storer, Disposer (at 1. Used Oil TransporteriTransfer installation) Note: A permit is Facility - Indicate Type(s) of n:] a. Greater than 1000kg/moo (2,200 lbs.)

          ]b. 100 to  1000 kglmo (220-2,200 lbs.)                  required for this activity, see                     Activity(ies)

I]c. Less than 100 kg/mno (220 Ibs) instructions. [1 a.Transporter

4. Exempt Boiler and/or Industrial E] b. Transfer Facility

2. Transporter (Indicate Mode in boxes 2. Used Oil Processor/Re-refiner 1-5 below) Furnace

a. Smelting, Melting, and Refin Indicate Type(s) of Activity(ies)

ElI a.For own waste only E] a. Processor [J b. For commercial purposes ing Furnace Exemption L[ b, Small Quantity On-Site Burner F] b.Re-ref iner II 3. On-Specification Used Oil Burner Mode of Transportation Exemption 4. Used Oil Fuel Marketer S1. Air S. Underground Injection Control E] a. Marketer Who Directs Shipment S2.Rail of Off-Specification Used Oil to

       ~i3.Highway                                                                                                       Used Oil Burner S4. Water                                                                                                         b. Marketer Who First Claims the S5. Other -specify                                                                                                   Used Oil Meets the Specifications B. Universal Waste Activity EL   Large Quantity Handler of Universal Waste IX. Description of Hazardous Wastes (Use additionral sheets if necessary)

A. Listed Hazardous Wastes. (See 40 CFR261S3 - 33; See instructionsif you need to list more than 12 waste codes.) B. Characteristics of Nonlisted Hazardous Wastes. (Mark 'X in the boxes correspondingto the characteristicsof nonfisted hazardous wastes your installation handles; See 40 CFR Parts 26120 -261,24; See instructions if you need to list more than 4 toxicity characteristic waste codes.) (Ltst specific EPA hazardouswaste number(s) for the Toxtctty Characteristic contaminant(s))

1. Ignitable 2. Corrosive 3. Reactive 4,roxiciw 23 (DOO0) (0002) (003 Characteristic X XX X 0:0oD4 D 05 006 D i010 7I C. Other Wastes. (State-regulated or other wastes requiring a handler to have an 1.0., number; See instructions.)

12 3 ----- 4 f5 6 X. Certification I certify under penalty of law that this document and all attachments were prepared under my direction or supervision in accordance with a system designed to assure that qualified personnel properly gather and evaluate the information submitted. Based on my inquiry of the person or persons who manage the system, or those persons directly responsible for gathering the information, the information submitted is, to the best of my knowledge and belief, true, accurate, and complete. I am aware that there are significant penalties for submitting false information, including the possibility of fine and imprisonment for knowing violations. Signatuu_ Name and Official Title (Type orprint) Date Signed Robert C. Braun, Plant Manager Limerick Generating Station XI. Comments Note: MailI completed form to the appropriate EPA Regional or State Office. (See Section IVof the booklet for addresses.) EPA Form 8700-12 (Rev. 12/99) -2of 2

FormApproved, OMB No. 2050-0028 Expires 12/13102 Please print or type with ELITE type (12 characters per inch) in the unshaded areas only GSA No. 0246-EPA-OT For Official Use Only 91 92 93 94 95 9 B. Toxicity Characteristic Hazardous Wastes. (See 40 CFR261.24; Use this page only ifyou need to listmore tlan 4 waste codes.) 5 6 7 8 90 0j__8 I O0L,9 DO0 1 0 D l018 D 22 11 12 13 14 1s 16 S}-L-J 3 5 D E0 3 90 i DO 2L 5! 17 18 019 20 21 22 EPA Form 8700-12 (Rev. 12/99) Li/I

3620-FM-WQ0041.1 Revv. 10/98 COMMONWEALTH OF PENNSYLVANIA DEPARTMENT OF ENVIRONMENTAL PROTECTION WATER MANAGEMENT PROGRAM APPLICATION FOR NPDES OR WQM PART II PERMIT TRANSFER

1. Date October 16. 2000

2. Name of Present Permittee PECO Energy Company

3. Mailing Address 200 Exelon Way Street or Box Number Kennett Square State PA Zip 19348

4. Permit(s) Involved (Use Attached Sheet if Necessary) 5. Location of PermittedFacilities Permit No. Date Issued Most Recent Amendment SEE A TTACHED TABLE Municipality:

SEE ATTACHED TABLE County:

6. Does Transfer of the Permit(s) Involve a Change in Ownership or Tenancy? 0 Yes 03 No If NO, for a change in name only, have you complied with the Fictitious Name Act? Dl Yes, copy must be attached 0 No

7. The Existing Permit(s) is (are) N Attached 0 Cannot be Produced (Explain Why)

Affidavit

9. I, James D. von Suskil , being duly sworn accor ing to law depose ands-ay that I (am-t-e applieer4 (am an officer or official of the applicant) (hav-e the auth.. it' t.. make this.. ppliato f^r th applicant) named above as the present penmittee, that said permittee relinquishes all right, title and interest in said permit, and that the information included in the foregoing application and item 24 below is true to the best of my knowledge and belie out pplic le portions in parentheses only)

10. Signature /. r 4

11. Title Vice P dent, Limerick Generating Station 12.

COMMONWEALTH OF PENNSYLVANIA COUNTY OF Cr ,1tJ.L SS

12. SWORN TO AND SUBSCRIBED BEFORE ME 0 This -q Day of '>1 .*93 *O f

Public) res 0, 0 commission Expir

                                                                      /
                                                                                         - I-

3620-FM-WQ0041.1 Rev. 10/98

13. Statement of Acceptance of Permit by Proposed New Permittee I

1,we 0 A Private Individual El A Corporation 0 A Partnership El An Association [Other LLC Named Exelon Generation Company 15. Contact Person For Additional Information Dawn Fish Exelon Way, Kennett Square, PA 200 ExeFon Way

14. With Principal Office of place of Business Located at: 200 19348 Kennett Square, PA 19348 Mailing Address 610-765-5847 Phone Number Hereby accept the permit(s) herein referred to and agree to be bound by all terms of said permit(s). Phone Number: 610-765-5847 16 I, we have determined that the QUANTITY of the discharge will be OThe Same 0 Different El Decreased in relation to the existing approved permit(s)

If different, explain why

17. I, we have determined that the QUALITY of the discharge will be [EThe Same 11 Different In relation to the existing approved permit(s)

If different, explain why

18. Date of anticipated ownership transfer January 1 12001

19. Affidavit If Corporation Affix Seal Here

?0. I, James D. von Suskil , being duly sworn according to law depose any say that I (a..4he-appl.eaj#t) (am an officer or official of the applicant) (have the authori*it to make this applicatiRn fbr the appli***n) named above as the proposed new permittee, and that the information included in the foregoing aliption an item 2 bplow is true to the best of my knowledge and belief. (Cross out inapplicable portions in parentheses only)

21. Signature

22. Title Vice Pesident, Limerick Generating Station

23. COMMONWEALTH OF PENNSYLVANIA COUNTY OF "Af 5e 0--X - SS SWORN TO AND SUBSCRIBED BEFORE ME U This Day of _

My Commission Expires J r oo

24. Statement of liability for permit violations - unless otherwise indicated by attached written agreement, the proposed new permittee will be held liable for all continuing and future violations of the transferred permit(s).

PECO Energy Company Limerick Generating Station NPDES Permits

                                                                                                    -

I FACILITY PERMIT NUMBER MUNICIPALITY & DATE ISSUED MOST COUNTY RECENT AMENDMENT i + i .1. Limerick Generating Station PA 0051926 Limerick Township 9/27/2000 9/27/2000 Evergreen and Sanatoga Roads Pottstown, PA 19464 Montgomery County I I iI Bradshaw Reservoir PA 0052221 Bedminster Township 11/9/98 5/18/99 Elephant and Central School Roads Bedminster, PA 18944 Bucks County i 4i Pottstown - Limerick Airport PA 0054089 Limerick Township Pending 3310 West Ridge Avenue Pottstown, PA 19461 Montgomery County Draft Permit Iceal a*M

                                                                                                                    /"7/0rhtnn I.                                       I

_______________________________________ ______________________________________________________ I. *"*-'- 'J.J'J I _________________________________

FOR DEPARTMENT USE ONLY 3630-PM-WQO0016 Rev. 2/2000 COMMONWEALTH OF PENNSYLVANIA DEPARTMENT OF ENVIRONMENTAL PROTECTION BUREAU OF WATER QUALITY PROTECTION Date Received BUREAU OF WATERWAYS ENGINEERING 1 APPLICATION FOR TRANSFER OF PERMIT ' Aprovedby Departmen AND SUBMERGED LANDS LICENSE AGREEMENT Approval Date DAM SAFETY USE ONLY Return 4 executed copies each with signatures to the appropriate office on the attached list. No Dam Permit issued, permit waived. TO BE COMPLETED BY PRESENT PERMITTEE E No Dam Permit issued, permit required. Name PECO of Energy PresentCompany Permittee Telephone Number 610-765-5874 Mailing Address City State Zip 200 Exelon Way Kennett Square PA 19348 n A Private Individual 0 A Corporation El A Partnership El A Government Agency El LLC [] Deceased/Unable to Locate Type of Permit GP D1 Permit Number Date Issued Stream Municipality County Obstruction [D Dam M See Attached Table See Attached Table The Original (or a copy) of permit is 0 Attached r- Cannot be produced Has a bond been posted in connection with this project? El Yes 0 No Do you presently hold a submerged lands license agreement? E] Yes 0 No (If yes, please fill out the reverse side also) 1 AFFIDAVIT " I James D. von Suskil being duly sworn according to law depose and say that I (am the pcmittee) (am an officer of the permittee) (ha-ve the authority to mFnk this appli*catin fer the pcrmittoa) named above as the present permittee, that said permittee relinquishes all right, title and interest in said permit, and that the information included in the foregoing application is true to the best of my knowledge and belief. (Inapplicable portions should be crossed out). Vice President,

                                               -___Limerick                                       Generating Station permittee3l                                         Title (ifapplicable)                             Date Witness Signature 3'                                               Title (ifapplicable)

TO BE COMPLETED BY NEW APPLICANT Name of New Applicant Telephone Number Exelon Generation Company, LLC 610-765-5847 Mailing Address City State Zip 200 Exelon Way Kennett Square PA 19348 Federal ID/Social Security [] A Private Individual El A Corporation [] A Partnership C] A Government Agency 0 LLC No. Statement of Acceptance of Permit: IN~e hereby accept the permit herein referred to and agree to be bound by all terms and conditions of said permit. AFFIDAVIT 1' I James D. von Suskil being duly sworn according to law depose and say that 1(am the applicant) (am an officer or official of the applicant) (have the authority t*,* nak this application for the applicrant) named above as the new applicant, and that the information included in the foregoing statement is true to the best of my knowledge and belief. (Inapplicable portions should be crossed out)

                       \                                                               Vice President, SLimerick                                                     Generating Station ignature of new applicant 3'                                         Title (if applicable)                             Date Witness Signature 3'                                               Title (if applicable)

Page 1 of 2

3630-PM-WQ0016 Rev. 2/2000 APPLICATION TO ASSIGN LICENSE AGREEMENT TO BE COMPLETED BY PRESENT LICENSEE Name of Present Licensee 2' NA I AFFIDAVIT I__being duly sworn according to law depose and say that I (am the licensee) (am an officer of the licensee) (have the authority to make this application for the licensee) named above as the present licensee, that said licensee relinquishes all right, title and interest in said License, and agrees to assign all right, title, interest and obligations under License Agreement dated , permit number to the new licensee named herein, and that the information included in the foregoing application is true to the best of my knowledge and belief. (Inapplicable portions should be crossed out). 3 Signature of present licensee ' Title (ifapplicable) Date 3 Witness Signature l Title (if applicable) TO BE COMPLETED BY NEW LICENSEE 2 Name of New Licensee ' NAI AFFIDAVIT ___being duly sworn according to law depose and say that I (am the licensee) (am an officer or official of the licensee) (have the authority to make this application for the licensee) named above as the new licensee, and agrees to accept assignment of all right, title, interest and obligations under License Agreement dated , permit number and that the information included in the foregoing statement is true to the best of my knowledge and belief. (Inapplicable portions should be crossed out). 2' Title (if applicable) Date Signature of new licensee 2' Witness Signature Title (if applicable) it if the regulated activity was authorized by a General Permit, the new applicant must also complete and submit a new "Notification to Use" form of the applicable General Permit. If a Submerged Lands License Agreement is presently held, page 2 of this form must be completed by both the Present Licensee and the new applicant (new Licensee). Further, the Affidavits on page 1 do not have to be completed. 2J The name of the present licensee and the new licensee must be the same as the present permittee and new applicant shown on the front of this form. I' Clarification on some signatures: For corporations,on page 1 the signatures must be the President, Vice President, Secretary or Treasurer but no witness is required; on page 2 the signature must be the President or Vice President and witnessed by the Secretary or Treasurer. For government agencies, on both pages 1 and 2 the signature must be the Chief officer and witnessed by the Chief Clerk, Secretary or Treasurer. For partnerships,on pages 1 and 2, any partner authorized to sign on behalf of entire partnership must sign. For LLCs, if it is member managed, a member must sign; if it is manager managed, a manager must sign. If anyone else signs, must send documentation saying they have authority to sign. Witness signature is not required for LLC. For individuals, no indication of title is necessary. Page 2 of 2

Limerick Permits

r. . - - - -

CnnlhI. ILU *lie Name Site iu uou ntv Stream D*t*. II.climtl P,*rmif T*lna D*Prw ;& IklA Strea .mi ~... VI 140r 75036 PECO- 452264 Bucks Geddes Run, 02/12/88 Encroachment 09-051A Bradshaw Cabin Run and its tributaries, and Deep Run and its tributaries NA PECO- NA Montgomery Brooke 01/12/71 Obstruction/ 19161 Limerick Evans Creek Encroachment NA PECO- NA Montgomery Possom 01/12/71 Obstruction/ 19194 Limerick Hollow Run Encroachment and Schuylkill River MkA D ' M"/- kA I-, -a.. . . r-,- ... *. .. .. .. 1"n ivi*ontgomery --,cnuyKIII U0/13//2 Obstruction/ 19972 Limerick , .. *vI 1 I 75036 PECO- 452264 Bucks Perkiomen 02/12/88 Encroachment 09-077A Bradshaw Creek NA PECO NA Bucks Perkiomen 12/18/74 Encroachment 19615 Perkiomen Creek MA -IA r. __ -.. . I 'JP\ F r A*,%J INIA MUCKS *Schquylkill 07/16/76 Encroachment 19616 Limerick 4 ________ 1 _________ j _______

10- 2-00  ; 1:08PM  ; t Oct-02-00 12:42P Engineer-ing P.;# 02 2 COMMONWEALTH OF PENNSYLVANIA RESOURCES DEPARTMENT OF ENVIRONMENTAL Post Office Box 2357 E*NN SYLVANIA Harrisburg, Pennsylvania 17120 717-7S7- 6S826 February 11, 198 8 Management Bureau of Dams and WaterwaY D. M arano Engineer in Charge Civil Section Philadelphia Electric Company 2301 Market Street P.O. Box S699 Philadelphia, PA 19101 Re: DER Permit No. E 09-051A

Dear Mr. Marano,

a time extension of November 10, 1987, requesting This is in response to your letter construct and maintain the Philadelphia Electric Company co for Permit No. ENC:09-51 issued to and across the channel of various streams in Plumstead and bed a water supply pipeline under the Bedminster Townships, Bucks County. for a emrnpotray the Department extended the permit By order dated December 30, 1036, Pleasant diversion projec-. period to expire June 30, 1937, in order to review the Point and adding and interim by revising 30, 1986, also amended the permit The Department's order of December and added to Permit No.. EN.C.09-77. On including special conditions revised 1 suoersedeas special conditions extended until December 31, 1987, and subsequent vyby June 22, 1937, the permit was until February 15, 1988. adopted pursuant 105, Section 43 of the Department's Rules and Reegulations, Chapter set reasonable and and Encroachments Act, authorizes the Department to 105. to the Dam SafeTy permit issued under Chapter limits for completion of the work authorized by any appropriate the time limit specified as Permi No. E 09-051A and Therefore, the permit is re.ssued 199S. All conditions specilied in the permit as to December 3I, in Condition No. 1i is extended of the permit is enclosed in remain in effect and are to be complied with. A copy amended the f'le copy to this sign both copies of the permit and return You rimust immediately not become effective until of the permit to be retained by you will o-ffice. The executed copy copy returned within by you or your authorized representative and the file to this both copies are signed The Acknowledgement of Apprisal form must be returnec au-thor office. to d( the thirty (30) 6ays to this by the contractor, or his engineer, chosen and signed report office after it is completed conditions. The Cmrnpl-e.T;on read and understands the permit indicating tha- the work has been ized work to indicate he has or your authorized representative form must be signed by you (30) days of the completion of the approved pro:,CT. within thirty completed as approved

                                                                                                                             'Xearmng Board, of   the    Department       may    be appealable to the Environrnental            by any This action                                             Pennsylvania 17101, 717-7S7-34S3, P.S.

Second Street, rHarrisburg, 71 Third Floor, 221 North Administrative Code of 1929, person pursuant to Section 1921-N of the aggrieved

10- 2-00; 1:08PM  ;  ;# P-03 3 Oc-t-02-0Q 12:42P Engineering February 11, 1998 D, iNarano 2Pa. C$., Chapter SA. Appeals mustbe Section 510-21; and the Administrative Agency Law, 1-earing Board within athirty time 01 (30) days period. of written receiptCopies appealof of thenotice filed with the l.nvironmental statute provides different this ac-ion unless the appropriate may be obtained from the governing practice and procedure before the Board beyond that permitted form and regulations in and of itself, create any right of appeal does not, Board. This paragraph law by applicable statutes and decisional eennee 'Chief ivision of Waterways and Storm Water Managernent 2ureau of Darns and Water %)anagement

                                                                                                                                                   ;#   4 10-  2-00;       1:08PM          ;                                                                                                               P-04 "Oct-02-O0                12:42P          Engineciring EO9-O i
            *   ý7,,._0 CO\,,GN.EALH OF FE.N`YLVA.NiA RESOURCES DEPARTMENT OF ENVIRON.MENTAL WATER OBSTR UCON .AND                        ENCROACHMENT              PER_',lIT De-,atrvnt s' .. emncere
                                                                 . Resaohe                                               er 1970.rre  P.L-Departirnen

3"34 f71 P.S, o HEnvironme"tn 3tC-! e.r e.l. :o epercise .....

z nandpowers and . 26, 193,1P.L. 1_7 as amended by .he Ac, ot and bv Artue of the Act of No:ember Encroachments ducies under Safeiy and Octobter 23. 1979. P.L. 204..32 P. S-S.69_." er sea.) known as zhe "Dam nown as -he "Flood P'ain

21. (22 P.S. §s679.:01 .ear e 4 1975. P.L.

Ac-:" Act of Oc:ober ,r sea.), kmown as !he "Clean Act of Jun. - !9'37, P.L. 1987. (§§ PS. S 691,1 Manaernent Ac.": 1929, P.L. I 7":..:.r amended. vhic. emrpowers Streams Law"; and -he .\drnin'strati',e r..-de., Ac: and

                                                                                -Drii 9, certain ofDer-ron             duties   by     law vested in an- :*e
    *he ,Department to ,'xerclse certain powers                                                                                     Board. he_ "

the Water Su=.iy" Commi-Mssion or .. s;:varii and the Water and Power Resources upon issues this permit to: PHILADELPHIA ELECTRIC COMIPANY PA 19101 Box 8699, Philadel 2301 Market Street, P. 0. 31, 1998, to reissue giNing its consent to extend the time limit to December a water suoply and to amiend Permit No. E09-051 to construct and maintain Run, Cabin Run across the channel of Geddes oioeline under the bed and and and Deep Run and its Tributaries in Plumstead and its Tributaries. Sedminster Townshius, Bucks County. of Environmental to an application filed with the Department This permit is issued in response A.D. 19 81 , and with the understanding on the 7th day of Anril and specifications flied Resources with the maps, plans, proftles performed in accordan¢c . Subject however, to the that the work shall be N/A with and made part of the a)olicatiorl the O.ean Streams Act:, he Flood Plain ŽAanagernent Xct. and the r oilowving provisions of the Damn Safety ard Encroachirneats rules and regulations promulgated thereunder Law, the Administrative Code, the conditions and restrictions, return the file copy shall not become effective until and unless the permittee shall within thirty (30)

1. T'xis permit to the Department authorized agent of the permittee siae'nd by the permittee or an sigature shall signify and indicate that the permittee accepts date of the permit; such to submit such acceptance days from the and conditionls of the permit. Failure comply with the terms and agees to will render the permit null and void; and data which the The Department, in issuing this permit, has relied on the information to the issuance of :his 2-with his permit application. If, subsequent permittee has provided in connection to be false, incomplete or inaccurate, this permit may be moditted.

prove permit, such information and data in part, and the Department may, in addition, institute appropriate or revoked, in whole or suspended, legal proceeding"

2-00; 1:08PM ,  ;# 5 10- P.05 Oct-02-00 12:43P Engineering real estate or material, nor any exclusive

3. This permit does not give any property rights, either in title, easement, any ri'htt neither or interest, in. to.

privileges, nor shall it be construed to grant or confer of Pennsylvania: does it authorize any injury the Commonwealth or over any land belonging to rights, nor any infringement of Federal. necessary. State. or local laws property or invasion of private when to private assent the necessity of obtaining Federal or regulation: nor does it obviate the times be subject to supervision and inspection by representa1tives of

4. The work shall at all as approved shall be made maps, plans, profiles, and specification Department, and no changes in the the Department. The Department, however, reserves the right to except with the written consent of as may he considered in the maps, plans. profiles, and specifications require such changes or modifications this permit if in its opinion reserves the right 0osuspend or revoke necessary. The Department further will be subserved thereby:

the best intercst of the Commonwealth of the authorizes the construction, operation, mamntenance and normal repair or

5. This permit obstruCtion structures conducted within the original specifications for the waterand conditions of permitted Lenns the regulations of the Department and encroachment. and in accordance with involving modifications of the water obstruction or encroachment this permit. Any repairs or maintenance portion of the repairs or reconstruction, involving a substantial from its original spccifications, and any written approval and permit Department shall require the prior structure as defined by regulations of the of the Department:

work brush, rocks, and refuse incidental to this

6. All construction debris. excavated material,and placed either on shore above the influence of channel shall be removed entirely from the stream may be approved by:the Department; dumping 'rbund as flood waters, or' at such with the free discharge 'of the river or stream nor 7, There shall be no unreasonable interference

                                                                           .           ..

with navigation, during construction: of Pennsylvania require modification of the structure

8. If future operations by the Commonwealth or work if, in the opinion of the Department of Environmental Resources. the structure or work, or of floodwaters or navigation, the permittee shall, shall cause unreasonable obstruction to the free passage work or obstructions caused thereby, without expense upon due notice remove or alter the structural carrying capacity of rhe _harinel to the Commonwealth of Pennsylvania. so as to increase the inflood such manner as the Department may or render navigtion reasonably free, easy, and unobstructed, of this permit, the work shall not be completed, reouire; and if., upon the expiration or revocation extent and in such time and manner as the Department the permittee, at his own expense and to suchof the incompleted work and restore the watercourse to may require, shall remove all or any portion on account condition. No claim shall be made against the Commonwealth of Pennsylvania its former of any such removal or alteration; is of Environmental Resources when this work

9. The permittee shall notify the Department probable time of completion; commenced and at least two weeks before the of the work authorized in this permit. the permittee

10. Within thirty (30) days after the completion certifying Resources, Harrisburg, Pennsylvania. a statement shall file with the Department of Environmental with this permit and the approved maps, plans, profiles, that the work has been performed in accordance and specifications; the 31stday of December 1i, If this work is not completed on or before or sTpeificaUy extended, shall cease and be nul revoked A.D. 19 98 , this permit. if not previously and void; work authorized by this permit shall be apprised

12. The Engineer and the Contractor for the of being so apprised and shall sigrify their acknowledgement of all of the provisions and conditions Page 2

                                                                                                                              ;# 6 10-  2-00;      1:08PM                                                                                                    P-06 Oct-02-O0               12:43P        Engineering avilabie on the form herein attached. Copy of this                                 the with copy of the shall signed form, to-etheracknowledgemfent                bebeforwarded shall permitalso at all times. Copy    of

or inspection at the project site to have copies of the permit and acknowledgement available Failure the office issuing the permit.

issuance of a cease and desist be considered sufficient cause for to

   )r  inspection      at  the  project    site  shall personnel; order by the authorized Commonwealth in good condition and The     permittee    shall  maintain    the structure or work authorized herein 13.

plans and drawings; in accordance with the approved such may not be transferred without prior written approval from the Department,of Permit"

14. This permit for Transfer of a properly executed "Application approval being considered upon receipt form; herein, unless such If and when the permittee desires to abandon the activity authorized the structure 15.

is part of a transfer procedure pursuant to Condition 14, he must remove abandonment by the Department. to a condition satisfactory to and approved or work authorized and restore the area Paze 3

10- 2-00; 1:08PM  ;  ;# 7 12:43P Engineering Oct-02-O0 pERMIT No. P.07 SPECIAL CONDITIONS the District Engineer, is contingent upon the approval/permit from This permit and Philadelphia District, U.S. Army Corps of Engilneers, Custom House, SecorO CheStnut Streets Philadelphia, PA 19106, under Section 10 of the River and The Distict Engineer Clean Water Act of 1977.

-. Harbor Act or Section 404 of the                                              project  is:     Mr. D. Marano, contact person for this has been notified that the                                     B41-4   000 .

(215) Engineer-in-Charge, civil $ection, the work authorized by this permit, and upon completion of Fish Commission'S Southeast Regional B. Prior to commencementnotify the Pennsylvania The project site the permitteeBox 8, shall Elm, PA 17521, Telephone (717) 626-0228. and employees Office, for inspection by authorized officers be available shall at all times Fish Commission. of the Pennsylvania implemented and Control Plan must be properly sedimentation into Sedimentation and prevent excessive C. The Erosion and to minimize erosion closely monitored channel. the receiving stream by this p4rmit completion of the work authorized and upon District, 100 Mechanic

0. Prior to co1ellcement the Bucks County Conservation The project the perlittee shall notify PA 18901, Telephone (215) 345-7577.officers Doylestowh, by authorized Street, 2nd Floor, be available for inspection at all times site shall District.

the County Conservation and employees of A.... vlrjitionsof all times comply with *nthe terms of Engineersp permittee shall at all by the US. Army Corps E. applicable approvals and permits issued The approvals and permits are incorporated and the conditions set forth in such reference. in this permit by and conditions of all shall at all times comply with the terms Se the Delaware River Basin project approvals and permits issued byproject approvals are incorporated applicable in such conditions set forth Commission, and the in this permit by reference. zonsluction effecting provide adequate ce-ours during times. The permittee shall be kept open az all 5. U.S. Route 611 and PA Route 413 will to insure compliance with local roads. necessary be installed when A temporary road shall (Continued) this requirement. permit. and conditions of this and agrees to comply with the terms Permittee hereby accepts Permni~tee (signattre) RESOURCES ENV-IRONMYIENTAL FF3 12 1 issue Date Applies to ER-DWVA-Page 4

10- 2-00; 1:08PM 12:44P Engineering P 08 - Oct-02-O0 I1 Permit N*o. E09-O51A (Continued) SPECIAL cONDITIONS landscaped to complement shall be designed and facilities w I All above ground

        ""he surrounding env"r",,,, ....

conditions (Special Conditions I

1. PermfitteeP) shall with all operation comply Encroachments Permit EOg-077A.

through imnpose in 704, 32 P.S. §591 et seq. ("Limited 1923, P.L.

j. Pursuant to the Act of June 14, Power Act"): do it er ny a period of fifty years only; 1or. The duration of thisthat however, permit the shall permittee be for shall be entitled to extension and providhed said peraiitee of the permit upon the terms thereof, until the renewal or purchase by the Commonwealthi shall have received through recapture of the capital subsequent permittee, repayment of the permit ,

or by a duly authorized faith invested in the power project upon the valuable, prudently of the permittee plus such reasonable damages, if any, to property upon the continuance of for its usefulness serviceables and dependent by the or purchased, as may be caused that should such permit, but not recaptured provided, however, of property taken; the project, for which severance ethererom eefor any reason whatsoever, abandon the forms a part, or cease to operate the permittie, feren authorized shall cease and be null then this permit same for a period of three years the watercour= shall, at its own expense and to such extent and void ieand permittee and the se to its former

• such ad in,,e time and manner as the Department may require fe r wt or o.

of the -acilities and restor theheCommonwealth of Pennsylvania or any portion shall be made aoainst condition. No claim reyoval on account of any such Resources, to the Department of Environmental

2. The permnittee shall pay forth in permit charge as set hereby gr-ted, an annual for the privilege Dog-181A-Page 5

                                                                                                        ;#  9 10-   2-00;   1:08PM                                                                               P-09

- Oct-02-00 12:44P Engineering Permit No. 5 E_0'_9_-_0_ Stream Crossings; of Route 413 in Plumstead Geddes Run at a point approximately 2200 feet upstream Townshi p.

2. A Tributary to Cabin Run at a point approximately 6400 feet upstream of the boundary line in Plumstead Township.

Plumstead - Bedminster Township upstream of its point approximately 3600 feet

3. A Tributary to Cabin Run at a mouth in Bedminster Township.

611 in Bedminster 3500 feet upstream of Route

4. Cabin Run at a point approximately Township.,

upstream of its to Deep Run at a point approximately 5100 feet

5. A Tributary mouth in Bedminster Township.

upstream of its point approximately 1100 feet

6. A Tributary to Deep Run at a mouth in Bedminster Townhip.

in Bedminster 1000 feet upstream of L.R. 09091

7. Deep Run at a point approximately Township.

of its mouth Tributary to Deep Run at a point approximately 200 feet upstream

8. A in Bedminster Township.

10- 2-00; 1:03PM  ;  ;# 2 P.02 Oct-02-00 12:37P Engineering COMMONWEALTH OF PENNSYLVANIA RESOURCES DEPARTMENT OF ENVIRONMENTAL Post Office Box 2357 N NNSYLVANIA Harrisburg, Pennsylvania 17120 7 17-7S7-6 Z2 6 February i1, 1983 Bureau of Dams and Waterway Management D. M'arano Engineer in Charge Civil Section Philadelphia Electric Company 2301 Market Street P.O. Box 9699 Phiiadelphia, PA 19101 Re: DER Permit No. E 09-77A

Dear Mr. Marano:

your letter of November 19, Company1987, requesting a t-ime extension This is in reference to to construct and rn-nain

         .for Permit No. ENC:09-77                  issued to the Philadelphia Electric the left bank of the Eas dissipator       and channel stabilization along upstream -from L.R 09090 in Bedminster an outfall structure,             energy Branch Perkliomen             Creek       at a point approximately 800 feet Township,      Bucks Coun-ty.

Permit 30, 19S6, the Departmeint extended By Depar'rnental order dated Decemberexpire June 30, 1987. in order To allow a review interim period to 30, 1936, aiso NC. ENC:09-77 for a temporary The Department's order dated December diversion project. of the per-mit. of- the Point Pleasant and making additions to the special conditions by revising amended Permit -NC:09-77 was ex>tended until December 31, 19S7, and subseouently by suDer-On June 26. 1987. the permit adopted pursuant Department's Rules and Reguiations,reasonabie and Chao.te. 105, Section L3 of the to s5e-Act, authorizes the Departmertpermit issued under to the Darn Salety and Encroachments of .the work &u:hcr-zed by any appropriate time limits fcr completion ChlaoTeIrý 105. time limit specified permit is reissued as Permit No. 09-077A and the the the permit zs Therefore. to December 31, 1.998. All conditcions speciIfied in iCondi-uon No. 11 is extended enclosed in and are to be complied with. A copy of the permit is a,,mended re.-ain in efiec: CuolicaTe. the file copy tL o t s _mmedi=zely sign both copies of the permit and return until You must by' you will not become ef."ective ofice. The ar= executed copyyou of- the permit to be re-ained representative and the fliecopy returned within both cooies signed by or your authorized co tis The .%cknowledcgement of Appris.ti form must be returntd au...hor thirt' (30) days to this office. chosen I o do the by the con-traCTor -or his engineer, Th e ooeto Com R e 7. is cor i

                                              . eted   and     signed understands the peri,. cc nc t1o n it aerto indica--.e he has            read      and                                                        he work has been izedie work off representative indicating .nat signed       by   you   or    youT    au:horl-ed                                    approved     project.

form must be thirty' (30) days of the comletion of the comr leted a approved within

1o- 2-00; 1:03PM  ; P.;# 03 3 Oczt-02-O0 12:37P Engineering February 1 . 1988 2-D. MIarao-Board, may be appealable to the Environmental Hearing This action of the Department by any 17101, 717-787-3043, Floor, 221 North Second Street, Harrisburg, Pennsylvania of 1929, 71 P.S, Third to Section 1921-A of the Administrative Code must be aggrieved person pursuant Agency Law, 2 Pa. C.S- Chapter 5A. Appeals notice of Section 510-21; and the AdministrativeBoard within thirty (30) days of receipt of written Hearing of the appeal filed with the Environmental provides a different time period, Copies statute from the this action unless the appropriate and procedure before the Board may be obtained practice that permitted form and regulations governing any right of appeal beyond This paragraph does not, in and of itself, create Board. decisional law. by applicable statutes and Sinc e;.ýt x. (~eneE Coup. 1ý4Tie l5ivision of Waterways and Storm Water Management Management Bureau of Dams and Waterway

lO- 2-00; 1:03PM  ;  ;# P-04 4 Oct-02-O0 12:38P Engineering

                                                                   "-                          ?ERMIIT NO.                    0Q-7OQ771 CON,,1., EALT1        *OF HEX\SYLV.AIA DEPARTMENT           OF     ENVIRONMENTAL              RESOURCES WATER OBSTRUCTION                 AND      ENCROACHMENT             PERMIT Act of December 3, T:':e Departme:nt of En ironmenzal Rsources "Decartment". eszablished by the and pertorm ce2rtain I970. P.L. 334 (71 P.S. § §510-1 er seq.) and empowered to exercise certain powers                                by the Act o" duties under and by virtue of the Act of November 26. 1973, P.L. 1375, a amended                                   Encroachments e   sea.)  known   as  the  "Dam    Safety    and October 23. 1979, P.L. 204. (32 P.S, § §693.1 sea.) known as the "Flood Plain Ac-": Act of October 4. 197-. P.L. 851. (32 P.S. §§679.101 ut
                                                                                         §§691.1 er seq.), known as thu Clear.

Management Act": Act of June 22., 1937, P.L. 1987. (35 P.S. P.L. 177, as amended, which enpowen. Streams Law": and the Administrative Code. Act of Apri] 9, 1929, by law vested in and imposed the De-artmenr to exercise certain powers and perforn certain duties and Power Resources Soard. "1..re"ov upon the Water Supply Commission of Pennsylvaria and the Water issues zhis permit to: PHILADELPHIA ELECTRIC COMPANY Philadelphia, PA 19101 2301 ilarket Street, P. 0. Box 8699, extend the time limit to December 31, 1998, to reissue giving its consent to outfall and to amend Permit No. E09-077 to construct and maintain an along the left structure, energy dissipator and channel stabilization at a ooint approximately 800 feet bank of the East Branch Perkiomen Creek Township, Bucks County.' upstream from L.R. 09090 in Bedminster filed with the Department of Enironmeni Th1is permit is issued in response to an application , and with the understanding day of January AD. 19 82 Resources on the 7th with the maps, plans, profiles and specifications filed that the work shail be performed in accordance N/A . Subject however, to the with and made part of the application Act, the Flood Plain Management Act, the Clean Streams provisions of the Dam Safety and Encroachments regulations promulgated thereunder and the following Law, the Administrative Code, the rules and conditions and restrictions; and unless the permittee shall return -the file copy

1. This permit shaU not become effective until (30) of the perrnittee to the Department within thirtY signed by the permirtee or an authorized agent that the permittee accepts signature shall signify and indicate days from the date of the permit; such such acceptance conditions of the permit. Failure to submit and agrees to comply with the terms and will render the permit null and void; the Department, in issuing this permit, has relied on the information and data which this

2. The issuance o" his permit application. If, subsequent to the permittee has provided in connection with this permit may be modified.

and data prove to be false, incomplete or inaccurate, permit, such information appropniate and the Department may, in addition, institute suspended, or revoked, in whole or in part, legal proceedings; Page I

10- 2-00; 1:03PM  ;  ;# 5 P-05 "Oc't-02-00 12:38P Engineering iI either in real estate or maten-al, nor any exclusive

                   . This permit does not give any property rights,                                                                    or interest. m. to.

or confer any right. title, easement-priViiee nor shall it be construed to 5Mant of Pennsylvania: neither does it aurhoize any iniuzv or over any land belonaing to the Commonwealth State. or local laws property or invasion of private riights. nor an' infririgerment of Federal. to private of obtainng Federal assent when necssary" or regulation: nor does it obviate t*he ne-essity of the work shall at all times be subject to supervision and inspection by repreýsentativcsbe made

4. The as approved shall maps. pla*,s. profiles, and specification Department, and no changes in the Department. however, reser-ves The right to wr.zten consent of the Department. The except with the in tihe maps- plans. profies, and specificatiuoss aS m'aV be considered such chan,_-.es or moditicarions i In Its opinioni reqi Th'e ril-nt to susetnd or revoke tius permiti ncessa.y. "The D.partrel m,,rther ;escrves will be subserved thereby:

the best interest of the Coninonw:-,ith repair. of the

                                           .       ,tuhori.,:5    the   construction,        operation- maintenancLe and nornMa;                             or This pcrn-it                                                                                   r th,     water otTsr,- o tt-rconducd       within    the original o s-petccfiitsýw....

tihe Departmt:. ad terms and conditions. of encroachmenti-. :'i :n acordance with the re,.,ulttons obstruction or encroachrenti invoiving modifica.tions of the water a subsrantial portion of the This rerm-,it- Any ep -"or rnainten'iance any repairs or reconstruction involving from its original spec:ifications. and written approval and permit as defined h\' reculations of the Department shall require the prior sItructuri" of the Depalmenfl: to this work excavated material. brush. rocks. and refuse incidental debris? influence of

6. All construction er-reyv from the stream channel and placed either on shor-e above The shall be re`moved as may be approved by the Department flood waters, or at such dumping ground stream nor with the free discharge of the river or There shall be no unreasonable 'interference with navigation. dutr.n construction, require modification of the structure

8. if future ooerations by the Commonwealth of Pennsylvania Resources. the structure or work of Environmental or work, or if, in rho- opinion of -- th Department passage of floodwaters or nav*atio, the permit--... expoense shall.

the free "shall cause unrea *sonabie obstruction to structural work or obstructions caused thercb,. wifthout son due notice rem.ove or alter the to incr.eas- the flooad carrying caacilv of the :mt .y cha.-.nel tothe ru  ; of Per,.vlvan.ia. 5a ais D--oyar; and unobstructed. in such manner as :he or render navigat-:o' reasonably free. easy. the work shall not be completed. and if. unPon the e.,i.ption or revocation of this permit, as the Department r,,auire: perinitreeC at his ov., expense and to such extent and in such time and manner the watercourse to the of *the incompieted work and restore may require, shall .- move all or 3nv portion azainst the Cornmonwm alth of Penns',vania on account made its former condition- No claim shall be of ary such removal or alteration: is of Environmental Resources whevn this work P. The perrriktee shall notify the Dzpartrment the probable inme of completion: commenced and at :east two weeks before dxvs after the completion of the work I30" authorized in this pe.rmit, the permittee

10. Within th.rty 2 ,sburg-- Pennsylvania, a statement certifying Resources. Han-shall rile with the Departmrent of Environmental with this permit and The approved maps, plans, proIles, accordance that the work has been performed in and specifications; the 31stday of December

11. If this work is not completed on or before or-cificaily extended. siaull rease and be null

                                        . his pemnit, if not previously revoked A.D. 19 98 and void:

permit shall be apprised Entgrn-:er and the Contractor for the work authorized by this being so apprised I" The and conditions and shall signify their acknowledgement of of all a The proeisions Page2

10- 2-00; 1:03PM  ;  ;# 6 P-06 Oct-02-00 12:38P Engineering shaL, be 3vailable signed form, togethel with copy of the pe.nit on the form herein attached. Copy of this shall also be Corwarded Copy of the acknowledgement for inspection at the project site at all times. and acknowledgeCneent availabie to have copies of the permit to the office issuing the permit. Failure of a cease and desist considered sufficient cause for issuance ior inspection at the project site shall be personnel; order by the authorized Commonwealth and or work authorized herein in good condition

13. The pernmittee shall maintain the structure and drawings; in accordance with the approved plans such prior written approval from the Department,

14. This permit may not be transferred without Transfer of Permit" of a properly executed "Application for approval being considered upon receipt form; Unless such abandon the activity authorized herein,

15. If and when the permittee desires to the structure is part of a transfer procedure pursuant to Condition 14, he must remove abandonment by the Department.

to a condition satisfactory to and approved or work authorized and restore the area Page 3

                            ;                                                                                    ;#  7 10-   2-00;    1:03PM                                                                                          P-07 Oct-02-O0             12:38P       Engineering SPECIAL CONDITIONS Engineer, the approval/permit from the District A. This permit is'contingent upon                                                 House,    Second    and Corps of Engineers, Custom Philadelphia District, U.S. Army PA 19106, unaer Section 10 of tne River and Chestnut Streets, Philadelphia,                                             The District Engineer Clean Water Act of 1977.

Harbor Act or Section 404 of the D. Marano, person for this project is: Mr. has been -notified that the contact (215) 841-4000. Engineer-in-Charge, Civil Section, by this permit, completion of the work authorized B. Prior to commencement and upon Southeast Recional Pennsylvania Fish Commission's the permittee shall notify the project site Telephone (717) 626-0228. The Office, Box 8, Elm, PA 17521, officers and employees for inspection by authorized shall at all times be available of the Pennsylvania Fish Commission. implemented and Control Plan must be properly C. The Erosion and Sedimentation sedimentation into erosion and prevent excessive closely monitored to minimize the receiving stream channel. by this permit, completion of the work authorized D. Prior to commencement and upon District, 100 Mecnanic Bucks County Conservation the permittee shall notify the (215) 345-7577. The project 2nd Floor, Doylestown, PA 18901, Telephone Street, for inspection by authorized officers site shall at all times be available District. and employees of the County Conservation of all comply with the terms and conditions E. The permittee shall at all times of Engineers, issued by the U.S. Army Corps applicable approvals and permits such approvals and permits are incorporated and the conditions set forth in in this permit by reference. of all comply with the terms and conditions Basin The permittee shall at all times Delaware River permits issued by the

Dplicable project approvals andset forzh in such project approvals are incorporated Commission, and the conditions in this permit by reference.

detours during construction effecting G. The permittee shall provide adequate kent open all ti:.. lo.al .. L. Route 11_ ane PA Route 413 will be zo insure complianfce wi;. wren necessary A temporary road shal- De installed this requirement. (Conmtinued) termPs and capndions olf this -ner-r-it, acceipzs and agrrees to comply with the Perrnittee herelby Dare Perrnittee (signature) DEPARTMENIT OF ENN-VIRONMENTA-L RESOUTRCES issue Date a e ECos chie _ui*,%ion of Waterways and Storm Wataer Managemern ppDlhes to EI-DWM- 7

                                                                                              .A Page 4

10- 2-00; 1:03PM  ;  ;# P-08 8 12:39P Engineering Oct-02-O0 Eo9-077A Permit No. SPECIAL CONDITIONS (Continued) to complement shall be designed and landscaped facilities

h. All .above ground the surrounding environment.

Electric River for use by the Philadelphia day, subject from the Delaware gallons per

1. The withdrawal not exceed a maximum of 46.2 millionthe Delaware River Basin Commission.

Company shall established by limitations and conditions to all with the Operating and releases of water shall conform and OindinaS, Point storage Assessment j, All withdrawals, Envirofme'ntah Operating plan described in the Department's 98*2).. Any changes to such (Auqust Pleasant Water Su: DY Pr'oject started at a n..e.. h Lree ,, ...... to the East Branch Perkiomen in release rates or K. pumping and releases graduallY, and any adjustments manner, in order to a low rate, and increasedshall be controlled in a gradual i*n stream flow - termination of releases .. ...4 avoid rapid ifuc'uaý i Cniton1,1 oo t it I project operations, as tea provided get in hr Condition r, the permite-e the permtte ital schell mainrtaiL mirUsR-d a mnimum flow of 27 cubic feet per econ(. em ag touhoutc o in the Branch IBranch Perkiomen East Creek at with the the c day the sbooster BUCKS station commences the normal low flow period begistnin inthe norast operation of longer required for the pumping is no times, the permittee pumping and ending when Generating Station- At all other East Branch Perkiomen the Limerick Nuclear cfs (6.5 myd) in the iflow of .0 shallk maintain a minimum Cree L' , ar- nh Perkio-,enf Crek. Discharges to = .... operaTions, permittee shall initiate

1. During the initial start-up of project oT water from the Delaware River and incregse t he transfer and discharge a he an 3r T n-h e kiomenl £r-k in stcges. During the staged star-up, sr,* n xc Branch PerkiOmnimf greek di scharges to tne Lasz stages specified for the respective . -. r Rate e

Ti mef r ame 20 cfs (19.£2 mqd)

                                                       . e.30 days days                           27.1 cfs \-I.5D mgd)

At least 30 2 trpaft. a n , o.- r-

                                                     .o shall inspect           an         onitor the 0 portion

2. DurinM each staoe, :he permittee to and downstream of the out-et of the ESt Branch Perkiornen Creek adjacent impacS. Prior :0 initiaion structure for erosion and sedimenfalionl submit and the Dea1lmen following s;-rt-uPa program, of the approve the permi,,tee shall plan shall inziude monitorinl shall monitoring plan. Such s ani i ,.a t, e osihigh n offlow. the bank o - bed -o .

any s.inifican-t period of precipitation and any i-

3. lf any inspection discloses sigifin erosion of the b o b e i 7.

the perm-ttee snall ...... lh-Branch Perkiomen Creek, the East permt 't authofl.7D in wriincf such and request and an amendment to this revegeate any exposed Deoartmer erosion stabilize and measures to correct be consistent morioau of the stream oank. The corrective measureS shall with the scenic or natural esthntic values of the specific location The Department shall be notified jn writinq o0 any corrective action Ek77 o- comoietion of such action. by Zne permit-ee within 14 days

10- 2-00; 1:03PM  ; P;# 09 9 Ocrt-02-00 12:39P Engineering Permit No, LO9-277A SPECIAL CDNDITIONS (Contitued) of Stage 3, the Permittee shall

4. Within 60 days following the initiation prepared by a competant engineer regarding submit to the Department a report the results of the monitoring program.

at any to suspend the start-up program

5. The Department reserves the right are causing that project operations stage should information indicate to excess streambank erosion or sedimenzation, or significantly contributing to the satisfaction of the Department.

until such conditions are corrected basis its judgement determines, on the

6. If at any time, the Department in information, that the or any other of the start-up monitoring program to the East Branch Perkiomen Creek is causing excessive discharge of water will be required to submit for approval streambank erosion, the permittee a plan for streambank stabilization by the Department and to implement erosive effects caused by project measures on those banks which evidence operations.

the supply of water

7. During the first phase of project operations (for of water from the Delaware River to for Limerick Unit 1), the discharge mgd).

not exceed a rate of 27.1 cfs (17.51 the East Branch Perkiomen Creek shall (with of project operations Prior to proceeding with the second phase discharge of 65 cfs), permi~tee of 54.2 cfs and a maximum an average discharge approve a report prepared by shall submit to and the Department shall results of monitoring of the first a competant engineer summarizing the erosion and sedimentation in phase of project operations and observed with a plan soreambank stabilization the Easz Branch Perkiomen Creek, together will implement to address erosive and other measures which the permiozee phase of the projec: operations. effects that may be caused by the second start-up of the second phase of project Such plan shall include a staged for any subsequent operations. These procedures shall also be followed pnases of project operations. the portion of East Branch Perkiomen

8. The permittee shall inspect and monitor discharge on a regular basis and Creek adjacent to and downstream of the flows. If sucn inspection discloses following any significant period of flood of the East Branch Perkioment Creek significant erosion of the bank or bed such erosion, promptly correct below The discharge, the permittee shall soreambank. Reporis vorZion of the stabilize and reveaetate any exposed action taken, shall be filed with of such monizoring, and any corrective inspection or action.

the Department within two weeks of each declared by the Governor of Pennsylvania N. During any drought or water supply emergency law, or declared by the Delaware River or any agency pursuan; to Pennsylvania 10 of the Delaware River Basin Compact, Basin Commission pursuanz to Article subjecT operations by this project snell be all withdrawals, uses of water and or conditions limitations, restricnio-n to, and shall comply with, any applicable the Pennsylvania Emergency imposed by the Delaware River Basin Commission, in response to zne emergency. Management Agency, or the Department shall to the East Branch Perkioment Creek

0. Discharges of Delaware River wateor Creek equal or Exceed East Branch Perkiomen be suspended whenever flows in the Bucks Road goae.

125 cubic feet per second at the Page 6

1:03PM p;# 10- 2-00;  ; 10 10 "Oct-02-0O 12:39P Engineering Permit No. E09-077A SPECIAL CONDITIONS (Continued) Delaware River to the East Branch Permittee shall not discharge water from the for and obtained from the Department Perkiomen Creek unless permittee has applied Permit (NPDES) in accordance a National Pollution Discharge Elimination System and the discharge is in compliance with Section 402 of the Federal Clean Water Act forth in any applicable NPDES with all terms, conditions and limitations set Permit.

                                                                              §591 et seq. ("Limited Q_   Pursuant to the Act of June 14, 1923, P.L. 704, 32 P.S.

Power Act"): of fifty years only;

1. The duration of this permit shall be for a period to extension and provided, however, that the permittee shall be entitled until the said permittee renewal of the permit upon the terms thereof, Commorlwetlth, by the shall have received through recapture or purchase of the capital or by a duly authorized subsequent permittee, repayment upon the faith of the permit, prudently invested in the power project of the permittee valuable, plus such reasonable damages, if any, to property upon the continuance of serviceable, and dependent for its usefulness as may be caused by the such permit, but not recaptured or purchased, however, that should severance therefrom of property taken; provided, abandon the project, for which the permittee, for any reason whatsoever, part, or cease to operate the the facilities herein authorized forms a shall cease and be null same for a period of three years then this permit and to such extent expense and void and the permittee shall, at its own require, remove all may and in such time and manner as the Department watercourse to its former the or any portion of the facilities and restore the Commonwealth of Pennsylvania condition. No claim shall be made against on account of any such removal.

of Environmental Resources,

2. The permittee shall pay to the Department charge as set fortr in Permit for the privilege hereby granted, an annual the Delaware River to the East Branch R. Permiztee shall not discharoe water from such flowaae easements or other Perkiomen Creek until permittee has obtained owners as may be required property prooerty interests from downstream riparian Creek over the ripariank ownrers of the as a matter of l]a for the increased flow lants.

the Eas- Branch Perkiomen Creek on a S. Permittee shall monitor the ecology of a report every reoular basis. The oermittee shall file with theof Departmen7 such monitoring and any two years describing and explaining the results The perrni-tee shall take any m gtiating changes in the ecology that occur. plans s:,mizted in conformance with steps indicated necessary by such monitoring and approved by the Department. Page 7

FEB 13 '95 16:27 DAMS WTRWYS 0 NTLDS 717-772-5986 '

                    * ,. ,.                                                                  --                                   *. , . :.                    .              :- , *           .**    ~        *.~
                                                                                                                                                                                                                                                                              . .     .

7.. . . .T. "COMMONWEALT OP PENNSYLVANtA "" PERMIT NO DEPARTMENT OF ENYIRON1dENrAL 165." RESOURCES.

                                                                                                                                                       .PF.               rr The Department of Environmental                                                                                                                                 ..

Resources, established by the Act (71 P.s. 51 et.. sq.), and transferring or December 3, 1970 "" which, by virtue o Section the functions ehe of. Water r 1808 of "The Administrative and Power Resources Board "certain powerS and perform certain Code,.* was empowered to cxercis*" duties by law vested in.nd imposed Commission of Pennsylvania, upon the Water Supply-.* under and by vrtue of said of the General Assembly of the Commonwealth of Pennsylvania' .Adinistrative Code and of an act the regulation of dams, or other * .titlcd "An act providing for.-'.' or projecting structures or obstructions, as defined the boundary into all streams- and. bodies of water lierein, in, along, across' of, this Commonwealth; vestig certain wholly'or partly withiri,, or forming Commission of Pennsylvania, powers and duties in the Water part of-.- provisions hereof," approved thefor this purpose, and p Supply twenty-fifth day ofn-" i p u, one thousand nin he as amended, hereby..issues this permit d the to: .. .a-n ddred. and thirtcen' . " .' " rLADEL "".: ' ." c o nse n t o .n. *

                                      -. ... ,* *
                                    .,.:,?-                             *t~~~~. O.. . . . . .. . . . . . .....

c':truct ... " ........- ". .. .......

                                                      *      .                                                  .          tur.,truc                                                                         .~~     .    ....      ...     .

t In  : . Ja~da20nCrek, P4Mk~otu t-&'1000,fcat the Int *3ctionof Route 29 I  :.' ' southesr. of . agndBuckwa.lt 82 . o~ad It~Pr~~ n kj~ 7owns.hIps, Hontegomeo rwm outy.

                                                                           -....
                                       .     ...-...... .                 .             .             .             .              .            .          .             ...       ."                               .....

This permit Is issued in response .;.-.:i.:". Resources on the*_ 18th to an application riled with the day of rncnt ofEnvironmntal" __,___ t_._"_.._ A.D. 19 the understanding d. w a.n..

                  "and, specifications that                                          the work shall be performed in                                                                                                                                                            .th filed             with           and           made part of the application                             accordance                    with         the       mnaps,      plans, praf.iks.
    * "-
      ,.-:*;-,~~~~~~~~
          .. .... .. . ..                             . '. .... .. :'.".....                                ...        :. *..                 . ..        .,.        ...            .               ..
                                                                                                                                                                                                                                                                               ."'.....-.
                             *'. . . . . ... ... .. . .           ......                 ..     "...    ....*.    .. '.........      .....       ".  "..         :.. :..
                                                                                                                                                                     ...        :..*..........-....

             -subject,           however. to the provisions of
       ~~ the following conditions,                                                                                             the Act of June 25,13,PL55,s regula tions, and restrictions-`.-:.........                                                                                                           mne           ad
          *             *,
                                                                  .     .

I. his Permt does no give~ any ProPertyigt I.:

                                                                                                                                                      . right..................r...t.r...........                                       .

any eXclusiVe or interest, in. to, or aver. Privile-ges, nor shall it be construed to grant 'eiter in' rca saeo .... mtra , any; land belonging to the Co or.onwe-lo- confer any right,, titl' ezsmn o '................................. does a thorize c-.yneiter it a i yj r to private property nor invasion of Federal, State, or local laws of private rig h~ts, n ra y i f~ g m

                                          .....            ass nt... hens,or regulation: nor does                                                        ."..--.

it obv~t th ecssiy

            .               wc                           ssary; ."                                                                                                                                                         nof ony infin e                          o-n                 Federal
                                       ;:-......*./:-?
                                                   .
                                                               ?  ..........................-......
                                                         . .'. ... ',.-;......   ,,..-        ....-..
                                                                                          .,,,r,,--,.

g tlons

                                                                                                             ....             ari.     .......

restic.. . . . . . . . . . . .n. .... . ..... ...-

• FE 13'95 G:2 D~(S ITRWYS a WTLD3 717-772-598e 37 2

No

2. Thc work shall at all times bc subject t ue-iinadIlP~inb of Dcphert ncn. nd o hagcs crsnaze shall be. made except with in Ehc m aps,' Plans. prorilr-s'and the wri~ttn consenit of thc spcc~if-c ations as approved rc~esv the right to require' such chne Department.TcDprm~

rm oi cton in th Te a ps parmn t, hro oec spcif-Icatioils as may -be considered. wever.a Suspend or revoke this permit if intspnonheetItretoth neccsr The Department further ireserves Conmnwa1h6 h igtt will to!:eý: subserved there by; n..oinont........ees. f h nw ealth'w ill~....vt 3.All construction debris,

                                                                   ;excavatcd'matcrial, brush!.

wr shl be r o ed c tieY from the rocks, and' infl: ucnce of flood waters, or at such dumping strea mrchannecl and placed c'ithicfuse incidea 'to ti grou'nd as' may be apoe er On' shor"C above th yteDprmn 4h reT s all e n o tinr aso nab le in terfere'n ce with . th e free d hisch arg nor with navigation during construction;r~rste e o fthi ie r r s r a 1ion;

                                                                                                                                                         "

5 It future operations by thc Co'mmonwealth of PcnnsyJvania require mod cation o h structure or work, or if* in~ the cause unrrasonable obstruction opinion 'Of the Department of Environmental to the free passage of floods Resources, it shall. upon due notiCe remove or or navigation, theprnte expense to the Commonwealth after the structural work or hl, or Pennsylvania, so as to obstructions caused thereby, without:: of the 'channel or render navigation lncrez,5 thc flood carrying reasonably free, easy, and capacity the Department may require; unobstrljctcd, shall not be comlpleted, the arnd 1f, upon the expiration in such manner as. perniittce, at his own expense or revocation of this permit, thc work and manner as the Department and -to such extent and in work and restore the watercoursemay require, shall remove all. or any portioni of. the 'such time; to its former condition. No claim shall incompleted Comrmonwealth of Pennsylvania be'made against the on account of any such removal or alteration'.;

6. The perrnittee shall noctify is commenced and at least the Department of Environmental two .weeks. before the probable. Resources when -this work.*,-'":

tC. of completion' 7.. Within thirty (30) days the perrnittee shall 1file with after the comnpletio'n of the Department of Environmental the "Work' authorized: in this"permit astatement cer-tirying, that the work Resourcei,'H-amisbu-rg, Pennsylvania has been' performed iacodnewhtispermit the approved1 maps, plans, and profiles.'and specifications 8.. Performance. of the work authorized shall.. constitute: a'n conditions' contained in the a'cceptance of the Vanious. permit. . .

9. If this work' is not completed o~o eoete3s speilcajjy excndd halcae n enulai vi .

day of thedc solawll the......ng.... .. . . . . . . . . . . . . . . .

    .FEB                                    13 '95 1G:30 DAMS                          14TRWYS                  [QTLDS 717-772-59BG                                                                                           P4/5
                                                                                                                           -3 1 Reuceby          h~ reatst                     xtet pacticable: the. area addur ation of cXPOSreo
                                            ' " : ~~~..............................
                                                           .dilyerodibl..                 o -                   "                "        i../-  -l... .:*,.                              .           ..       -'.           .         *...-,
          * ..Stect                                 Retard. the      bsoilsrate ththeby use of temporary         frI.                costrucion v           *g*tation ste antcntol
                                                                                                                                                            'Or    sed Ing, and Mul      '

disposa thro,o? lcig rb

,

                          ~"~'
                            ~L"                     accelerating the establishment oaprnzetvgtto                                                                              n         onltn                  rtce cg*owor.ryas                                                           is :consistent with onstruction scheducs.
                                                      'eenttemporary 4'Trap'sediment                      wlrt        asbasi from.constructio"                                                  permanent       ormen                                               top
                                            ""S"Sprl*t                  osrie appdsly from.                       sue thet          ton keepiut"within con s constrUti                                        tolsra  rol imits                nc                 "aul dno ra'of include~~~'iis                          pump dicarf;fo.-:t'ug  prain
           '" ..::.....                 ,*-.-.,-*,include. s  dment.oron.

Utili.e.te.por"y.-auresto.ontTraop constructon

                                                                      *pum p discharges fromi dcwatcring~opcrato~n;.:,...".-.i. sotps      In    tc       porary..or perman               b.*:.::.-.!    s     s s:- . .. .'. . .- ,
                                            .S. Sprinkle orcapply              6. ~ ~~~dusth*uppressors rde   ~            ~         ~ to ~keepedustwith;n r~uvrsweesra              .     ~ eprr rvd         ~ ~odn             ~~n osillimits tolrablc                        ,,;"ha 1.

b asionsbeo

9. - Proads and pt the cnstruction sitre ofpoltat a.. chemica- fucl lubricats,"

S to culvarts; wh.er..stam" fording is objectionabe-.-...... .

                                     ...  ...   '   Locate borrow                      feasc ilt             re poiiutionwfrlm t                                  o r              is             i        e .   :."     ..      ...

8. Utilize temporary-measures to control erosion n construction operations suspebel for an appreciable length of time; t rue teal d b th 'l'reau

. :." "-9. Provide protection against discharge of pollutants .- as chem icals, ifuel lubricants, ..- .'

         .: ,."""r :. <              . ... se wa ge c tc. in t o a stre a m ; . .                                                */ :             ./ . : .) t .: .. : - . - -: : : :. " : : .. 7                                          * : . ::
                                                            .       ..............               .....................                                                                                                                            '..

S. . T . Locate sn itry fa cilities oway from, streams, ' l.sor sprigs  ;: " " V,

                                                         *                                                ..
     . . . :.                . . :.                     * . . ..                .         . .. . . .                          -. :...                    .. ..o. :. . . . . . - - : . : . .: -                                       .: . .:...
                  "of:i.*:               -This forductogerwthopy pi                                                     shallof th permit                         of alle of-     theurovisionty a th    ainblle, oritr tnspeion       dc.dtin  atthe 5    .::  ithe projec*iDepartmenrtWithin
                     'i:,..it:                                         thirty         (30)        days          fromf.      the    dater'     thanod              acon:.da                             afovfilable               - "o i2/.. .. - e pa rt ma.ti:?                en t , it scontrall w r i tttime e n a coc e ppy     t a n cof e othe   askt f .t hoe . t e rwleet hem s mtnr       icotn dhare d 'n          it ioluir n s .ms i mntbp oe s sforw ed.. t hirded   i nto. .the e r ecsshallbf   -. . offieau;:.--}i;::i
                                                                                                                                                                                                                    ". . . . .: : . :: : . . .i andshlligifythirc                                   -owegomet      of beingso                      appie n ih                    fo-nhritaHed                                 Copy:

i1spctionat"t2. he prject i ntractr conedshall be 'orall oi the provisions and conditi

    -,.*i
    .. ".'.and shall sign ilty their; ack now legm ent .ofbeijgý so -apprised :'. on the. .fo .rm                                                                                 herein at~ta~ched . 'C opy .'; : :i : ./ <
               .i-.ofii.:*

f th~is signed form , together w ith c opy. of,..thd* perm it sh all be available.for inspection-at the.,..:.:<? ,::'*"*.

-:'.)"*.!poject ..-_itc at all. times.:' Copy. of the acknowledgement. sha~ll. alsb be forwarded to the' ffis*:?::*::.:?i.

    *: -.i,:   ,... i~ esi ng ThorerEnbynany "h perm it.': Failure         andthoiedtoComocwapth    "have copies of the                     perisoelo
                                                                                                                                      .PCr It 'a"2           d ac n w e g cnt avail~able' for~i -:.i-*..":i.
    )i ,".)(inspection                       at the project site shall *be considered sufficient cause for issuance. of a.ce~ase and.-)i.i.:"..i,'
*             ..
      . -... p...              . ...          - ." ..         -:. ...           .. * ".       .- '..,--              '-         -    ..   "                                 "    "'=         *.'*V"'"',
                                                                                                                                                                                             ""     . 9'- p."      %". .       .     * -'"J    ""

a~

FED 13 '95. 1G:32 DAMS WTRL4Y'S & LTLDS 717-772-5986 P./ 4

                                                             '.0..

BFrAL COHDITIw3a 7 A. Siltat+/-io control sehl 'be p1.widad for durinig costruction

                 . .. t ab! ixation. h a11 be undartAken by pla~nting of gtrasaeui and bank ahrubbery or trees Lazedlately afte                                             fec           hu   fpoe               9caltq Y' ata.                                 *JP~t9 Of       im~   D   *o      rjc B.Ali maitarsi, "' =d debris. remo~ve.               fronm" streamm bed sball. be moved enrtfrely ouat of thO flood plain *area.                           -'

CI. 4perzmit A =ast be secuared from the Pc=sYlvana Fish C~mingiilon

                  !Harrisburz, if the tiea Of .*=PJLoefveA Is requirol P 1' C. Vetare Patxolmffln Francis Rotchfaord,- R D. 1,Water S rreat,.

Collegevýiia

               '  -PA .19426 (ThOU02 215-489-4973) must-ba ucntifled uhen project S.M.:

tart= d 9 when .zploffives xa'eto'be 'Used', anid Irenprj for final& acti cped

                                                                    '                                            t,.Istoncompleted 0~~~             E          C.1.17 DEATMN -OF ENVIRONMENTAL RESOURCES ATTET                    .                                      . R. Butler,    Chief.

Diyisicyn' of Dms. S'm &xrelmi

e. I

       .4'~~~~~ý           fF                                      ,    ,I      .. .*                  ,1

7 COMMONWEAL'Ill OF PENNSYLVANIA FE *M yr .o 19616 - R ODEPARTMIIENT OF ENVIRONMENTAL RESOURCI-S PERMIT The Dcpartmn.nt of Environmental Resources, established by,, the Act of I)eceiiber 3. I17(l (71 P.S. 51 et. seq.), and transferring the functions of 1hC Water and Power Resoures~ Ioard which, by virtue of Section 1808 of "The Administrative Code." was empowered to exercise certain powers and perform certain duties by law vested in and iniposed upon (lie Water Supply Commission of Pennsylvania, under and by virtue of said Adniinistrative Code and of an act of the General Assembly of the Commonwealth of Pennsylvania. en.titled "An act providnig f'or bbstructions, as defined herein, in. alzng. 'crss, the regulation of dams, or other structures or or projecting into all streams and bodics of water wholly or partly within, or 'frmirng par 01 the boundary of, this Co mmonwealth; vesting certain powers and 'lir., in the Water Sutpply Conitmission or Pennsylvania. for this purpose: and providing penalties Ior.thlie vieolitaion ofI ile provisions lhcreof," approved the twcnty-fifth day of June, one tIousanid nine hIi ildrctl andflhiri.cn. as aniended, hereby issues this permit to PHILADELPHIA ELECTRIC COMPANY giving its consent to -- - construct two water intake structures, a blowdown diffuser, and channel stabi lization in and along the Schuylkill River, at a point approximately 1100 feet upstream from the mouth' of Possum Hollow Run, in Limerick Township, Montgomery County. This permit is issued in response to an application filed withi the Depart'meni ol-rvirm'c,,l Resources on the 18th day of August A.1). 11) 71 . and with the understanding that the work shall be perl'ormcd in accord:,nce wiilh Iehe maps, plans. l'r, lih-,*, and specifications filed with and made part or the application subject, however, to the provisions of the Act of June 25. 1913, P.L. 555, as ;j nienided, and the following conditions, regulations, and res.trictions:

1. This permit does 10ot give any property righls, either in real cstlat, or 1irjileri.t. uor any exclusive privileges, nor shall1 it be construed to grant or confer ;rnv ri.iut. itle.. c:uscucir.

or interest, in. to. or over ally land belonging to (he C"orlnioolWcv:lllh o! Pl'c, s\.lii:" rcih'r does it autthorize any injury to private property nor invasiotn l pri',at rightls, o ;rnv iMW iin',.n,,;rt of Federal, State, or local laws or regxnlation; nor does it obviate the nccessity o1" hoairnirni: F,dvral assent when necessary;

                                                    "2

2. Thie'%-wort shall at all times be subject to supervision and inspctfion bIy reprcsen tativcs of the Depairtment. and ino changes in tile m11,1ps. p1Is. profiles and spccificalions as a pproved shall be made except with tilhe written consCnt of' the Departiment. The Dllpartm ent, however.

reserves the right to require such changes or modifications in the maps. plans, profiles, and specifications as may be considered necessary.' The Department further reserves the righi to suspend or revoke this permit if in its opinion the best interest of tile Commonwealth wviii be subserved thereby;

3. All construction debris, excavated material. brush, rocks, and refuse.incidental to this work shall be remove d entirely from the stream channel und placed either on shore above the influence of flood waters, or at such dumping ground as may be approved by the Department:

4. There shall be no Unreasonable interference with the free discharge of the river or streaml nor with navigation during construction:

5. If future operations by the Comm6nvwealth of Pennsylvania require modification of tihe structurc or work. or if, in the opinion of the l)epartment of Environmental Resources. it shall caIuse unreasonable obstruction to the free passage of floods or navigation, the permnittee .h:all, upon due notice remove or alter the structural work or obstructions caused thereby, without expense to the Commonwealth of Pennsylvania, so as to increase the flood carrying capacity of the channel or render navigation reasonably free, easy. and unobstructed, in such manner as the Department may require:-and if, upon the expiration or revocation of this permit. the work shall not be completed, the permittee, at his own expense and to such extent and in such time and manner as the Department may require, shall remove all or any portion of the incompleted work and restore the watercourse to its former condition. No claim shall be made againsi tihe Commonwealth of Pennsylvania on account of any such removal or alteration:

6. The permittee sh.all notify the Department of Einvironmental Resources when IItis work is commenced and at least two weeks before the probable time of completion:

7. Within thirty (30) days after the comnpletion of the work authorized in tIis permit, the permittee shall file with the Department of Environmdntal Resources. Hlarrisburg. Pennsylvania, a statement certifying that the work has been performed in accordance xWith this permit and the approved maps, plans, profiles, and specificarions.

8. Performance of the work authorized shall constitute an acceptance of the various conditions contained in the permit.

9. If this work is not completed on or heIlorC I he 31st dIaN of December A.l). 19 76 . this permit, if nol prcvioMsly revoked nr specificallly extended., shall cease and bc Mnill and void.

10. The pernlittec shall be requLired to and shall require his contractor to donlform with the following:

I Reduce by the greatest extent'pralcticaible the area and duration of e~xŽposure oU readily crodible soils;

2. Protect soils by ,use of temporary vegetation, or seeding and mulching, or by accelerating the establishment of permanent vegetation and conipleting protected segments of work as rapidly as is consistent with construction schedules

3. Retard th6 rate of runofF. from the construction site and control disposal thereof:

4. Trap sediment from construction sites in temporary or permanent silt basins to include purfip discharges from dewaiering operation:

5. Sprinkle or apply dust suppressors to keel) dust within tolerable limits on haul roads and at the constru'ction site:

6. Provide temporary bridges or culverts where stream fording.iis objectionabll  :

7. Locate borrow areas wherc pollution from the operation is minimized;

8. Utilize temporary measures to control erosion on construction operations suspended for an appreciable length of time:

9. Provide protection against cfischarge of pollutants as chemicals. fuel lubricants.

sewage etc. into a stream;

10. Locate sanitary facilities away from streams. wells-or springs:

         "II. Conduct operations in such manner to minimize Itirbiditv at and below the construction site so as to meet [lie turbidity requiremnen ts establi-shed by heIhBurcai of Water Quality iManagement.

II . This permit shall not become effective until and unless the permittee shall file with the Department within thirty (30) days from the date thereof, upon a form furnished by the Department, its written acceptance of the terms and conditions imposed therein.

12. The lEngineer and the Contractor shall be apprised of all of the provisions and conditions and shall signil'y their acknowlegment of being so apprised on the .form herein aitache.d. ConPy of this signed form, together with copy of the permit shall be available for inspection at the promict site at all tim es. Copy of the acknowxledgement sliall also lie forwarded to the orrice issuing tile permit. Failure to have copies of the perimit an1d aCknowledgne ilablc for inspwction at the project site shall be considered sufficient cause for issuance of a cease: aid desist order by any authorized Commonwealth personnel.

Ii- ,

                                       -4 SPECIAL CONDITIONS:

A. Siltation control shall be provided for during construction and bank stabilization shall be undertaken by planting of grasses, shrubbery, or trees immediately after completion of each phase of project. B. All material and debris removed from stream bed shall be-moved entirely out of the flood plain area. C. A permit must be secured from the Pennsylvania Fish Commission in Harrisburg, if the use of.explosives is required; P. F. C. Waterways Patrolman Francis Rotchford, R. D. #1, Water Street, Collegeville, PA 19426 (Phone: 215-489-4973) must be notified when project is started, when explosives are to be used, and when project is completed for final inspection. Date DEPARTMENT OF ENVIRONMENTAL RESOURCES By: V. R. Butler, Chief ATTEST: Division of Dams and Encroachments

                '2?i  />-L/>(

1

24PM IV WTRIYS, WTLDS

• EROS26/3 F,'rm I-' . ............. 91.*9. ...........

COMMONWEALTTH OF PENNSYLVANIA DEPARTMENT OF FORESTS AND WATERS WATER AND POWER RESOURCES BOARD PERMIT "TheWarter :nd Power Resources Board which, by virtue of SecLon IS0S of "The Administrative Code," is empowered to exerciie certain power.m anod perform certain duties by law vested in and impoeed upon the Water Supply Commission of Pennsylvania, under and by virtue of s-ld Admin. istrative Code and of an iet of the General Assembly of the Commonwealth of Pcnnsylvani., en. titled "An act pt'no'idinK for the regulation of dam., or other structures or obstructions, as de Alned herein, in, along. across, or projecting into all streams and bodie. of water wholly or pertly within, or forming port of the boundary of, this Commonwealth; vesting certain powers and duties in the Water Supply Cornmission of Pennsylvania, for this rpurPose; and providing penalties for the violation of the provisions hereof," approved the twenty.Fifth day of June, one thousand nine hundred and thirteen, as amended, hereby issues this permit to .. LAD..LIrA Ii;. ,TRIC

                                                                                                  ........  ....................
                                                                                                                  .....
                                         .        .....  . ... -,.      . ........ ... .. .. ..... .............. . . .... . ... . . .               .. .. .        . ... .. . .... . .. .

giv~~~~~ng~ osn it t ......... . ................. '~~~ onrito +/-..wt ti~.in.Sf PosM.=.cA0 Bruo... tp Iflk~ 1200 feet east OP thoon

                                                                ..Nntciary       .oixty........................                                             .......................         .
                                                                            .................................                                                                .. . .
                                                                           ~....  .. .....  .....I.................                                       .........
                                            .. ..............                               ......   ........     ............                          .......
                                           .............. .......... I.....................                  ......         ................... .. ...........
                                                                                         ..................   .. ..... ......... ............
                                  .         ................ ..   .. .   ............... I............................       . ................................
                                                                                                                                    ...                                                     ....

This permit is isued in renponre to an application filed in the ofrce of the Water and Power Resources Boa*rd on the ..... 29th .......... dcy of . D-.,Fcrb . A. D. 19, 7,0and with the understanding" that tUe work shall be performed in accordance with the maps, plans, pro. files, and speeiflc-,tions filed with and made part of the application........ Uý- I I ( zldu:: UD-1; IO

OCT 17 '00 01: 25PM DIV WTRWAYS, WTLNDS & EROS CNTR " P. 9/3' subject, however, to the proe:isions of the Act of June 25, 1013. P. L. 656. as .mended, and the following conditions, regullti ns, and restrictions: I. This permit does nom give tlny property rights. either in real estate or material, nor any exclusive l)rfvilc-c.4, nor shall it be conast.rued to Krnnt or confer any right, title. ensement. or in. torest. in, to, or over any land belonging to thc Commonwealth of Pennyslvnnia;: neither docs it au. thorize any injury to. private property nor invsionr of private rjihts, nor any infringement of Fed. eral, Statc, or local laws or reguIntions; nor does it obviate the necessity of obtaining Federal asscnt when necessary;

2. The work sh-,al ar all times be subject to supervision and inspection by representatives of the Eoard, nindno changes in the maps, plans, prorlics, and apecifcationn as approved ahall be mnde except wJih the writter consent of the Board. The Board. however, reqerves the right to re quire such chonires or modoilcaLions in the maps. plans, profiler, and specificationg as may be con sidered necessary. The Boarn further reserves the right to suspend or revoke this permit if in the opinion of the Board the hes*c interests of the Commonwealth will be subserved thereby:

3. All construction debris, excavated material, brush, rock.s. ,nd refuse incidentol to this work shall be removed entirely from the streamr channel And placed either on shore above the influence of flood waters, or at such dumping Xround ns may be approved by the Eoard;

4. There shall be no unreosonable interference with the free discharge of the river or stream nor with navigation during construction;

5. If future operations by the Commonwealth of Pennsylvania require modification of the structurc or work, or if. in -he opinion of the Water and Power Resources Boerd, it shall cause unreasonable obstruction to the free passage of floods or nnvigation. the permittee shall, upon due notice from the Water and Power Resources Board, remove or alter the structural work or ob.

structions caused thereby, without expense to the Commonwealth o Pennsylvania, so a.%to increase the flood carryinz capacity o0' the channel or render navigation reasonably free. easy, and unob. structed, in such manner as týe said Board may require: and if, upon the expiraLlon or revocation of this permit. the work shall not be completed, the permittee. at his own expense and to such extent and in such time and mnanner as the said Board miy require, shall remove all or any vor tion of the incompleted work tind restore the watercourse to its former condition. No claim shill be made against the Commonwealth of Pennsylvania on account of any such removal nr altera tion:

6. The permittee sh01ll notify the Water and Power Resources.Board when this wvork iq com menced and at least two weeks before the probable time of completion;

7. Within thirty (30) (lays after the completion of the work authorized in this permit. the pormittcc shall file wiLh hec \itterr and Power Re.ouirccs Board. Horrisburg, Pa., a statement cerLt.

fying that the work has been performed in occordannce with this permit and the approved maps, pinns, profile.', and .fpCeificaLioNs; S. Performence of the work authorized shall con.stitute an acceptance of the variou. condi. tion.q contained in the permit. 0 0 T 17 2000 02: . eýj

0~ 17 '00 01:25PM DIV 17TRTfYr, WTLNDS & EROS CNTR M.70/3

5) f this work is~ not conipletecl on or beforc the 30th dcyOf JAY 0 .. Jwu.o A. Dl. .~ "9 is permit, it not prevfiouzy revokod or qpeerficaflly eN,-tnded,.sli)l cenns, ~nc1 be null and Void.

10. rho pormit~tee, in accepting th~in pormit, ago.ee, to haive --tendby equipment to m(Ticientay broach tho proponed fill in the oevent of hig~h vaterB.

11 . Upon ocupletion of. the construcotions thbo permittoo sh&aa romova

                 *all.2           material fromi tbo cro.,v oaction aZ the otream and notiX7 tho Wntter and
                              ?Potor Rozno~zoen Board upon Ito              ~ovzal.
                                  .12. Thiai pdmit ahanl zot.beccma atffootive untill a~nd unlaina tho per-.
                *           ~mittao     shall fJ~lo with the Board witbim thirty (.30) days from date thereof, upon a. f orm P=r.Asahd b7 -the -Boerd, -Its vritten aoceptexnoo, of thotterw.',                     and .

conditionn thereinz izao~iod. 1ý3. The poi-mittea Is 4tre~oted -to.tull)y ocaipy uwith the. reoiolution of lVater and Power Roaourcea Boarzd reflative to tho eatablinhment, of certain tho

                            *criteria for tho control of-ero.nion- and-vater pollution. A aoop of. -thini rosolution Is attached to the permit.

u.... .................... 9 . . ....

                                                                    .....................
                                                                                   .....

aU IC

                                                    .     .. ........ . . .. .. .ST.                 ..   ....... ...
                        .......

I........... on . .... ..I...-..... ...... WITNESS MY hand as Cha r gnf t a n e nd P w r Re o rerB a d t is I2y d"Y~~ x Of.. .... .D

                                                        .....          9.....7                                             Iau OCT 17 2000 02:37                                                                            717 772 5986                        PPI3E.30

CT 17 '00 01:26PM ply L4TRWPYS WTLNDS & EROS CNTRL IP 0 9 Form FWWR-.17--l0oooS.C3 Fe . ...19972 COMMONWEALTH OF PENNSYLVANIA DEPARTMENT OF FORESTS AND WATERS WATER AND POWER RESOURCES BOARD PERMIT The Water and Power Resources Board which, by virtue of Section 1808 of "The Administrative Code," Is empowered to exercise certain polwers and perform certain duties by law vested in and imposed upon the Water Supply Commission of Penn.ylvania, under and by virtue of said Admin istrative Code and of an act of the General Assembly of the Commonwealth of Pennsylvania, en titled "An act providing for the regulation of dams, or other structures or obstructions, as de fined herein, in, along, acro.qs, or projecting into all streams and bodies of water wholly or partly within, or forming part of the boundary of. this Commonwealth; vesting certain powers and duties in the Water Supply Commission of Pennsylvan-l. for this purpose; and providing penaltics for the violation of the provisions hereof," approved the twenty-fifth day of June, one thousand nine hundred and thirteen, as amended, hereby issues this permit to PED1.....I. .r.....a CA!OW

                      ..............         .................                                                   .. .                .. .             ......................... .....                  .........
                     .... ...........               .                 ....                .........................................................            ............................ ........

giving its conent toa culvert havlng a ye=n of 16 feat vIt &n

                      .............. ..... .... .... .                     ... .................................................   . .           . ..............................................
                                                                                                                                                    ...... ..                                                            .. ..

U~n0ol'tmnrarQe at feet in fpoim~ aolW ram (z 2-3"4 APPz=Cnztsj)r1yV 230 t

                    . ..............
                        . ...
                           . . . ... . .....
                                        ... . .. ..................
                                                            ..... ...........
                                                                     . .. .. .....
                                                                    .....        .... .......
                                                                                       ......... ..  .....          . ..
                                                                                                               ...................        ..... ..............    .. ..... .. ...........
                                                                                                                                                                 ....               ......... ............... .....
                                                                                                                                                                                  ...................................         ...
                                                                            ....................................................................                           .... .....I..................

Thr=isa =nermit Wsisudith

                                                                                     .- spchs              te nap                       Icain          imemJ teokfc                   oamthip Wamter                     oweCn Resources Board on the...............

Mstb72

                                                                                                                           .. ..day of. ..                   .....        ......        .. , A. D. 19                       and
                                 ............ -.                              I.,........ I.......................        ... I.............. ........................................

111....... . with the understanding that the work ,hsll be performcd in accordance with the maps, pians, pro files,. .and specifications

                       ................... ....            .. .... filed...........

with ..end made part of the applicationn

                                                                                                      ................................                              .................
                                                                                                                                                                ......         ....... ..................             .....
                 ...................                          ........................                                              ....             ..         .. .............                       ............

OCT 17 2000 02:37 (i ( ( (,: DI.ot PAGE. 31

         .5ubject, however, to the proviejons of Lhe Act of June 25, J913, P. L. 5.55, mv amended. and Lhe following conditions, re.;tutione, rind restrictions:

1. Tbls permit does not give any property rights, either in real estatc or material, nor any exclusive privileges, nor shall it be construed to grant or confer any right. title, easement, or in terest, in, to. or over any land blionging to the Commonwealth of Pennsylvania: neither doeq it au thorize any injury to prIvate property nor invasion of private rights, nor any infringcemcnt of Fed.

eral. State. or l*anl laws ar reculations; nor does it obviate the necessity of ohtainin., Federal assent when neces..nry:

2. The work Oqhnli nt all times be subject to 3Uervision and ;nspection by representatives of the Board, and no chan"ges in the maPS, plftns. profiles, Andtspecifications as approved shall be made except with the wriLCen conrsenL of the Board. The Bord. however, reserves the rij'ht to re.

quire such changes or modificntion-s In the maps, plans, profiles, and specifications as may be con. sidered necessary. The BoArd further reserves the right to suspend or revoke this permit if in the opinion of the Board the best interests of the GommornweAlth will be subserved thereby:

3. All construction debris, excavated material, brush, rocks, and refuse incidental to this work shall be removed entirely from the stream channel and placed either on shore above the Influence of flood waters, or at such dumping ground as may be approved by the Board;

4. There ;hall be nt unrensonsble interference with the free discharge of the river or stream nor with navigation during construction:

5. If future operati'on.u by the Commonwealth of Pennsylvania require modifctation of the structure or work, or if. in the opinion of the Water and Power Resources Board. it shall cause unreasonable obstruction to the free passage of floods or navigation, the permittee shall, upon due notice from the Water and Power Resources Board. remove or alter the structural work or oh.

   .ttructions canused thereby, without expense to the Commonwealth of Pennsylvania, so as to increase the flood carrying capacity or the channel or render navigation reasonably free, casy, and unob-.

structed. in such manner as the esid Board may refluire: and if. upon the expiration or revocation of this permit, the work shnll not be completed, the pirrmittee. at his own expense and to such extent and in such time and manner is the said Board may require. shall remove all or nny por tion of the incompieted work ond restore the watercourse to its former condition. No claim ,hall be madc against the Commonwealth of Pennsylvania on account of any such removal or altera tion: G. The permit tee shJ]J notify the Water and Power Resources Board when this work is com. menced And at least Two weeks before the probable time of completion;

7. Within thirty (30) lays after the compleGon of the work authorized in this permit, the permittec shall Mie with the Wte~ar and Power Resources Bonro. HitrrisburgT, Pa., a statement certi.

fying that the work has been performed in accordance with this permit and the approved map., planns, profles, and specificatmions; S. Performance of the work authorized shall constitute an scceptance of the various condi. tions contained in the permit. 717 772 5986 PlGE.32

'N1DIV WT WAYS, WTLNDS & EROS CNR 1,7N,1 1

9. If this %Yorkis not completed on or before the 31st dIny of. DeNocmbex A. D. ig . 7. this pe~rmit. if not proviousLy revoked or spccifvilsly exiended. shnil ce.%ee and Ue null And~ void.

        .10. The Per~.tte. shall &-tsroiee caution during oonatxuation of theo ulvort t.o alilainat     eztxaes~va tLnbiri-t         and~ ah.       im    iately proteat aj..            Uza~td rxue, b7 use*ing and mJlohing.

f..1 This permit ahall not bse. o~ffegotive until and Unloae the perx.ttoo Oha1 I file. With %be Dopmarmnt wtinit& WxtTbf.y30) 475' from the date Ihemeof,.upon. a.. fuynihad. by tA, Departmnt, itc Vcrittex acoosptaxos or the t0mad And OOrndt4tOnZa irTpoee4 ther. in. 12.. The porrittee is. directed to.=U7l~ oanp2ly vith the resolution of the Water

   &.nd PFwer Eeaonxoes Djoard relati-ye to... the astabliahmcft af Cer-tain criteria for. the Control of eraoijon ard1 water pollution.. A 0037 Of this recolutiorm lo attacebd zo
                                         .h... .. . . . .    .. .    .I   .      ..

NVITNESS my hand i Ja3 LLL Lw~.~~h.. . ~ ti day of . ..M . Y 7-~......A. 7: D. 19 ......... ISI Howard W. Chapman ROwaxrI W. Cbapmaz, AasoO+/-ate DepuIy rOr A-ir, Waeter e.mI Cazezw+/-T Proteation. ATTEST: Screi-y PRGE. 33 717 717 772 5986 PAGE. 33

OC T1'00 MD WTRWflYS, WTLNDS & EROS CDITR P. 25/3? 19161 Form- F W l- -2il ,a .................................... COMMONWEALTH OF PENNSYLVANIA DEPARTMENT OF FORESTS AND WATERS WATER AND POWER RESOURCES BOARD PERMIT The Water and Po1wcr Resources Board which, by virtue of Section 1808 of "The Administrative Code," is empowered to exercise certain powers and perform certain duties by law vested in and impoied upon the Water Supply Commission of Fennaylvania, under and by virtue of said Admin. istrative Code and of ,nr nct of the General Assembly of the Commonwealth of Pennsylvania. en. titled "An act providing for the regulation of dams, or other structures or obstructions, aa de. fincd herein, in. along, across, or projectinz Into all streams and bodies of water wholly or partly within, or forming part of the boundary of, this Commonwealth: vesting certain powers and dutles In the Water Supply Commission of Pennsylvania. for this purpose; and providing penalties for the violation of the provlflons hereof." approved the twenty-fifth day of June. one thousand nine hundred and thirteen, as imended, hereby issues thia permit to PHILADELPHIA ELE.CTRIC COM.PANY .. .... ...... S.. . ............ ... . .. . ..... ... I...................... ,,. .. .............. . ....... .. . ... . ....................................................... .. ... giving its consent to ...... ma.x1.AO..a. kE .....

                              * .vunCeklocated
                                             ...............
                                                 ..                I . . .aa                    onabztUOit,
                                                                                        .............
                                                                                 ...............
                                                                                             ...                                                  nanot of Its mrouth in Limeor1,c-k

.................................. . ....

S....z. N .o,.'*...t

                                                ,..
                                         ..............          .o.*..   .....

hpMngome r.! .

• y......

                                                                              * .*                          . .................................... ..... ...... .. . ..................................... ...
                  ... . . .     .     . . .. .. ...      ...... .. .. .       .........    .... ..... .......   . ....  ........ ..... ..... .....    ...........              .            .......      ......I .- ...............
                         . ... . . . . .        ........         . .. .   . . . .....   ... .......        ................
                                                                                                         *...                  ... ,. ... . . .. . . . ... . ... ... . .. . . . .. ...   . .... ........... ....................

This permit is issued in response to an application filed in the office of the Watcr and Powcr Resources Board on the 30th.......day of Novembsr , A. D. 19 . 70nd with the undcrstanding t.hat tho work shall bc porformcd in .ccordnncc with the mi.its, plans, pro files, and spcdficntions Mcd wi-h and made part of the an plication, .. ..................... . .. OCT 1? 2000 02:35 C10 ?72 59%6 PAGE.25

01:24PM DIV WTRNRYS WTLNDS & EROS CNTR P.26/3 qubject, h*w*ver, to the rovi~ion, of the Act of June 25. 191., P. L. 655r, as amended, and the fblowing condlitionn, reruliLions. ind restricLions: I. This pcrmit doc, nct. p]ve any property rights, either in real estate or msiterinl. nor any exclusive privileges. nor sbhill ;t be conatrucd to grant or confer any right, title, emcment. or in terest, in, to, or over any land belonging to the Commonwealth of Pennsylvania neither does it au thoriza any injury to private property nor invasion of private rights, nor ney infringement of Fed eral, State, or local laws or regulations; nor does it obviate the necessity of obtaining Federal ai%4sent when necessqry;

2. Tho work sball at il[ times be subect to supervision and inspection by representatives of the Board, and no changes in the maps, plans. proriles, and specifications as approved shall be made except with the written consent of the BoArd. The Board. however, rcser!ves the right to re quire such changes or modiicastions in the maps, plans, profiles, and specifications as may be con.

3idered necessary. The Board further reserves the right to suspend or revoke this permit if in the opinion of the Board the best interests of the Commonwealth will be subserved thereby; S. All construction debris. excavated material, brush. rocks, and refuse incidcntal to this work shall be removed entirely from the stream channel and placed either on shore above the influence of flood waters, or at such dumping ground as may he approved by the Board;

4. There shall be no unreasonable interference with the free discharge of the river or stream nor with navigation during construction:

5. If future operations by the Commonweilth of Pennsylvania require modircatioa n of the structure or work, or if, in the opinion of the Water and Power Resources Board. it shall c.use unreasonable obstruction to the frce passage of floods or navigation, the permittee shall, upon due notice from the Water and Power Resources Board, remove or alter the structural work or ob structions caused thereby, without expense to the Commonwealth of Pennsylvania. so as to increase the flood carrying capacity of the channel or render navigation reasonably free, easy, and unob structed, in such manner as the said Board may require; and if, upon the expiration or revocation of this permit, the work shall not be completed, the permittee, at his own expense and to such "extent and in such time and manner as the said Board may require, shall remove all or any per tion of the incomnpleted work and restore the watercourse to its former condition. No claim shall be made Against the Commonwealth of Pennsylvania on account of Any such removal or altera tion;

6. The permiLtee shall notify the Water and Power Rcsources Boord when this work is com menced Pnd at least two weeks before the probable time of completion:

         "7. Within    thirty (30) days after the comnletion of the work authorized in this permit, the permnittce shall file with the Water and Power Repources Board, Hnrrisburg. Pa.. a sLALemennt certi.

fying that the work has been performed In accordance with this permit and the approved maps, plans, profiles, and 9pecific.6onT: S. Performance of tht: work authorized shall constitute an acceptance of the various ciondl tions contained In the permit.

                                                                           ?17 ?72 598G                    PAGE.26

1:24PM DIV WTRNRYS, WTLNDS & EROS CNTRL i S

9. If this work i.s not coi~pleted on oc netore the 31st" day or December

                                                                                                                                                                               .hnal conse -nd be nMkll A. D. 1i                   7.,his permit, if not prtvioualy revoked or ,%c4cicl.y extended, and void.

10. Attentlon of the permlttee lI called to the fact that, in the opinlnn of culvert. &a

           *.......the ...Waer. and Power Y.,eAourceoz..BoA.d, ..the.waterwL~y ar&.of.the ma xin~umexpactedi..floods .-without
           ....... pr.opoFod will.bo inadcquatec.todLa charge
           .. . . b .* k, w~ .............     *..                             .......                ....... ......              .....   .      . ........................ ..............
           ..           .....                                                           .                      Ittei.ful ly. .mply, w.ith thia.Re o olulklorflt
                                                                                                               +/-p..

Water. aad.P Po-wer .Reao urcas.o~d e~vk the. .estab1lshmont o(.certaln criteria for the control of eropton and water pollution. A..copy..o t.his Renolution is attached tp .the..perromt, .. ............. .

                        .l....... The.. p.emLt..a hall. not, becon-Le. eafective.,xtti.-arnd.unle aa..th..pe rMitte S.... ,~*.C1.'..i.th.th .. az*, ithln .thtrty...(3.Ql.4ay~.a..troxn.dte..thcreo(£....uea. a. form
                                                                           ,
                                                                         ........            ..           .. .........       .......................        ..... ........................................ . . . .
              ....................................................                .................    ..................   ...........................        .............................. .. . . ...............
          ......................................................................................................................                                  .. .                               . . . . ..
                                                                                                                                                                                 . . . . . . . ............
                           ......................................................                                             ..... ,.
                                                                                                ...............................................                                      .......................
                            ...............                   .... . . . . ..
                                          .......................                         .         .....................................................................           . . . . ........... ......       ...
                   ...........................                                                        ...........................................................            ......... .......... 12th            .

WITNESS my hond as Chairman of the Water and Power Resources Board th- . day of ............... .Ja.rua ry ......... A. , 19 ...... 71 WATER AND POWER RESOURCES BOARD URIC.E1K. CPODDA i5.. ;h'-..

                                                                                                                           ..

J. Fecrgusou DO 02:375 717 772 5986 PAGE.27

2700-FM-AQ0012 COMMONWEALTH OF PENNSYLVANIA Rev.2/96 DEPARTMENT OF ENVIRONMENTAL PROTECTION P.A No: BUREAU OF AIR QUALITY O.P No: CHANGE OF OWNERSHIP Request for Transfer of Date / / Page of Plan Approval/ Operating Permit for an Air Contamination Source OFFICIAL USE ONLY

1. PERMIT Permit Type: D Plan Approval D State only/ Synthetic Minor Operating Permit Z Title V Operating Permit 2 REASON FOR TRANSFER

[__ Sale " Other Merger Effective Date: January 1, 2001

3. SOURCE DESCRIPTION 3a. Type of Source: Auxiliary Boilers 3b. Owner/Operator's designation of source and/or plant if any: Boilers A, B and C

4. SOURCE LOCATION Street address or route number: Township/ Municipality: Limerick Limerick Generating Station Borough:

Evergreen & Sanatoga Roads Limerick, PA 19464 County: Montgomery

5. OWNER/ OPERATOR STATUS 5a. Does the firm which owns the source also operates it? 5b. This change is for:

(I.e., do the owner & operator have different Employer ID Numbers?) D Owner LI. Operator Both LYes D No

6. NEW OWNER/ OPERATOR 6a. Firm Name: Exelon Generation Company 6c. Employer ID Number (IRS Number):

6b. Mailing Address 6d. Contact Person: Dawn Fish 200 Exelon Way 6e.

Title:

Environmental Manager Kennett Square, PA 19348 Mid-Atlantic Regional Operating Group 6f. Telephone Number: (610) 765-5847

7. PREVIOUS OWNER/ OPERATOR 7a. Firm Name: PECO Energy Company 7b. Mailing Address: 2301 Market Street, S21-2 Philadelphia, PA 19101 7c. Employer ID Number (IRS Number): 23-0970240 AFFIDAVIT I, James D. von Suskil, being duly sworn according to law depose and state, under penalty of law as provided in 18 Pa. C.S. §4904 and Section 9(b)(2) of the Air Pollution Control Act, 35 P.S. §4009(b)(2), that I am the representative of the Permittee identified above, authorized to make this affidavit. I further state that information provided in the Change of Ownership form is true and correct based on information and belief formed after reasonable inquiry. I understand that all conditions of the previous owner's plan approval or operating permit will not change and are transferable to the new plan approval or operating permit.

Sworn to and subscribed before me this 16 day of October ,2000 Not aivPublic Signature_ _ _ _ _ _ _ _ _ _ _ Name (typed) James D. von Suskil Title Vice President NOTE: Return this completed form with fee(s) and completed Compliance Review Form.

3800-PM-WSM0040 Rev. 9/99 DATE RECEIVED COMMONWEALTH OF PENNSYLVANIA DEPARTMENT OF ENVIRONMENTAL PROTECTION BUREAU OF WATER SUPPLY MANAGEMENT APPLICATION FOR TRANSFER OF A PUBLIC WATER SUPPLY PERMIT I1. Date 10/16/00 1

2. NAME AND ADDRESS OF PRESENT PERMITTEE 3. FACILITY NAME AND ADDRESS PECO Energy Company Limerick Generating Station Evergreen & Sanatoga Roads PHONE: Pottstown. PA 19464 I.-

4. PERMIT NO. 5. DATE ISSUED 4696508 3/25/97 4696507 3/25/97

8. DOES TRANSFER OF PERMIT INVOLVE CHANGE IN OWNERSHIP?

Yes El No IF.NO, HAVE YOU COMPLIED WITH FICTITIOUS NAME ACT? [1 Yes E0 No

9. THE ORIGINAL PERMIT IS 1I ATTACHEDFf1 I'-- C.l'JNIlCT oc1:

ODI"*I'I It'*rl* 9 THE ORIGINAL PERMIT IS M r,.AkiKinT Mr- pDnr-%"t, F- Ll

10. SIGNA TTEE 13.

I

11. TITLIU S \lic.= Pr*=id!*nt I imp~rink"(*n*rmtinn .*;f~tirtn 12. DATE Vi-- President Limerick Generatin Stati-IF CORPORATION AFFIDAVIT AFFIX SEAL HERE COMMONWEALTH OF PENNSYLVANIA

14. COUNTY OF I -j4 0 le U' (

15. 1, James D. von Suskil, BEING DULY SWORN ACCORDING TO LAW DEPOSE AND SAY THAT I (AM THE APPLICANT) (AM AN OFFICER OR OFFICIAL OF THE APPLICANT) (HAVE THE AUTHORITY TO MAKE THIS APPLICATITON FOR THE ApPLICAM NAMED ABOVE AS THE PRESENT PERMITTEE, THAT SAID PERMITTEE RELINQUISHES ALL RIGHT, TITLE AND INTEREST IN SAID PERMIT, AND THAT THE INFORMATION INCLUDED IN THE FOREGOING APPLICATION IS TRUE TO THE BEST OF MY KNOWLEDGE AND BELIEF.

16. SIGNATURE_ _____

17. TITLE Vice President, Limerick Generating Station SWORN AND SUBSCRIBED TO BEFORE ME

18. THIS A/4.- DAY OF , ),L' I/uI_____ 9s.

(SEAL)

                                                ...   (NOTARY PUBLIC)

3800-PM-WSM0040 Rev. 9/99 STATEMENT OF ACCEPTANCE OF PERMIT

19. NAME AND ADDRESS OF NEW PERMITTEE Exelon Generation Company, LLC 200 Exelon Way, Kennett Square, PA 19348 PHONE: 610-765-5847

20. TYPE OF PERMITTEE El PRIVATE INDIVIDUAL El ASSOCIATION El PARTNERSHIP [ OTHER LLC El CORPORATION I/WE HEREBY ACCEPT THE PERMIT REFERRED HERE IN TO AND AGREE TO BE BOUND BY ALL TERMS OF SAID PERMIT

21. FACILITY NEW NAME (IF APPLICABLE)

N/A

22. SIGNATURE Ito, 25.

23. TITLE 24. DATE Vice President'imerick Generating Station IF CORPORATION AFFIDAVIT AFFIX SEAL HERE COMMONWEALTH OF PENNSYLVANIA

26. COUNTY OF

27. I, James D. von Suskil BEING DULY SWORN ACCORDING TO THE LAW DEPOSE AND SAY THAT I (AM THE ,NEW PERMI'TEE) (AM AN OFFICER OR OFFICIAL FOR THE NEW PERMITTEE) (WA-VE--T-1E AUTHORITY TO ACCEPT THIS PERMIT FOR THE NEW PERMITTEER) NAMED ABOVE, AND THAT THE INFORMATION INCLUDED IN THE FOREGOING STATEMENT IS TRUE TO THE BEST OF MY KNOWLEDGE AND BELIEF.

28.SSGNATURE

29. TITLE Vice Prisic U-Vaý2ý t, Limerick Generating Station (SEAL)

SWORN AND SUBSCRIBED TO BEFORE ME

30. THIS

                       /6'i           DAY OF                     --. 49 2

26 oc< (NOTARY PUBLIC) ARE THE FACILITIES ESSENTIALLY THE SAME AS ORIGINALLY APPROVED? El YES E[ NO IS EITHER PARTY IN VIOLATION OF ANY ACT, RULE, REGULATION OR ORDER OF THE DEPARTMENT OR ANY PERMIT CONDITION? El YES EINO IS CHANGE IN OWNERSHIP OR TENANCY INVOLVED? El YES ENO IF NOT, IS PROOF OF COMPLIANCE WITH FICTITIOUS NAME ACT OR FICTITIOUS CORPORATE NAME ACT ATTACHED? El YES ENO RECOMMENDATION REGIONAL MANAGER TECHNICAL SERVICES SECTION CHIEF El APPROVE Dl REFUSE DATE El APPROVE El REFUSE DATE SIGNATURE SIGNATURE

10- 9-00; 3:16PM , 610 718 2721;# ER-BWSCH-43: Rev. 1/85 COMMONWEALTH OF PENNSYLVANIA DEPARTMENT OF ENVIRONMENTAL PROTECTION BUREAU OF WATER SUPPLY MANAGEMENT PUBLIC WATER SUPPLY PERMIT No. 4696507 B. CT CATION A. pERMITTEE (Name und Address) P nMunicipality Pottstown Borough PECO Energy PO Box 2300 Montomery Sanatoga. PA 19464-0920 lUse as Source ?onstructaon S PERMIT PROVES FOR:Supply AS INDICATED BELOW: (3 Impoundment

• Stabilization o Well(s) 0 Disifection o Spring(s) 0 Settling E- Pump Station(s) o Stream 0 Filtration Transmission Lines o Lake 0 Iron and Manganese Treatment 0 Distribution Storage 3

0 Softening o Fluoridation Q Distribution System [o Other XNOWN AS Training Center Corrosion ControiSIyterm U S AUTHOR RIZED TO USE AS SOURCE(S) OFInSUPPLY. CONSTRUCT OR OPERATE, AS INDICATED ABOVE. PROVIDED YOU THAT ARE HEREBY FAILURt TO COMPLY . WITH CAPE

                                                  .

CHPE ... ARTICLE 1.ARICE11, OF OFTHEOFRULES THIS PERMIT THETHE SHALL VOID OF AND REGULATIONS GIVEN DEPARTMENT AUTHORITY OFTO THE OR CONDION ENVIRONMENTAL PROTECTION OR THE TERMS PERMiTTEE BY THE ISSUANCE OF THE PERMIT. PROCESS OR QUALITY OF WATERS SPECIFICATIONS AFFECTING THE TREATMENT 10 DEVIATIONS FROM APPROVED PLANS OR FROM THE DEPARTMENT. SHALL BE MADE WITHOUT WRITTEN APPROVAL OF EiVIRONMENTAL PROTECTION UNDER THE AUTHORITY OF THE PENNSYLVANIA THIS PERMIT IS ISSUED BY THE DEPARTMENT 43 COMPLY WITH THE PROVISIONS 1"1984 (P.L 206, NO. ). OPERATION SHALL SAFE DRINKING WATER ACT, THE ACT OF MAY IN SECTIONS 4 AND 6(e) OF THE PENNSYLVANIA SAFE DRINKING WATER OF CHAPTER 109 ADOPTED UNDER THE AUTHORITY ACT. THIS PERMIT IS SUBJECT TO THE ATTACHED SPECIAL CONDITIONS EROSION CONTROL STANDARD CONDITIONS RELATING TO THIS PERMIT IS SUBJECT TO THE FOLLOWING EVkNE A PROTECTION DEATETO PERMIT ISSUED BY Date 329. Gerard M. Centofanti Regional Manager Title Water Supply Management Re 30 (KAL)76.44

10- 4-00; 3:21PM 610 718 2721;# 2 ER.BWSCH-43: Rev. 1/85 COMMONWEALTH OF PENNSYLVANIA DEPARTMENT OF ENVIRONMENTAL PROTECTION BUREAU OF WATER SUPPLY MANAGEMENT PUBLIC WATER SUPPLY PERMIT No. 4696508 A. PERMITIEE (Name and Address) B. PROJECT LOCATION PECO Energy Municipality Pottstown Borough PO Box 2300 Sanatoga, PA 19464-0920 County Montgomery C2. THIS PERMIT APPROVES FOR: 1.U Use as Source F\7 U of Supply [] Construction 3.' ] Operation AS INDICATED BELOW: 4.Suc 5- Facilities 0 Well(s) 0 Impoundment 0 Stabilization O 0 Disinfection o3 Spring(s) Settling o Stream. 0 Filtration 0 Pump Station(s) Eo Lake 0 Iron and Manganese Treatment 0 Transmission Lines o[ Softening 0 Distribution Storage o Fluoridation. Q Distribution System O Other KNOWN AS L;merick Generating Station Corrosion Control System YOU ARE HEREBY AUTHORIZED TO USE AS SOURCE(S) OF SUPPLY, CONSTRUCT OR OPERATE, AS INDICATED ABOVE, PROVIDED THAT FAILURE TO COMPLY WITH CHAPTER 109. ARTICLE II. OF THE RULES AND REGULATIONS OF THE DEPARTMENT OF ENVIRONMENTAL PROTECTION OR THE TERMS OR CONDITIONS OF THIS PERMIT SHALL VOID THE AUTHORITY GIVEN TO THE PERMITTEE BY THE ISSUANCE OF THE PERMIT. NO DEVIATIONS FROM APPROVED PLANS OR SPECIFICATIONS AFFECTING THE TREATMENT PROCESS OR QUALITY OF WATERS SHALL BE MADE WITHOUT WRITTEN APPROVAL FROM THE DEPARTMENT. THIS PERMIT IS ISSUED BY THE DEPARTMENT OF ENVIRONMENTAL PROTECTION UNDER THE AUTHORITY OF THE PENNSYLVANIA SAFE DRINKING WATER ACT, THE ACT OF MAY 1. 1984 (P.L 206. NO. 43). OPERATION SHALL COMPLY WITH THE PROVISIONS OF CHAPTER 109 ADOPTED UNDER THE AUTHORITY IN SECTIONS 4 AND 6(e) OF THE PENNSYLVANIA SAFE DRINKING WATER ACT. THIS PERMIT IS SUBJECT TO THE ATTACHED SPECIAL CONDITIONS THIS PERMIT IS SUBJECT TO THE FOLLOWING STANDARD CONDITIONS RELATING TO EROSION CONTROL PERMIT ISSUED DEPARTMENT OF ENVIRO MENT/[ PROTECTION [Date 3-25-97 BY do___________________ Gerard M. Centofanti Regional Manager title Water Supply Management Re 30 (KAL)76.45

3800-PM-WSM0040 Rev. 9199 DAERECEIVED mown COMMONWEALTH OF PENNSYLVANIA DEPARTMENT OF ENVIRONMENTAL PROTECTION BUREAU OF WATER SUPPLY MANAGEMENT APPLICATION FOR TRANSFER OF A PUBLIC WATER SUPPLY PERMIT

1. Date 10/16/00

2. NAME AND ADDRESS OF PRESENT PERMITTEE 3. FACILITY NAME AND ADDRESS PECO Energy Company Limerick Generating Station Evergreen & Sanatoga Roads PHONE: Pottstown, PA 19464 PHONE: 610-765-5847

4. PERMIT NO. 5. DATE ISSUED 6. MUNICIPALITY 7. COUNTY 4696508 3/25/97 Pottstown Borough Montgomery 4696507 3/25/97

8. DOES TRANSFER OF PERMIT INVOLVE CHANGE IN OWNERSHIP? [] Yes E3 No IF NO, HAVE YOU COMPLIED WITH FICTITIOUS NAME ACT? El Yes E3 No

9. THE ORIGINAL PERMIT IS [ ATTACHED El CANNOT BE PRODUCED

10. SIGNATL} E OFAPRIENT PERMITTEE 13

11. TITLL' AgZL- I '

12. DATE Vice President, Limerick Generating Station IF CORPORATION AFFIDAVIT AFFIX SEAL HERE COMMONWEALTH OF PENNSYLVANIA

14. COUNTYOF & =(t q ()2LP/-

15. I, James D. von Suskil, BEING DULY SWORN ACCORDING TO LAW DEPOSE AND SAY THAT I (AM THE APPLICANT) (AM AN OFFICER OR OFFICIAL OF THE APPLICANT) (HAVE THE AUTHORITY TO MAKE THIS APPLICATION FOR THE APPLIC-A^NT) NAMED ABOVE AS THE PRESENT PERMITTEE, THAT SAID PERMITTEE RELINQUISHES ALL RIGHT, TITLE AND INTEREST IN SAID PERMIT, AND THAT THE INFORMATION INCLUDED THE OREGOING APPLICATION IS TRUE TO THE BEST OF MY KNOWLEDGE AND BELIEF.

16. SIGNATUREEJUI _Q-E4 --

17. TITLE Vice President. Limerick Generatinq Station SWORN AND SUBSCRIBED TO BEFORE ME

18. THIS DAY OF ) { (OTA /UB9C) .c'. 1> (SEAL) 7' (N 0TAty'9UB L IC)

3800-PM-WSM0040 Rev. 9/99 STATEMENT OF ACCEPTANCE OF PERMIT

19. NAME AND ADDRESS OF NEW PERMITTEE Exelon Generation Company, LLC 200 Exelon Way, Kennett Square, PA 19348 PHONE: 610-765-5847

20. TYPE OF PERMITTEE El PRIVATE INDIVIDUAL El ASSOCIATION El PARTNERSHIP [ OTHER LLC E] CORPORATION I/WE HEREBY ACCEPT THE PERMIT REFERRED HERE IN TO AND AGREE TO BE BOUND BY ALL TERMS OF SAID PERMIT

21. FACILITY NEW NAME (IF APPLICABLE)

N/A A J

22. SIGNATURE/& ,jý 25.

23. TITLE 0 24. DATE Vice President, Limerick Generating Station IF CORPORA TION AFFIDAVIT AFFIX SEALP -,IERE COMMONWEALTH OF PENNSYLVANIA

26. COUNTY OF

27. I, James D. von Suskil BEING DULY SWORN ACCORDING TO THE LAW DEPOSE AND SAY THAT I (AM THE NEW PERMI.'EE) (AM AN OFFICER OR OFFICIAL FOR THE NEW PERMITTEE) (HAVTH

     ,AUTHORITY TO ACCEPT THIS PERMIT FOR THE NEW PERMITTEE) NAMED ABOVE, AND THAT THE INFORMATION INCLUDED IN THE FOREGOING STATEMENT IS TRUE TO THE BEST OF MY KNOWLEDGE AND BELIEF.

28. SIGNATURE

29. TITLE Vice Pusdnt. Limerick Generatina Station (SEAL)

SWORN AND SUBSCRIBED TO BEFORE ME

30. THIS DAY OF (NOTARY PUBLIC)

ARE THE FACILITIES ESSENTIALLY THE SAME AS ORIGINALLY APPROVED? El YES El NO IS EITHER PARTY IN VIOLATION OF ANY ACT, RULE, REGULATION OR ORDER OF THE DEPARTMENT OR ANY PERMIT CONDITION? El YES E3 NO IS CHANGE IN OWNERSHIP OR TENANCY INVOLVED? El YES El NO IF NOT, IS PROOF OF COMPLIANCE WITH FICTITIOUS NAME ACT OR FICTITIOUS CORPORATE NAME ACT ATTACHED? El YES El NO RECOMMENDATION REGIONAL MANAGER TECHNICAL SERVICES SECTION CHIEF El APPROVE El REFUSE DATE El APPROVE El REFUSE DATE SIGNATURE SIGNATURE

607822; 10- 9-00; 3:16PM 610 718 2721  ;#_ ER-BWSCH-43 Revy. 1/85 COMMONWEALTH OF PENNSYLVANIA DEPARTMENT OF ENVIRONMENTAL PROTECTION BUREAU OF WATER SUPPLY MANAGEMENT PUBLIC WATER SUPPLY PERMIT No. 4696507 B. PROJECT LOCATION A. TE (Name and Address) e 1Municipality Pottstown Borough PO Box 2300 Montgomery Sanatoga. PA 19464-0920 t C. THIS PERMIT APPROVES FOR: I. HSuppiy use as Source [] Cosruto 3-C Operatior AS INDICATED BELOW: Impoundment Stabilization o Well(s) 0 Settling 0 Disinfection 0 o Spring(s) Filtration 0 Pump Station(s) 0 o Stream 0 Iron and Manganese Treatment 11 Transmission Lines 0 Lake 13 Distribution Stoage 0 Softening 0 Distribution System 0 Fluoridation 0 n Other KCNOWN AS Training Center Corrosion Control!SYstem ABOVE, PROVIDED OF SUPPLY, CONSTRUCT OR OPERATE, AS INDICATED YOU ARE HEREBY AUTHORIZED TO USE AS SOURCE(S) OF THE DEPARTMENT OF ARTICLE II, OF THE RULES AND REGULATIONS THAT FAILURE TO COMPLY WITH CHAPTER 109, OF THIS PERMIT SHALL VOID THE AUTHORITY GIVEN TO THE Ol CONDITIONS ENVIRONMENTAL PROTECTION OR THE TERMS PERMITTEE BY THE ISSUANCE OF THE PERMIT. PROCESS OR QUALITY OF WATERS OR SPECIFICATIONS AFFECTING THE TREATMENT NO DEVIATIONS FROM APPROVED PLANS FROM THE DEPARTMENT. SHALL BE MADE WITHOUT WRITTEN APPROVAL AUTHORITY OF THE PENNSYLVANIA OF ENVIRONMENTAL PROTECTION UNDER THE THIS PERMIT IS ISSUED BY THE DEPARTMENT 206, NO 43). OPERATION SHALL COMPLY WITH THE PROVISIONS MAY 1L 1984 (P.L SAFE DRINKING WATER ACT, THE ACT OF SAFE DRINKING WATER IN SECTIONS 4 AND 6(e) OF THE PENNSYLVANIA OF CHAPTER 109 ADOPTED UNDER THE AUTHORITY ACT. SPECIAL CONDITIONS THIS PERMIT IS SUBJECT TO THE ATTACHED CONDITIONS RELATING TO EROSION CONTROL THIS PERMIT IS SUBJECT TO THE FOLLOWING STANDARD DEPARTMIENT O ENVII ONMENAL PROTECTION PERMIT ISSUED 3-25-97 BY Dat z Gerard M. Centofant! Regional Manager

                                                                                                                                              !

Title Water Supply Management Re 30 (KAL)76.44

10- 4-00; 3:21PM 610 718 2721;# 2 ER-BWSCH-43: Rev. 1185 COMMONWEALTH OF PENNSYLVANIA DEPARTMENT OF ENVIRONMENTAL PROTECTION BUREAU OF WATER SUPPLY MANAGEMENT PUBLIC WATER SUPPLY PERMIT No. 4696508 A. PERMITTEE (Name and Address) B. PROJECT LOCATION PECO Energy Municipality Pottstown Borough PO Box 2300 Sanatoga, PA 19464-0920 County Montgomery THIS PERMIT APPROVES FOR: 1 Use as Source 2.D Constrution Oeao C. of Supply Operation AS INDICATED BELOW: 45- Facilities o Well(s) rl Impoundment 0 Stabilization o3 Spring(s) O Settling fl Disinfection o Stream [0 Filtration Q Pump Station(s) o Lake 0 Iron and Manganese Treatment r Transmission Lines o Softening 0 Distribution Storage o Fluoridation. 0 Distribution System o Other KNOWN AS Limerick Generating Station Corrosion Control System YOU ARE HEREBY AUTHORIZED TO USE AS SOURCE(S) OF SUPPLY, CONSTRUCT OR OPERATE, AS INDICATED ABOVE, PROVIDED THAT FAILURE TO COMPLY WITH CHAPTER 109, ARTICLE II. OF THE RULES AND REGULATIONS OF THE DEPARTMENT OF ENVIRONMENTAL PROTECTION OR THE TERMS OR CONDITIONS OF THIS PERMIT SHALL VOID THE AUTHORITY GIVEN TO THE PERMITTEE BY THE ISSUANCE OF THE PERMIT. NO DEVIATIONS FROM APPROVED PLANS OR SPECIFICATIONS AFFECTING THE TREATMENT PROCESS OR QUALITY OF WATERS SHALL BE MADE WITHOUT WRITTEN APPROVAL FROM THE DEPARTMENT. THIS PERMIT IS ISSUED BY THE DEPARTMENT OF ENVIRONMENTAL PROTECTION UNDER THE AUTHORITY OF THE PENNSYLVANIA SAFE DRINKING WATER ACT, THE ACT OF MAY 1. 1984 (P.L 206, NO. 43) OPERATION SHALL COMPLY WITH THE PROVISIONS OF CHAPTER 109 ADOPTED UNDER THE AUTHORITY IN SECTIONS 4 AND 6(e) OF THE PENNSYLVANIA SAFE DRINKING WATER ACT. THIS PERMIT IS'SUBJECT TO THE ATTACHED SPECIAL CONDITIONS THIS PERMIT IS SUBJECT TO THE FOLLOWING STANDARD CONDITIONS RELATING TO EROSION CONTROL PERMIT ISSUED DEPARTMENT OF ENVIRO PROTECTION Date 3-25-97 By _____4 !__ _ __ Gerard M. Centofanti Regional Manager Tide Water Supply Management Re 30 (KAL)76.45

FOR DEPARTMENT USE ONLY 3630-PM-WQO0016 Rev. 2/2000 COMMONWEALTH OF PENNSYLVANIA DEPARTMENT OF ENVIRONMENTAL PROTECTION BUREAU OF WATER QUALITY PROTECTION Date Received BUREAU OF WATERWAYS ENGINEERING APPLICATION FOR TRANSFER OF PERMIT 1' ApprovedbyDepartmen, AND SUBMERGED LANDS LICENSE AGREEMENT Approval Date DAM SAFETY USE ONLY Return 4 executed copies each with signatures to the appropriate office on the attached list. No Dam Permit issued, permit waived. TO BE COMPLETED BY PRESENT PERMITTEE No Permit issued, Damrequired. permit Name of Present Permittee Telephone Number PECO Energy Company 610-765-5847 Mailing Address City State Zip 200 Exelon Way Kennett Square PA 19348 O A Private Individual 0 A Corporation I- A Partnership El A Government Agency El LLC El Deceased/Unable to Locate Type of Permit GP [l Permit Number Date Issued Stream Municipality County Obstruction El Dam 0 D09-181A 12/30/86 NA Plumstead Township Bucks The Original (or a copy) of permit is 0 Attached [] Cannot be produced Has a bond been posted in connection with this project? [] Yes 0 No Do you presently hold a submerged lands license agreement? El Yes 0l No (If yes, please fill out the reverse side also) AFFIDAVIT" I James D. von Suskil being duly swom according to law depose and say that I (am. the permittc.) (am an officer of the permittee) (ha*e: the auth.rity t, make this applicatin f-r the pormittoc) named above as the present permittee, that said permittee relinquishes all right, title and interest in said permit, and that the information included in the foregoing application is true to the best of my knowledge and belief. (Inapplicable portions should be crossed out). Vice President, Limerick Generating Station 0 70" Signature of present permittee 3/ Title (ifapplicable) Date Witness Signature 3' Title (if applicable) TO BE COMPLETED BY NEW APPLICANT Name of New Applicant Telephone Number Exelon Generation Company, LLC 610-765-5847 Mailing Address City State Zip 200 Exelon Way Kennett Square PA 19348 Federal ID/Social Security El A Private Individual El A Corporation 0l A Partnership 0- A Government Agency 0 LLC No. Statement of Acceptance of Permit: IAWe hereby accept the permit herein referred to and agree to be bound by all terms and conditions of said permit. AFFIDAVIT 1" I James D. von Suskil being duly sworn according to law depose and say that I (a.. the applicant) (am an officer or official of the applicant) (have the authority to make this application for the applicant) named above as the new applicant, and that the information included in the foregoing statement is true to the best of my knowledge and belief. (Inapplicable portions should be crossed out) Vice President, Limerick Generatina Station

                   .P                               3 Signature of new applicant '

Title (if applicable) Date 3 Witness Signature ' Title (if applicable) Page 1 of 2

3630-PM-WQ0016 Rev. 2/2000 APPLICATION TO ASSIGN LICENSE AGREEMENT TO BE COMPLETED BY PRESENT LICENSEE [Name of Present Licensee 2l NA

   ...

NA I I AFFIDAVIT I__being duly sworn according to law depose and say that I (am the licensee) (am an officer of the licensee) (have the authority to make this application for the licensee) named above as the present licensee, that said licensee relinquishes all right, title and interest in said License, and agrees to assign all right, title, interest and obligations under License Agreement dated , permit number to the new licensee named herein, and that the information included in the foregoing application is true to the best of my knowledge and belief. (Inapplicable portions should be crossed out). 3 Date Signature of present licensee ' Title (ifapplicable) 3 Witness Signature ' Title (if applicable) TO BE COMPLETED BY NEW LICENSEE 2 Name of New Licensee ' NA AFFIDAVIT I being duly sworn according to law depose and say that I (am the licensee) (am an officer or official of the licensee) (have the authority to make this application for the licensee) named above as the new licensee, and agrees to accept assignment of all right, title, interest and obligations under License Agreement dated permit number --- and that the information included in the foregoing statement is true to the best of my knowledge and belief. (Inapplicable portions should be crossed out). 3 Signature of new licensee ' Title (if applicable) Date 3 Witness Signature ' Title (if applicable)

"1' if the regulated activity was authorized by a General Permit, the new applicant must also complete and submit a new "Notification to Use" form of the applicable General Permit. If a Submerged Lands License Agreement is presently held, page 2 of this form must be completed by both the Present Licensee and the new applicant (new Licensee). Further, the Affidavits on page 1 do not have to be completed.

21 The name of the present licensee and the new licensee must be the same. as-the present permittee and new applicant shown. on the front of this form. 31 Clarification on some signatures: For corporations,on page 1 the signatures must be the President, Vice President, Secretary or Treasurer but no witness is required; on page 2 the signature must be the President or Vice President and witnessed by the Secretary or Treasurer. For government agencies, on both pages 1 and 2 the signature must be the Chief officer and witnessed by the Chief Clerk, Secretary or Treasurer. For partnerships,on pages 1 and 2, any partner authorized to sign on behalf of entire partnership must sign. For LLCs, if it is member managed, a member must sign; if it is manager managed, a manager must sign. If anyone else signs, must send documentation saying they have authority to sign. Witness signature is not required for LLC. For individuals, no indication of title is necessary. Page 2 of 2

                                                                                                  ]it.I1  N    C1          D09- 161 f, COMMONWEALT7H OF PENNSYL ANIA DEPARTMEN1 01 ENVIRONMENTAL RLS()URCL'.S PERMIT December 3, 19T0, (71 P.S. §510-1 She Departiecnt o1 Environmental Resources "Department", established b. the Act of of the Act of November 26.

el seq.) and empovered to exercise certain posNers and perform certain duties under and by virtue as the "lDam Safety and Encroachments 1978, P.L. 1375, No. 325, as anmended by the Act of October 23, 1979. No. 70, knosn which empowers the Departmcnt to exercise Act"- and the Administrati\M Code, Act of April 9, 1929, P.L. 177, as amended, Water Supply Commission of Pennsylvania certain po%.,crs and perform certain duties by la" vested in and imposed upon the i~ues :et-4o* and the Act of ,hutc1 4,1]9., 1'.1.. and the W\ater and Poser Resources Board, h 701, 32 ]'.S. § 111 Ct scl. , hereby 2issues tbhs permS t to: PHILADELPHIA ELECTRIC COITPANY, 2301 ilarket Street, Philadelphia, PA 19101 giving its consent to modify the designof the proposed Bradshaw Reservoir Damso divide between North Branch Neshaminy Creek and South Branch Geddes Run in Plumstead Township. Bucks County. on the 7th- day This permit is issued in response to an application filed with the Department of Environmental Resources A.D. 19 86 . and with the understanding that the work shall be performed in accordance with of July the maps, plans, profiles and specifications filed with and made part of the application December 15, 1986

r,e follcss Subiec:. hol. eve. to the rovisio'> of the Dam Safety and Encroachments Act. the AdministrarJve Code, and C!rC (YOUR ATTENTION IS DRAWN TO CONDITION NUMBER 12).

conditions, regulations, and restrictions

1. This permit does nor* i'e any property rights, either in real estate or material, nor any exclusive privileges, nor shall it be construed to crant or confer any right, title, easement. or interest in, to, or over any land belonging to the Commonvealth of obtaining of Pennsylvania: any infringement of Federal, State, or local laws or regulations; nor does it obviate the necessity Federal assent when necessary;

2. The work shall at all times be subject to supervision and inspection by representatives of the Departmen', and no of the Depart chances in the maps, plans, profiles and specifications as approved shall be made except with the written consent the right to require such changes or modfications in the maps, plans, profiles, and ment. The Department, however, reserves be considered necessary. The Department further reserves the right to suspend or revoke this permit if in specifications as may its opinion the best interest of the Commonwealth will be subserved thereby;

3. All work shall be conducted under the oversight and supervision of a competent engineer approved by the Depart construction ac ment, and such engineer or a competent representative shall be on the work site at all times during significant tivities until completion of the dam.

4. The Department shall be notified in advance of the proposed time of commencement of this ork, and a dctailed report upon the status of the construction shall be mailed to the "Divistin of Dam Safety, P. (). Box 2357, flarr:b'%r, Penn (30) day, alter the coni sylvania 177120"" on the first of each month until Aork upon the dam hnis been completed \Wth[n thir:-,

pletion of the work anlthori7ed in thiC permit, the permitiiec shall ic A-ilth the 1)s iston of Dam Satt, V 3 a ' c' -.*itfv1T. CCen:

    , the work h;,\ been perfotmed in accordance wi!h thi, permit and the app:oved map. pt:.. proiClC',                          anc   sp.":ttc~itor',

o Ifl;, the pernmitec shill submit t1o the DiikioC of Dim Salet%. "ithm ninety (9*! davy\ ol the dat- of Inmal cicnrrplc!:ott tie dam auiCtIcrized by IC , permit. a set of -a,, built" plan, for the project:

1I ilh , ikwl. i' '1

                                                                 !        n1,llCilid on (I bef,.eic                          ..      .. ...       t-1,.'  .......            .      _1st_                    da.' W December                                             ..         A.D. 19 8.8 . thi, permit. if not pies ouslk rTt tik'd 0t spcilical.s e\lended. shall A....

C I."1, UJ!'iL . !tI Id. wIid I:. upon the '\piratt nlIO re\ oc.aton ol this permi. thII( \tw.k shall not be LonipltedL the pCI ic it I LL , i 1.' 11t.\ PSU, 'i'. :il it' II eC\

                                                                                       .      and Iit sui!, InhI t        andi nrl IMllt I it IItt itId I ),.j-           1'1 rlci              r-quciet ICrexlLI 1        1     1L p0t.',:      t,     'iiti,   illd'pk                  ',,,i        aid    re-lcrc tlie \ka rIuuMr.C I' i i t I1            t nce         -ondJi iio i. N cla'im sh ll bIc nfiai                 a.t'\:.in 1It              ~*

Ino I; itq'\\uýjiII ll W }Pet'll, I I \ d 1141 0 11 i.*Oý , 0 111 l aln\ SL, 1),. rt`I' 1OLtl OIof al. !iI toI~i. t), - n..:.c!L.; tcl h b1'p,' .. ' Lii n;k.. portiion 0 d h1Ih oit id, t iii;! ,i\cl, porti'i , t )c icu1 lOf Itw da'ic n ha- teecl *ILpp!

 ,w'd. in %k     rhiti . . a it ICrI sciial                   i\  L  of    lie L" D   patrincnt;      no     carlh    or  o0lh    -   emba4k      nicni      iia 1       rli.l   whiJI     ii iln a fro7zen condittin s4 :ll be cot tIC,           (It     pla'cid        in    ncllnhaiKn        cnts:    concrete      shall    not   be   placed       in  trecyinp          calt   icei eX  cept   urnder     onditionns arprmed bh the l)cpartlmnen:
             '7.        1 le I c parnmenit shall be notitiicd at least one,.teck in advance of thl time \,.hen it i, proposed IO bepin to storc
 %Nset ici itli rce.-r oit ti pond created b\ Hit dam for which this permit i. i-,sued. 1he Department \\ill requiTe the pernitmec

[( ailo\* . por!t iTt0 t IOf fIih nalMa] tcaheni i fls i pass the dam W ile thlie reser oir oi pond i.:.bein, filled, and ihis notice is require.d intoider thKl arlanT'emenC tnt- Mhi bnit rde it hiase a rpies,,enatie i on) 1ih ei0oid b.foie or during the filling it ilhc )cparimcii

 *si-idC:,         i; desra.ibli.           S*illdicutn          ss.ci        io   support      fish  lilt   0all    bc   allotCd to fl'm into thu1sirieI               l         h bcltui,   lh daf., dutinc the Pl', nI Oi it ,eon-i truciion of repair                            an   d    N hil   thc     i¢ter.oir    k  beis    . ll   -d. Thi'  pcrmitee          agreTC      to   abide   bi   sucf'   rules and icu!.

lion, a, 10 the stota1ia and discharT,, 0' s;itc. and as to thc hesel 0t 1lh1 rcsers on cieaicd b\ said dam, as ma\ be precct:be-d ronm limj i time by thc said DepartmntLw: S. All frees o, no valiie and hrush cleared from the area untide Ili;, permit shall be burned at such time and under such condilions as to prevent the file from spteading to adjoininp timber land; provided, howevej, that befo .- such, burnine i- b-ein, the Regional .ir Pollut ion coretr! Engineer of the Departmeni of EnsironmenIal Resourc's in chargre of the Rcgion in \tk'hil the area is located shall be notified:

9. The permittee agrec, in accepting ihiu permi,. to install, upon the request of the Pennsylvania Fish Commission.

such fiwisa. e, fi-h'-tay a- th aid Deparimen; ma3 require. {Set: ioi I 8Y. of the Act of N 2. 1925. 1.L. 44S. as amended L) Act of Ap:il*] 22. 19",, P... 621. .) *-'enioi, i- also called to Sevcion 191 of the Ac't of May 2 , 1925. P.1.. 44,N aw amended

       -\, No. 113., appro\ed May. 2.. 135. \s hid provide: that no pet:-on o\kt!in_..Ics.ing or maintainilne a dam, hold;nc bask
    .atrs mhabited by lish, shall drz-\, oft                                       such      ssaters  without firs, recei\int,          civritten permission from thle Pennsyhl ania I ish

10. Perfornan,:c of die o\wr k authori7ed shall coniitutc an acceptance of the various conditions contained in the per mit: pro, ided thai if the pern:ec fail> to file acceptan,'e. of the permit in accoidda" . Coadition 12. . p, :

nuL!l and sod and the periihtte ,hull rcnoe all ssorks constructed and restore the area in a manner specitfied by the Department. I 1. 1 he Eneine-r and the Contractor shall be apprised of all of the provisions and conditions and shall siinif\ thei, acknowledecmenr of being so appried on the form herein attached. Copy oa this signed form, together with copy of the permit shall be asailable for inspeclion at the p,-otjct site at all times. Copy of the acknowledgement shall also be forwarded to the of0i,:c is.,suinl.g th1t per:::. I-ailure to has e copie, of the permhi and acknostledgement available for inspection at the project site shall be considered sufficicnt causc for issua,,. oi a cease and d_,,ist ordet by thL authorized Commor:scalth personnel: 1 2. This permit shall not become effective until and unless the permittee shall file with the Department within thirt. (30) dais from the date thereof. upon a form furnished b) the Department, its written acceptance of the terms and conditions imposed therein. Failure to submit such acceptance will render the permit null and void;

13. The permittee is advised that this project may be subject to the regulation of Section 404 of the Federal Clean WValer Act of 1977. 1 he permittee is dliccetd to immediately contact the followini" District Office of the U.S. Atmy Corps ot Engineers for furiher information:

Chief, Rcuplai iV I unc..tion, Branch Ui.>. Arniy C.orp' of Fnei'..ee:s, District

14. SEE SPECIAL CONDITIONS ON ATTACHED SHEET.

DEC 3 0 1 DATE DEPARTMENT OF ENVIRONMENTAL RESOURCES By: ATTEST: Permittee (Signature) 3

Pernit No. Dog9-16A SPECIAL CONDITIONS of Environmental The permittee is directed to furnish the Department and names, qualifications, Resources, Division of Dam Safety, with the of construction. the supervision employer of the personnel responsible for The permittee of the contractor is also required. in addition, the name the right to approve the is further advised that the Department reserves This of supervision of construction. personnel who will be in charge to the Division of Dam Safety fifteen (15) information is to be submitted of construction. days in advance of the anticipated start County Conservation Districtat The permittee must also notify the Bucks 215-348-1166 prior to the start of construction. reports regarding the The permittee is required to submit annual professional engineer, condition of the dam, certified by a registered 1 of each year. to the Division of Dam Safety on or before October shall be submitted An emergency warning system and evacuation plan and local emergency management to and approved by the Division of Dam Safety of water in the reservoir. officials prior to commencement of storage operation and maintenance The permittee shall submit a copy of the proposed to the in duplicate, manual for Bradshaw Reservoir and Pumping Station, prior to the impoundment 30 days Department for review and approval, at least until the operation of water in the reservoir. No water shall be impounded and maintenance manual is approved by the Department. the terms and conditions The permittee shall at all times comply with issued by the Delaware of all applicable project approvals and permits in such project approvals set forth River Basin Commission, and the conditions are incorporated in this permit reference. 32 P.S. §51I :t seq. Pursuant. to the Act of June 14, 1923, P.' . 704, ("Limited Power Act"): of fifty years

1. The duration of this permit shall be for a period be entitled only; provided, however, that the permittee shall of the permit upon the terms thereof, to extension and renewal recapture shall have received through until the said permittee authorized subsequent or purchase by the Commonwealth, or by a duly invested in the permittee, repayment of the capital prudently plus such reasonable power project upon the faith of the permit, of the permittee valuable, serviceable, damages, if any, to property upon the continuance of such and dependent for its usefulness by as may be caused permit, but not recaptured or purchased, however, taken; provided, the serverance therefrom of property abandon that should the permittee, for any reason whatsoever, forms herein authorized the project, for which the facilities

of three (3) a part, or cease to operate the same for a period and void and years then this permit shall cease and be null expense and to such extent and the permittee shall, at its own may require, remove in such time and manner as the Department and restore the watercourse all or any portion of the facilities against the to its former condition. No claim shall be made removal. on account of any such Commonwealth of Pennsylvania Environmental Resources,

2. The permittee shall pay to the Department of

                                                   $10,000 annually.

for the privilege hereby granted, the sum of shall be made at the end This payment for any calendar year thereafter upon bills rendered of the year or within thirty days or approved by the Department. Page 2

REPORT UPON TILE APPLICATION D 09-181A OF PHILADEKLPHIA EI*CTRIC COMPANY the proposed to be issued: To modify the design of Permit divide between North Reservoir Dam on the drainage Bradshaw in Plumstead South Branch Geddes Run Branch Neshaminy Creek and Township, Bucks County. Julv 7, 1986 received ---------.------------------- Application August 14, 1986 received -------------------------------- Plans December 15, 1986 plans received ---------------------- Revised Brian R. Maguire, H.E. upon by.----------------------- Reported

                                  -------------   Project  Review and Evaluation Section
                                                    ----------

Dam Safetv

                                  ------------------------ Division of between    North   Branch Drainage divide Stream -- ----------------                                   Creek   and   South   Branch
                    ------------------------ Neshaminy                                 Geddes Run
                       ----------------------------------------------
                                        ------             Water storage and distribution Purpose -------- ------------------------------------------                    Earthfill Type  of   Dam
                                                              ----------------------        20 feet Height       -------------------------

2840 feet Length - ----------------------------------------------7.0 Acres operating level) -------- Surface Area (maximum normal 7.5 Acres (top of dam) --------------------------- Storage Capacity: 60..7 Acre-Feet (maximum normal operating level) ----- Acres 76.7 Acre-Feet (top of dam) ------------------------- S....7.9 _ cres Drainage Area --------------- C-2 Classification - -------------------------------------------- Harrisburg, PA December 30, 1986 GENERAL DISCUSSION: proposed to modify the design of the The applicant seeks authorization divide between North be located on the drainage Bradshaw Reservoir Dam to Plumstead Township, South Branch Geddes Run in Branch Neshaminy Creek and approved by DER permit number Bucks County. The proposed dam was previously 1, 1982. Dam 09-181, issued on September a continuous be created by constructing The proposed reservoir will The impoundment will be used for 2840 feet long. earthen dike approximately Pleasant Pumping water pumped from the Point distribution and control of Creek to the Perkiomen and Neshaminy Station on the Delaware River, approximately 2.5 miles southwest of Watersheds. The proposed site is located and Move: Roads. at the intersectior, of ?radsh*a the village of Point Pleasanlt

from does not involve inflow dam is located on a drainage divide, and by the The watershed. The "drainage area" controlled surface any stream or contributory plus the area at top of dam (7.5 acres) dam is the reservoir surface reservoir (0.4 of the embankment which drains into the as area of that portion area of 7.9 acres. The proposed reservoir, total drainage of 60.7 acres), for a acres and storage capacity a surface area of 7.0 NSL). (The previously modified, will'have operating level ( a35.0 maximfu1r normal area of 17.4 acre-feet at the a reservoir with a surface would have created normal operating approved design of 215 acre-feet at maximum capacity acres, with a storage level.) GEOLOGN: Underlying site lies within the Triassic Lowland Province. by its The reservoir of the Lockatong Argillite formation characterized The top bedrock consists and fractured nature. texture, and its bedded borrow area, dark grey color, fine in elevation in the proposed bedrock is highest Pleasant Pike. The surface of the and adjacent to the Point reservoir area and southeast of the toward the Delaware River of the rock falls off to the north rises and falls with elev:tion 413. The bedrock in the reservoir area toward Pa. Route the surface topography. averaging 6.5 feet in is uniformly an impermeable silty clay of the bedrock are Overburden argillite frequently found on top depth. Zones of weathered belong to the parts of These thin-bedded zones badly broken and thin-bedded. frequently and persist which are 14 to 20 feet thick and recur and will be detrital cycles are associated with fractures rock. The badly broken parts laterally. massive by wider areas of tough, linear and narrow and separated entire reservoir floor of this geology, the design calls for the In light material. thick layer of impermeable to be covered with a 2-foot TYDRCIOGY: small size with classification has been determined to be regulations, The dam In accordance with current potential (C-2). significant hazard to 1/2 Probable design flood for this dam is in the 100-year the spillway range. Maximum Flood ("PMF") frequency area behind is off-stream, the uncontrolled drainage acres). Since the reservoir top of dam level (7.9 is limited to the surface area at the embankment reservoir are: (1) rainfall on the reservoir Sources of inflow to the the Point Pleasant Pumping Station. An (2) water pumped from reservoir from* surface, and pass the maximum inflow to the designed to emergency spillway, be provided to prevent Station (147 cfs), will the Point Pleasant Pumping system. 1 o of failure of the pump control " embankment overtopping in the event emergency spillway design been provided above the Additional freeboard has all of the iainfall from the to receive and attenuate high water level overtopping the Precipitation ("PMP") event without Probable Maximum of 34.2 inches over a 24-IuU embankment. This rainfall amounts to a total duration.

HYDRAULICS: Station will be to the reservoir from the Point Pleasant Pumping Inflow located adjacent to the northeastern portion controlled by an inlet structure of a weir type overflow The inlet structure consists from of the embankment. three sluice gates. It will direct pumped flow equipped with 54-inch structure two 54-inch by into the reservoir through the Delaware River either Station through a 54-inch to the Bradshaw Pumping sluice gates or directly pipe bypass main. prestressed concrete cylinder sluice gate and 54-inch main to the Bradshaw Pumping Station will through the bypass Directing flow during periods of operation of the water supply system permit continuous or maintenance. reservoir drawdown for cleaning portion Pumping Station will be located on the southwestern the The Bradshaw situated in consist of an intake structure of the embankment and will and an above ground below the station floor embankment, a sump located pumping units with a The station will house four vertical of 49 MGD. superstructure. 46 MGD and facilities for the gravity release combined capacity of to the East Branch of reservoir will be delivered Pumped discharge from the Gravity releases 48-inch transmission main. Perkiomen Creek via a proposed Creek via a proposed 42-inch transmission will be to North Branch Neshaminy on each transmission main to measure main. Venturi meters will be provided discharges. r s ecrest 7A r s with C

                                                                .
                                                      .. a standard     .

• i c riser

                                                                    . overflow The emergency spillwa way co    consists of prestressed          '

set at elevation 435.5. Riser flow will exit into a 42-inch and discharge into a the base of the embankment concrete cylinder pipe through IV impact basin. Bureau of Reclamation Type STRUCTURAL: A cutoff dam w;ll be constructed as a continuous earthen embankment. e: tne The the center.ine impervious material along zrench will be excavated to slopes. 8.0 feet and 1 to i side dam, with a bottom width of to 1 downstream, be 3 to I upstream and 2.5 Embankment side slopes will at the intake will be 2 pumping station intake. The side slopes except at the and will be set at of the dam will be 14 feet to 1. The minimum top width blanket will be placed on the entire a filter elevation 438.0. Riprap and A toe drain will be incorporated into for erosion protection. upstream slope slope. the entire length of the downstream One will be formed into the embankment. Two 12-foot wide access ramps slope. The other portion of the downstream will be located on the western portion of the upstream slope. will be located on the southeastern provide with asphaltic concrete will A 20-foot wide roadway paved The roadway will run in a westerly station. vehicular access to the pumping the crest of the dam, and from the Danboro Point Pleasant Pike, onto direction stat at a parking area adjacent to thr p*urpincn will terminate 3

carried out utilizing soil parameters Stability analyses of the dam were at the site. tests on soil samples taken determined in laboratory of downstream slopes at the section The stability of the upstream and The Corps of by computer simulation. greatest water depth was evaluated with Side Forces" "Slip Circle Slope Stability Engineers Program 741-11-F5030, drawdown conditions. state seepage and sudden was utilized to evaluate steady factor of the applicant disclosed a minimum The slope stability study of The minimum factor of seepage condition of 1.5. safety under the steady state These are greater than condition was 1.8. safety under the sudden drawdowf by the Corps of Engineers Manual, recommended the minimum factors of safety 0 of Earth and Rock-Fill Dams." EM-111 1902, "Stability METHOD AND SCHEDULE OF OPERATION: the Delaware River Pleasant Pumping Station on Pumped flow from the Point The water through the inlet structure. will enter the Bradshaw Reservoir full operation such be maintained, during normal level in the reservoir will a maximum level will not vary more than that the fluctuation in surface Pleasant Pumping the operation of the Point of three feet by controlling controlled will be automatically or manually Station. Pumps at Point Pleasant are made. In the Bradshaw Reservoir as withdrawals to maintain water level in pump operation control system, causing continuous event of failure of the pump alarms would be pool levels in the reservoir, and resulting in above-normal shut down. If and the pumps would be manually sounded at two remote locations would overflow, thus down, the emergency spillway the pumps could not be shut protecting the dam from overtopping. of 46.2 MGD will be used to pump a maximum The Bradshaw Pumping Station Creek. This water to the East Branch of Perkiomen through a transmission main Limerick at Philadelphia Electric Company's will be used as cooling water Station. Reservoir into North branch Nr;shaminy Gravity releases from the Sradshaw Run as well as flows in that stream, and Pine Creek will supplement natural Plant of the the North Branch Water Treatment storage in Lake Galena to supply Neshaminy Water Resources Authority. pumping station Manual for the reservoir and An Operation and Maintenance phase of engineer during the construction will be prepared by the applicant's approval prior to this Department's review and the project and will be subject start-up of reservoir operation. to the impoundment of water and LIMITED POWER ACT REQUIREMENTS to supply D 09-181 constitutes a "dam The project approved under Permit of special conditions for steam power," and is subject to the imposition water §591 et seq. 14, 1923, P.L. 704, 32 P.S. as required by the Act of June to the permiL period alu Power Act"), including conditions relating ("Limited annual charges. 14

LETTERS 01 APPROVAL & AGENCY COMMENTS: the Bucks County Conservation A letter dated September 17, 1986 from and approved the Erosion and District indicates that they have reviewed project. Sedimentation Control Plan for this Management's State Water Plan A memo from the Bureau of Water Resources to indicated that they have no objection Division dated August 1, 1986 has this project. dated July 23, 1986 A memo from the Pennsylvania Fish Commission opposed to all aspects of the Point indicates that they remain philosophically Pleasant diversion project. Bureau of Water Quality Management The Norristown Regional Office of the 16, 1986 there should be minimal impact has indicated in a memo dated August on water quality by the proposed construction. all aspects of the Point The Pennsylvania Fish Commission opposes (1) that major Reservoir, contending: Pleasant Project including the Bradshaw the operation of the completed project, environmental damage will be caused by statement should be completed to assess and (2) that an environmental impact the impacts of the project. ENTVIRONMENTAL REVIEW: design modification was An environmental evaluation of the proposed Section of the Division of Waterways performed by the Environmental Review the Section In performing the evaluation, and Storm Water Management. (2) visited the the application, (1) considered information submitted with of the U.S. Army Corps representatives site both separately and together with given at the public hearing. of Engineers, and (3) considered testimony Based` on the above, the Environmental Review Section concludes3: of Engineers and the

1. The wetland area identified by the Corps applicant's environmental consultant and shown on the project within the definition of 25 J drawings is not an "important wetland" Therefore, the wetland area should nct Pa. Code Section 105.17(a).

300-foot buffer associated be considered as one which requires the with important wetlands. the proposed

2. The elimination of the wetland areas within and reservoir will cause no impoundment by construction of the dam significant environmental harm.

drawings are outside the

3. The wetlands delineated on the project for the dam and proposed impoundment and construction area effects reservoir. There will not be any significant environmental on these wetlands because of this project.

5

will have no significant

4. The proposed design modification environmental effect.

PUBLIC COMMENTS AND HEARING: public comment regarding this The Department has received extensive the Library hearing on the application in application; and held a public Thursday, October 16, County Community College on Building Auditorium at Bucks additional for the purpose of soliciting 1986. The hearing was conducted modification in the application for the proposed public comments concerning to avoid the realignment of the embankment the project design, including of the reservoir. reduction in storage capacity wetland areas and subsequent solicited comments concerning: The Department particularly from the integrity of the dam arising (1) Impacts upon the safety and volume. reduction in reservoir storage proposed reconfiguration and environmental impact of the dam caused (2) Significant changes in the by the proposed design modification. ISSUES BEFORE THE DEPARTMENT on Dam Safety and Integrity Impact of Design Modification

1. Slope Stability by the hearing, including testimony Comments submitted at the public John Phillippe, questioned the engineering consultant to Del-Aware, design.

slope stability analyses for the modified dam and conducted The stability analyses submitted by the applicant confirm that the dam enclosing the independently by the Department cf rapid drawdCcwn. reserv.-ir is'stat-a even considering the condition that stability be analyzed for the most Accepted design theory indicates and dynamic both static critical section of the embankment, considering for downstream under steady state seepage (earthquake) loading conditions slopes. for upstream (or inside) slopes and rapid drawdown conditions stability of the upstream (or inside) From the perspective of slope condition is the most-critical embankment slopes, a rapid drawdown sudden emptying of (that is, situation. In comparison to rapid drawdown operation of the modified Bradshaw all water from the dam), the actual pumps at Pt. Pleasant and Reservoir calls for controlling the inflow from Station in such a manner as to outflow through the Bradshaw Pump Reservoir within a 3-foot maintain the level of water in the Bradshaw and fall Storage levels would rise maximum difference of elevation. 3-foot range of elevatioII operation. The proposed gradually during this operatiotl under tht fluctuation is essentially identical to the intended frenuent cvciling (l accomplished by the more original design and will be 6

pumps. However, even with more frequent cycling, the Point Pleasant down rapidly. levels will not move up and were performed for both The stability analyses supplied by the applicant using the U.S. Army sudden drawdown conditions steady state seepage and With Side "Slip Circle Slope Stability Corps of Engineers program Bishop slope Forces." The Department used the PCSTABL4-SimpIified and is widely at Purdue University stability program, which was developed accepted. use of the slip circle Phillippe, criticized Del-Aware's consultant, Mr. Generally failure method of analysis. method rather than the wedge the slip circle however, indicates that accepted engineering practice, analysis for this type than the wedge failure method is more appropriate failure of on this type of foundation, because of embankment constructed occur along a slope would most likely either the upstream or downstream is generally the circular arc method slip circle or circular arc. Also, to soil foundations homogeneous embankments and applicable to essentially containing no layers of fine-grained soil consisting of thick deposits In this case, other strata in the foundation. significantly weaker than embankment, be constructed as a homogeneous the Bradshaw Reservoir will clay with no layers of a silty with a soil foundation consisting wedge method is others. In contrast, the significantly weaker than foundations dams and to earth dams on generally applicable to rockfill pg. D-19). of Engineers ER 1110-2-106, containing weak layers (Corps of the Corps of hearing related to the use A question raised at the of 1.2 for the minimum factor of safety Engineers guideline for a on a the embankment is to be constructed rapid drawdown condition when available to it, clay shale foundation. Based on the information that the foundation is argillite determined however, the Department has slope stability recommended guidelines for (not clay shale) and that the the nearby Lake It is noted that factors of safety are anplicable. a: - has oper7,ec on the same foundation strata Galena Dam was constru --d problems. or stability for several years with no seepage of safety of 1.5 analysis arrives at a factor The applicant's stability for the under steady-state seepage with dynamic loading (earthquake) the same loading downstream slope. The Department's analysis for of 1.4. The difference in the two indicates a factor of safety of side forces in the applicant's results is accounted for by the use as noted on page 4 method of analysis. Corps of Engineers guidelines of 1.0 for the a minimum factor of safety indicate a recommendation for Using either with dynamic loading. steady-state seepage evaluation the result is that the slope is stable. analysis program, however, condition applicant for the rapid drawdown Analyses by both DER and the the proposed embankment is upstream slope of similarly conclude that the stable. pc'sr analvsis, a question may be ln conducting the rapid drawdowr, st. i>ri of the nkmw~1. regarding what is the "most cri t i cal" heP 7

is 2840 feet. Of this, a section total length of embankment crest near the pump house has an upstream approximately 100 feet in length top at this point, the embankment (inside) slope of 2 to 1. However, has an upstream width is over 100 feet. The remainder of the embankment top width of 14 feet. For these slope of 3 to 1, with an embankment sections. stability analyses on both purposes, the Department conducted analysis for rapid drawdown, the applicant's For the upstream slope with A similar analysis factor of safety of 1.8. the 3 to 1 slope yielded a slope with rapid to 1 section of the upstream by the Department of the 3 analysis also safety of 1.5. A Department drawdown yielded a factor of drawdourn of the upstream slope with rapid analyzed the 2 to I section As noted earlier, Corps safety of 1.3. which yielded a factor of under the rapid drawdown analysis guidelines for upstream slope factor of safety of 1.2. minimum condition indicate a reconmmended of the reservoir the unlikely event of a complete and sudden drawdown In integrity slope would not jeopardize the pool, a failure of the upstream the upstream slope is 2 to 1, that area where of the embankment, even in is much wider this portion of the embankment because the crest width of The only portions of the embankment. (over 100 ft. wide) than other the owner of failure would be the cost to consequence of this type of repairing the damaged embankment. has never an upstream embankment sloughage It should also be noted that of reservoir or the uncontrolled release caused the breaching of a dam, all upstream embankment water. Except for slides during construction, of water within result of the prior drawdown failures have occurred as a the embankment fails, the the reservoir. Under these conditions, when to release. is no water in the reservoir reservoir is empty and there on Internal Velocities and

2. Impacts of Reservoir Downsizing Emnba" -ment S-abiliz impact of public hearing regarding the Questions were raised at the of the inside slopes of the dam reservoir downsizing on "scouring" embankment.

will be covered with an 18-inch The inside slopes of the embankment blanket. This an 8-inch thick filter thick layer of rock riprap on to prevent erosion of the embankment armoring layer is more than adequate of water within the reservoir. material resulting from movement in even under the operations hypothesized It should be emphasized that the water pumped from Pt. Pleasant the public hearing comments, with being one point, and the same volume flowing into the reservoir at volume and cross-section reservoir, the removed at the other end of the the in relatively low velocities for of the reservoir would result reservoir. movement of water through the 8

Construction

3. Suitability of Soil for Embankment soils at the site the hearing regarding whether Questions were raised at construction.

were suitable for embankment construction of it must be emphasized that all soil used in the First, site.) will (whether derived on-site or off the reservoir the embankment and compaction specified permeability be required to meet the away prior to material will be stripped requirements. All surface blanket. embankment or the impervious constructing either the are adequate for the tests indicate that the soils on the site Laboratory Computations by the design and specifications. proposed use as restricted of material is required a total of 119,000 c.y. by the applicant indicate backfill. Of this blanket and structural for the embankment, impervious off-site borrow areas. c.y. will come from total, approximately 49,000 foundation material by (C) value of 1000 psf. used for the The cohesion when analyses is very conservative the applicant in the stability which are generally of 20,000 to 400,000 psf compared with C values as sandstone, coal, chalk and rocks such found for soft sedimentary expected for metamorphic to 800,000 psf to be shale; or values of 400,000 (Rock Slope Engineering, Hock as quartzite, gneiss and slate rocks such to those the higher C values closer and Bray). Had the applicant used being used at this be anticipated for the materials normally even that would the embankments to be the stability analyses would indicate project, described. in the slope analyses previously more stable than noted Failure Due to Piping

4. Potential for Embankment modified Bradshaw questioned whether the Testimony at the hearing Piping, a form of would be vulnerable to a "piping" failure.

Reservoir the progressive embankment, is caused by internal ercsion of an due to uncontrolCed particles from unprotected exists movement of soil slope. foundation or an embankment seepage emerging from the with adequate or pervious foundations Relatively impervious foundations impervious soil susceptible to piping because cutoff trenches are not the reservoir head is resistance to the flow of water that offers so much face the friction before the downstream in overcoming largely dissipated 1973, p. 222). (Design of Small Dams, of the dam is reached as a defense measure in the design of Bradshaw A toe drain is provided It consists of a 12-inch diameter against a piping possibility. The stone is wrapped in filter by 2B stone. perforated pipe surrounded the filter cloth. 6 inches of 2A stone surrounds cloth and a minimum of the embankment depth of five feet along A cutoff trench to a maximum is also provided in the bottom width of 8 feet, centerline, and with a Bradshaw design. 9

shall be compacted and the impervious blanket In addition, the embankment (ASTM D1557). of the maximum dry density to a density of at least 95% Structure

5. Adequacy of Overflow Control of the Jr. questioned the adequacy Testimony by Mr. Edwin Beemer, included in the Bradshaw design.

overflow control structure are control structure (or spillway) and other measures An overflow avoid overtopping of the in the design of any earthfill dam to required and failure. risk of embankment erosion embankment, and resultant spillway, design includes an emergency In this case, the Bradshaw reservoir from the Point to pass the maximum inflow to the been designed Station, or 147 cfs. Additional freeboard has Pleasant Pumping level to receive above the emergency spillway design high water provided Maximum Precipitation rainfall from the Probable and attenuate all of the This design meets or without overtopping the embankment. ("PMP") event for dams of this the criteria set forth in 25 Pa. Code §105.94 exceeds classification. on Limerick Operations Impact of Design Modification reduction the hearing questioned the impact of the proposed Comments at at volume at Bradshaw upon the safety of operations of reservoir Limerick. by the applicant, submitted to the Department According to information required for safe shutdown of Bradshaw Reservoir was not and is not pond the a 25 million gallon spray Limerick. The Limerick Plant has on-site combinations of to be safely shutdown under which allows the reactors tornadoes, loss of off-site as earthquakes, severe adverse events, such for 30 days The spray pond can operate power, and loss of water supply. source. without an outside uter 215 acre design of Bradshaw, with a reservoir volume of The original a deviding point three purposes: (i) provide feet, was intended to serve for Counties and PECO; (2) compensate for water to Bucks and Montgomery pumps; and (3) pumping rates of the Pt. Pleasant and Bradshaw different at Limerick to storage to enable two units contain sufficient additional Pt. Pleasant pumps. for one day in the event of a problem at the operate Pt. iii the event that all of the With regard to the third purpose, to simultaneously fail, pumps (including backup fazilities) were to Pleasant Limerick design would have allowed the original Bradshaw Reservoir another 24 hours. operations for at least continue normal full power support 24 volume of Bradshaw, the additional storage to In reducing the at in the event of a Lotal failure hours of normal Limerick operations With the modiiie . eliminated. Pt. Pleasant has been essentially uni-,LtfC were to fail, Liinexick'S reservoir design, if Pt. Pleasant Plpa..ý;)t opratrii temporarily until tIhe Pt. bc. required to shut down were restored. 10

the first two intended purposes of Bradshaw under the modified design, reservoir is the volume of the downsized would remain unchanged, and sufficient to fulfill these purposes. on Environmental Effects Impact of Design Modification

1. Impacts on Wetlands by the Department, original Bradshaw design Following approval of the and other were conducted by the applicant additional site studies agencies.

identified by of these studies, certain wetland areas were As a result Environmental and PECo's consultant, RMC the Army Corps of Engineers wetland identification Corps' three parameter Services, using the Army wetland area delineated by the The Department concurs with the method. Army Corps and PECo. will be excluded wetlands identified by the Army Corps of Engineers of the Bradshaw The impacts as a result of the realignment from construction design modification. Under the revised under the proposed Reservoir and adequate erosion filling will occur in these wetlands, design, no the reservoir to measures will be taken in construction of control construction sedimentation during the protect these wetlands from process. District, U.S. a letter dated August 14, 1986, from the Philadelphia wetland In that the the applicant was advised Army Corps of Engineers, of the limit of plan was an accurate delineation boundary noted on their the Clean Water accord with Section 404 of the Corps' jurisdiction in investigation by their representative Act. They noted that a site the proposed Th. Corns determined that verified this conclusion- wetlanid constructed outside the Federal Bradshaw Reservoir will be of the site, the Corps and DER evaluations boundary. Based on both the perform any of the the wetland area does not Department has found that is not an "important Pa. Code §105.17(a), and functions specified in 25 The Department has further found of §105.17. wetland" within the meaning will have and maintenance of the reservoir that construction, operation effect on this wetland. no measurable detrimental of Engineers, the area identified by the Corps In addition to the wetland in a pine wooded additional areas located Department has identified definitions, may be site which, depending on section of the reservoir areas comprise a total of considered wetlands. These additional wetland are scattered one acre within the pine wooded site, and approximately open areas. in pockets which occur in throughout the pine woods the Department additional wetland areas, In identifying these possible - solel_ on tworaramPtPrs - v eIetat utilized a method which relies test utilized by the Corps, and hydr2log. Under the three parameter 11

regulatory and environmental agencies, generally accepted by the Federal not be classified as wetlands. these additional areas would area will be eliminated by the The possible wetland in the pine wooded unique reservoir construction. The pine wood wetlands do not evidence in habitat. The hydrologic conditions wildlife, rare plants or unique of soil with runoff and lack these areas appear to associated information, the site visits and permeability. Based upon the application environmental harm, the Department the lack of any testimony indicating wetlands in the pine woods possible concludes the elimination of the or on the natural, scenic, historic would have no significant impact aesthetic values of the environment. Reduced Detention Time

2. Impact on Receiving Streams of on receiving streams of the transfer The issue of water quality impacts Creek water to the East Branch Perkiomen and release of Delaware River appropriately is being separately and and North Branch Neshaminy Creek pending NPDES permit applications addressed in the process of reviewing In and North Wales Water Authorities.

submitted by PECO and North Penn limits will be set to meet all the course of that review, appropriate two receiving streams. in the applicable water quality standards relied the project has not assumed nor The water quality evaluation of as a means of "treating" Delaware upon "detention time" in the reservoir directly compared Delaware River water. The Department's analysis has no for the receiving streams, with River water with the limits required Reservoir. changes assumed at the Bradshaw suspended will provide some reduction in In fact, the Bradshaw Reservoir way to the passing through on its solids for Delaware River water an based on the larger reservoir and Perkiomen and Neshaminy. Studies 40% of the period, indicate that average pumping rate over a 25-year pumped from the Delaware would have passeu suspended solids in the water streams; while 60% would have through the reservoir to the receiving volume, 507 of the suspended settled out. With the reduced reservoir and will pass through the reservoir, solids in the water pumped through half will settle out. to Surrounding Groundwater and

3. Impact of Seepage from Reservoir

   - Wetlands quality in the Delaware River confirm Tests and monitoring of the water in the 1982 Environmental Assessment the Department's original finding                                               does not the vicinity of Point Pleasant that "Delaware River water in levels of toxic or priority evidence the existence of significant pollutants."

from the Delaware occurs at the Even if some seepage of water transferrcd on thi. should have no measura'iJe efiect Bradshaw Reservoir, such seepage Tlie re-ervoir floor will betc,.ereC quality of groundwater in the area. a' thick imperviuus, blanket ] mcine jiat i: pen~iJi'ifty wilh a 2-foot 12

0.000005 cm/sec)-l For the modified reservoir, this limits the seepage Groundwater tables in the area arc, to a rate of approximately 0.3 cfs. The Lockatong formation has low high (30+ feet below ground surface). There are no mounding will be minor. transmissivity; therefore, seepage springs located within or significant wells, septic systems, structures feet) from the (100 to. 1000 the maximum probable area of influence reservoir. if believes that seepage impacts, For similar reasons, the Department Comments submitted to be significant. any, on nearby wetlands will not and dip of the that "the strike the public hearing record asserted The the seepage toward the wetland area." underlying shale would direct reasons: (1) Any suggestion for several Department disagrees with this located along the by the toe drain seepage is expected to be intercepted will be directed slope of the dam, and toe of the downstream (outside) site is (2) The rock underlying the reservoir away from the wetland. Topographic and not shale, but argillite. According to the Bureau of of Pennsyl Characteristics of the Rocks Geologic Survey's Engineering is provided Lockatong argillite formation vania, the permeability of the the water openings. Almost all of by secondary porosity of joint rather than bedding fractures movement would be expected to follow planes. or Changed Circumstances Re: Prior Other issues/Claims of New Facts Point Pleasant Project Environmental Assessments of the given public comments and the testimony A significant portion of written validity of the concerning the at the hearing dealt with the issues impact of the entire Point Pleasant assessment of the environmental also only the Bradshaw Reservoir, but Diversion project, including not of the the open channel conveyance the intake on the Delaware River, for and impact of the Limerick Electric diverted water, and the need Genera' ng Plant, Unit 2. 4 others, Unlimited, Inc. ("Del-Aware") and Comments submitted by Del-Aware require circumstances have alleged that new facts and changed of the entire Pt. Pleasant Water Supply reconsideration and review Project. circumstances and new evidence In responding to claims that changed Mr. record by Del-Aware's consultant, IComments submitted to the hearing PECO and the coefficient used by Phillippe, suggested that the permeability of soil that Department was incorrect. Mr. Phillippe asserted that "a sample a at an optimum moisture content showed had been reworked and compacted the PECO x 0-3 cm/sec. (50 times higher than permeability coefficient of 2.4 that the 2.4 x 'conservative assumption')." The Department's records indicate a sample an undisturbed soil sample; not 10-J permeability rate was for sample cited was taken at a Further, the compacted at optimum moisture. of roots rates would be expected because shallow depth, where high permeability and annual frost action. 13

Encroachments Permit and the require reconsideration of the entire for, environmental effects of, and associated evaluations of the needs the Department is guided by the alternatives to the approved project, Opinion and Order in the matter of recent Environmental Hearing Board of Pennsylvania Department of Delaware Unlimited, Inc. v. Commonwealth No. 86-028-G (August 26, 1986) Environmental Resources, E1IB Dockct (Del-Aware 11). the Environmental Hearing Board, The Bucks County Court of Common Pleas, have previously rendered and other forums of competent jurisdiction, needs, environmental impacts, and decisions on issues relating to project of this alternatives to the project. The Department's prior approvals of Permit No. D 09-181 for Bradshaw project, including the prior issuance Report and Assessment Reservoir and the Department's Environmental Project (August 1982), were appealed Findings Point Pleasant Water Supply Hearing Board in the matter of to and adjudicated by the Environmental

v. Commonwealth of Pennsylvania Del-Aware Unlimited Inc., et al.

et al., Docket Nos. 82-177-H arid Department of Environmental Resources, the I"). Following extensive hearings, 82-219-H, 1984 EHB 178 ("Del-Aware certain actions, but remanded Board fundamentally upheld the Department's review and/or inclusion in the issues to the Department for additional with the Board's permits of additional conditions consistent decision in Del-Aware I Hearing Board's Adjudication. The Environmental Court, Del-Aware was appealed to and upheld by the Commonwealth Electric Companv v. DER, 508 A.2d Unlimited. Inc. v. DER and Philadelphia 348 (Pa. Cmwlth., 1986). Hearing Board to the The issues remanded by the Environmental impacts in the Perkiomen and Department, including streambank erosion an NPDES permit are being addressed Neshaminy Creeks and requirements for with respect to Encroachments in separate actions taken by the Department Permits 09-77 and 09-81. Board in Del-Aware 11, the As decided by the Environmental Hearing estoppel) as collateral doctrine of issue preclusion (also known improper to reconsider and relitigate issues indicates that it would be to the environmental, social or which were previously litigated relating (including alternatives to the financial effects of the approved project project). litigation regarding this project, To the extent that the prior extensive and other forums, does not before the Environmental Hearing Board circumstances and new evidence, preclude consideration of alleged changed of the construction permits for it is noted that subsequent to issuance similar claims by Bucks County, NWTRA the project, the Department reviewed and Alternatives for Bucks and and Del-Aware. See Water Supply Needs Nuclear Generating Station Montgomery Counties and the Limerick County Proposals for Alternatives (September 1983); Assessment of Bucks Letter Iroin (June i~b); to the Point Pleasant Water Supply Project

                                                            *o*,a~h,   Vui*    .. t1lLV Secretary Nicholas Delenedictis to -on. Carl d.

of Environuientai liesources Commissioners (June 27, 1984.); Department Autlo)ity's Report 1"fcE Staff Review of Ntshaminy Water Resources 11-

1985); Review sin Water Resources Management 1985" (January Neshamilny North Penn and North Proposed Water Supply Alternative for Supplying of and Sewer Authority from Bucks County Water Wales Water Authorities the Department has not 15, 1986). Based on those reviews, (September changed environmental substantial evidence of new or significantly found nor sufficient approved water allocation impacts arising from the complete, feasible options offered a comprehensive, evidence that other project, such as alternative to the approved and environmentally-sound requires a reopening to find that the public interest would be necessary the outstanding Water of this Dam Safety Permit, or for various and reconsideration Permits or other approvals Allocation Permit, Encroachments elements of the project. RECOMMENDATIONS: of the Point Department concluded that the public benefits In 1982, the is an integral component) the Bradshaw Reservoir Pleasant Project (of which utility services, (2) the protection including: (1) the provision of public energy generating (3) the development of of public health and safety, ground and surface water improved management of impacts on the resources, and (4) the outweighed any adverse region; substantially After resources in the resources engendered by the project. public natural this environment and at the public hearing, of the input received careful consideration conclusion has not changed. in accordance this application is recommended Therefore, approval of 15, 1986 and the revised received in this office on August with specifications and the Standard office on December 15, 1986, plans received in this h;femb'r 31- 1988. and adding Conditions; setting the time of completion the following Special Conditions: 5PECIAL CONDITIONS: of Environmental to furnish the Department The permittee is directed qualifications, and Division of Dam Safety, with the names, construction. In Resources, personnel responsible for the supervision of employer of the The permittee is contractor is also required. addition, the name of the reserves the right to approve the that the Department This further advised construction. charge of supervision of personnel who will be in the Division of Dam Safety fifteen (15) days to be submitted to information is start of construction. in advance of the anticipated regarding the to submit annual reports The permittee is required engineer, to the dam, certified by a registered professional condition of the year. or before October 1 of each Division of Dam Safety on be submitted to warning system and evacuation plan shall An emergency emergency management by the Division of Dam Safety and local and approved the reservoir. prior to commencement of storage of water in officials 15

and copy of the proposed operation The permittee shall submit a Station, in Bradshaw Reservoir and Pumping maintenance manual for the at least 30 days prior for review and approval, duplicate, to the Department No water shall be impounded in the reservoir. to the impoundment of water manual is approved by the Department. maintenance until the operation and conditions of shall at all times comply with the terms and The permittee Delaware River and permits issued by the all applicable project approvals set forth in such project approvals are and the conditions Basin Commission, by reference. incorporated in this permit

                                                                                    §591 et seq.

14, 1923, P.L. 704, 32 P.S. Pursuant to the Act of June ("Limited Power Act"): of fifty years permit shall be for a period

1. The duration of this be entitled to that the permittee shall only; provided, however, the terms thereof, until the of the permit upon extension and renewal or purchase by permittee shall have received through recapture said perr-ittee, a duly authorized subsequent the Commonwealth, or by the power project upon of the capital prudently invested in repayment any, to reasonable damages, if the faith of the permit, plus such and dependent for valuable, serviceable, property of the permittee but not of such permit, its usefulness upon the continuance by the severance therefrom as may be caused recaptured or purchased, permittee, for taken; provided, however, that should the of property facilities the project, for which the any reason whatsoever, abandon the same for a a part, or cease to operate herein authorized forms cease and be null years then this permit shall period of three (3) own expense and to such shall, at its and void and the permittee Department may require, and manner as the extent and in such time and restore the remove all or any portion of the facilities be made against No claim shall watercourse to its former condition.

on account cf any such removal. the Commonwealth of Pennsylvania Resources, to the Department of Environmental

2. The permittee shall pay $10,000 annually. This granted, the sum of for the privilege hereby the end of the year year shall be made at payment for any calendar rendered or approved by thirty days thereafter upon bills or within the Department.

Joseph J/Ellam, Chief Division of Dam Safety by:<-' T Concurred in GilberL Kyle., irector Management Bureau of Dafns and Waturwa>' 16

Exelon Power www.exeloncorp.com Exelkrn. Power 200 Exelon Way KSA 1-E Kennett Square, PA 19348 October 31, 2000 Carol R. Collier Executive Director Delaware River Basin Commission PO Box 7360 25 State Police Drive West Trenton, NJ 08628-0360

Subject:

PECO Energy Company - Docket Transfer Request The recent merger involving PECO Energy and Unicom Corporation has created a new holding company, Exelon Corporation. As part of the corporate restructuring that will take place, all generating assets will be consolidated into a single generating company to be known as Exelon Generation Company, LLC. The target date for completion of restructuring is January 1, 2001. This letter is being sent to request that the PECO Energy DRBC Dockets listed in Table I be transferred to Exelon Generation Company. In accordance with Resolution No. 87-15, transfer of the dockets to Exelon Generation Company will not result in a substantial change to the originally approved projects. Exelon Generation Company will continue to operate all facilities in a manner that conforms with the conditions of the docket decisions. Please note that transfer of the dockets to Exelon Generation can not occur until legal restructuring is complete. In addition, based on a review of all existing PECO Energy dockets, a number of dockets are no longer applicable due to facility retirements or other issues. The dockets listed in Table II no longer apply and are requested to be terminated. If you have any questions or require additional information, please contact me at (610) 765-5514. Sincerely, Robert M. Matt , Jr. Manager, Environmental Affairs

bcc: C. A. Jacobs w/o attachments J. D. von Suskil E. J. Cullen R. C. Braun T. A. Shea 11 W. Jefferson D. P. Helker Il T. M. Chaykun El K. S. Kemper R. W. Sauer C. B. Wyler D. L. Fish w/ attachments

Delaware River Basin Commission PO Box 7360 25 State Police Drive Carol R. Collier DELAWARE

• NEW JERSEY West Trenton, New Jersey PENNSYLVANIA 0 NEW YORK Executive Director "TNITED STATES OF AMERICA 08628-0360 Phone: (609) 883-9500 Fax: (609) 883-9522 Jeffrey P. Featherstone Web Site: http://www.state.nj.us/drbc Deputy Executive Director October 6, 2000 Robert M. Matty, Jr., Manager, Environmental Affairs PECO Energy Company 200 Exelon Way Kennett Square, Pennsylvania 19348

SUBJECT:

Transfer of DRBC Dockets (see attached list) From: PECO Energy Company To: Unicorn Corporation

Dear Mr. Matty:

This is in response to your letter dated September 25, 2000 requesting copies of the existing Delaware River Basin Commission (DRBC) dockets for PECO Energy generating facilities in preparation for the pending merger between PECO Energy Company and Unicom Corporation. Enclosed is a copy of Delaware River Basin Commission (DRBC) Resolution No. 87-15 relating to changes of ownership of water resources projects approved by the Commission under Section 3.8, Article 10 and/or Article 11 of the Delaware River Basin Compact. Use of surface water is subject to water use charges in accordance with DRBC Resolution No. 74-6. Accordingly, enclosed is a copy of the Resolution with quarterly water use report forms that should be filed with the payment for each quarter that surface water is used. In order to initiate action required to comply with this Resolution, please write to the Executive Director of the DRBC and request the transfer of all appropriate dockets (copies enclosed) to the new owners. The project owner should provide the assurances specified in the enclosed resolution, and should affirm that it will accept and will conform with the conditions of 'the subject docket decisions. If you have any questions, please contact me at extension 221. Sincerely, 0/ý A Thomas L. Brand, P.E. Project Review Branch Head Enclosures (Resolution No. 74-6 and 87-15 and Dockets)

DRBC Dockets for PECO Facilities PECO FACILITY DRBC DOCKET NO. APPROVAL DATE Barbadoes D-72-206 04/25/73 Chester Station D-67-201 01/24/68 Cromby D-70-161 11/24/70 Cromby D-72-4 06/28/73 Cromby D-80-70 02/18/81 Cromby D-80-75 03/25/81 Croydon D-72-236 07/27/73 Delaware D-71-103 02/28/73 -Eddystone D-64-87 12/29/64 Eddystone D-65-50 06/23/65 Eddystone D-70-141 11/08/72 _Eddystone D-70-141 Amendment 1 06/26/74 Eddystone D-80-52 02/18/81 Eddystone D-92-66 08/10/94 Falls D-96-63 01/22/97 Limerick D-69-210 CP et al See attached docket copies Richmond D-65-126 11/24/65 Schuylkill River D-64-74 11/25/64 Southwark D-66-74 05/25/66 Tilgham D-74-22 01/29/75 West Conshohocken D-71-184 01/26/74

NO. 87-15 A RESOLUTION to amend the resolution relating to change of ownership of water resources projects originally adopted by the Commission on February 27, 1974. WHEREAS, from time to time changes are made in legal title to water resources projects previously approved by the Commission; and WHEREAS, the Commission resolution adopted February 27, 1974 relating to change of ownership of water resources projects previously approved by the Commission addressed approval actions under Section 3.8 or Article 11 of the Compact; and WHEREAS, the Commission subsequently initiated approval actions under Article 10 in the Ground Water Protected Area of Southeastern Pennsylvania and now proposes to amend the resolution relating to change of ownership of projects to include provision for the transfer of permits issued under Article 10; now therefore BE IT RESOLVED by the Delaware River Basin Commission: Upon change in legal title to a project previously approved by the Commission under Section 3.8, Article 10 and/or Article 11 of the Delaware River Basin Compact, the Executive Director is authorized to affirm the transfer to the new owner of such rights and conditions as may attach to the project as a result of the Commission's then-current approval; provided, however, that such affirmation is authorized only upon the Executive Director's determination that the project purposes and service area originally approved by the Commission will not be substantially altered as a result of the change in project ownership. The project owner shall submit to the Executive Director such supporting information as he shall require.

                                          /s/ R. Wayne Ashbee R. Wayne Ashbee, Chairman pro tern
                                          /s/ Susan M. Weisman Susan M. Weisman, Secretary ADOPTED: May 27, 1987

PECO Energy Company DRBC Dockets To Be Transferred TABLE 1 FACILITY MUNICIAPLITY & DOCKET NUMBER APPROVAL DATE COUNTY Cromby Generating Station East Pikeland Township D-70-161 11/24/70 Township Line & Cromby Roads D-80-75 3/25/81 Phoenixville, PA 19460 Chester County D-80-70 2/18/81 Croydon Generating Station Bristol Township D-72-236 7/27/73 955 River Road Bristol, PA 19020 Bucks County Delaware Generating Station City of Philadelphia D-71-103 2/28/73 1325 N. Beach Street Philadelphia, PA 19125 Philadelphia County Eddystone Generating Station Eddystone Borough D-65-50 6/23/65

     #1 Industrial Highway                                              D-70-141                 11/8/72 Eddystone, PA 19022                   Delaware County    D-70-141 (Amendment No. 1)        6/26/74 D-80-52                 2/18/81 D-92-66                 8/10/94 Fairless Hills Generating Station      Falls Township              D-96-63                 1/22/97 990 Steel Road South Fairless Hills, PA 19030               Bucks County Limerick Generating Station          Limerick Township        D-69-210-CP et al     See Attached Dockets Evergreen and Sanatoga Roads                                    (See Attached)

Pottstown, PA 19464 Montgomery County Richmond Generating Station City of Philadelphia D-65-126 11/24/65 3901 N. Delaware Avenue Philadelphia, PA 19137 Philadelphia County Schuylkill Generating Station City of Philadelphia D-64-74 11/25/64 2800 Christian Street Philadelphia, PA 19146 Philadelphia County

DOCKET NO. D-69-210 CP (Final) (Revision 10) DELAWARE RIVER BASIN COMMISSION Philadelphia Electric Company Limerick Electric Generating Station Limerick Township, Montgomery County, Pennsylvania PROCEEDINGS The Philadelphia Electric Company (PECO) applied on February 8, 1990, for approval to revise Docket No. D-69-210 CP (Final). The application was reviewed for revision of the project in the Compre hensive Plan and approval of these changes under Section 3.8 of the Delaware River Basin Compact. A public hearing on this application was held by the Delaware River Basin Commission (DRBC) on April 25, 1990. DESCRIPTION Purpose.- The purpose of this application is to request approval to 1) allow excess water from the Still Creek and Owl Creek Reservoirs to be released and used at the Limerick Generating Station in the event of an outage or partial reduction of the Point Pleasant Diversion System; 2) allow the transfer, in an emergency, of existing consumptive water use from the Titus and Cromby Generating Stations to the Limerick Generating Station; and

3) allow the continued monitoring of dissolved oxygen (D.O.) in the Schuylkill River in place of temperature, through August 1, 1990.

Location.- No changes are proposed in the location of any existing facilities associated with the application. Still Creek Reservoir is located in Schuylkill County, 2.3 miles north of Hometown, Pa., and approximately 5000 feet above the confluence of Still Creek and the Little Schuylkill River, in Rush Township, Schuylkill County. The existing dam is located at River Mile 92.47 - 102.1 - 30.15 - 1.0. The Owl Creek Reservoirs are located in the Borough of Tamaqua, Schuylkill County. The existing dams are located at River Miles 92.47 102.1 - 22.1 - 1.7 and 92.47 - 102.1 - 22.1 - 2.3.

D-69-210 CP (Final)(Rev. 10) (PECO) 2 Existing intake facilities at the generating stations are as follows: Intake River Mile Titus 92.47 - 71.15 Limerick 92.47 - 48.22 Cromby 92.47 - 39.1 Dissolved oxygen monitors have been installed approximately 200 feet upstream of each of six dams and at the Limerick site. The six dams are located as follows: Fairmount Dam 92.47 - 8.49 Flat Rock Dam 92.47 - 15.6 Plymouth Dam 92.47 - 20.7 Norristown Dam 92.47 - 23.95 Black Rock Dam 92.47 - 36.6 Vincent Dam 92.47 - 44.7 Physical features & Design criteria. The Physical features & Design criteria addressed in this application are as follows:

1) Still and Owl Creek Reservoirs The Tamaqua reservoir system consists of Still Creek Reservoir and two Owl Creek Reservoirs. Due to their close proximity to one another, the two Owl Creek Reservoirs are assumed to function as a single reservoir of combined capacity. The applicant reports that the Still and Owl Creek Reservoirs, at the headwaters of the Schuylkill River, have sufficient capacity to supply the needs of the Tamaqua area and to provide an additional billion gallons of water to the applicant for use at Limerick.

If the Point Pleasant Water Diversion System is unavailable or if the Limerick consumptive water demand is greater than the quantity that can be cooled by the water processing facility, the applicant proposes to release up to a maximum of 56 cubic feet per second (cfs) (36 mgd) [54 cfs (35 mgd) for use at Limerick plus a 3 percent allowance for losses] of water from Tamaquas8 Still and Owl Creek Reservoirs. The applicant proposes to release high quality water (TDS - 32 mg/l) from Still and Owl Creek Reservoirs, and claims that after mixing downstream the proposed- project not only maintains the water quality of the Schuylkill River, but improves it under certain low flow conditions.

D-69-210 CP (Final)(Rev. 10) (PECO) 3

2) Titus and Cromby Generating Stations Docket No. D-74-32 (Revised), approved on October 8, 1980, acknowl edged that the addition of a cooling tower at the Titus Station would result in a maximum consumptive use of 3.5 mgd.

The Cromby Generating Station was operating prior to the formation of the DRBC and the water use has not subsequently been substantially altered. Accordingly, there are no docket decisions establishing the con sumptive use at that station. However, in 1976, the DRBC issued a Certifi cate of Entitlement to PECO establishing the quantities of water that could be used at the Cromby Station and not be subject to DRBC water use charges. The entitlement established a quantity of 88.401 mg/month (2.9 mgd) for the Cromby Station. Proportioning the total consumptive use between Unit 1 (150 mw) and Unit 2 (201 mw) indicates that up to 50.628 mg/month (1.7 mgd) is the maximum consumptive use for Unit 2. The applicant proposes that during system emergency conditions, if the Point Pleasant Water Diversion System cannot supply sufficient water to meet the consumptive water needs of Limerick, that Titus Station and Cromby Unit 2 shut down and their allocations temporarily be transferred for use at Limerick.

3) Sites for Monitoring Dissolved Oxygen The applicant proposes to continue to monitor D.O. at two of the original six monitoring sites along the Schuylkill River through August 1, 1990. The applicant is requesting the D.O. monitoring as an additional method to determine Schuylkill River water availability only through August 1, 1990, because the Water Processing Facility will have just been placed into service and the risk of unforeseen problems is the greatest before this date. After August 1, the permit temperature restrictions are relaxed and the Point Pleasant Water Diversion System with Tamaqua reservoirs as backup, should be. sufficient to provide makeup water.

b. Facilities.- All existing facilities of the Limerick Electric Generating Project remain as previously approved. No new facilities are proposed at the Limerick site or at the existing Titus and Cromby generating stations as part of this application. The D.O. monitors were installed as described in DRBC Docket No. D-69-210 CP (Final)(Revised), which was approved on May 29, 1985.

The Still Creek Reservoir is formed by an earthfill dam, with an ungated concrete spillway at elevation 1,182.0 feet. The capacity at the spillway elevation is 8,290 acre-feet or 2,700 million gallons (mg) of water, 2,630 mg of which is estimated to be active storage. Still Creek has a surface area of 332 acres and is 77 feet deep. The Still Creek drainage area is 6.9 square miles. _

                 ~    ("-i t*"
                                               -. -y.
                                                  '

D-69-210 CP (Final)(Rev. 10) (PECO) 4 The Owl Creek Reservoirs have a combined capacity of 332 mg, 299 mg of which is estimated to be active storage. Upper Owl Creek Reservoir has a surface area of 67 acres and is 35 feet deep. Lower Owl Creek Reservoir has a surface area of 26 acres and is 30 feet deep. The Owl Creek drainage area I U-. is 2.0 square miles. Discharges from the Still and Owl Creek Reservoirs, for Tamaqua's use, are made directly through pipelines to the municipal water system. Treatment at the point of discharge includes chlorination and the addition of zinc compound for corrosion protection of the piping system. The amount of water released into Still and Owl Creeks will be within the capacity of the receiving streams. Spill records for both Still and Owl Creek Reservoirs indicate that, in the course of a year, the receiving streams regularly carry more water than the 56 cfs maximum release for Limerick (54 cfs for consumptive use plus a 3 percent allowance for losses). During spring months, spill releases from Still Creek routinely exceed the maximum release (54 cfs) proposed for use at Limerick. Discharges from Still Creek Reservoir will be made through an existing discharge channel which is approximately 175 yards long. This consists of a concrete section about 80 feet long. The remaining distance along Still Creek to the point where the spillway water is reintroduced into the creek is an excavated channel. This discharge channel is approximately 35 feet wide and 10 to 12 feet deep. The channel gets larger at its point of intersection with the spillway flow. The discharge channel was originally constructed to allow emergency releases from the reservoir to the creek, and has the capacity to discharge Limerick's required releases. The Still Creek stream channel from the spillway outfall to the mouth is wide; the bottom and sides are comprised mostly of rock and boulders. Water from the Still and Owl Creek Reservoirs will be released through existing outlet control facilities. Cost.- There are no construction costs associated with the implementation of this project. Relationship to the Comprehensive Plan.- The Limerick Nuclear Generating Station was included in the Comprehensive Plan, November 5, 1975, by Docket D-69-210 CP (Final), which incorporated the project description and docket decision D-69-210 CP. FINDINGS Most of the changes requested in this application have been approved previously by the DRBC on a yearly basis since 1985. Limerick Unit I was placed into commercial operation in February 1986 and Limerick Unit 2 was placed into commercial operation in January 1990.

D-69-210 CP (Final)(Rev. 10) (PECO) 5 The permanent source of supplemental makeup cooling water for the Limerick Generating Station, the Point Pleasant Water Diversion System, began operational testing in August 1989 and is expected to be completed in mid-May 1990. Testing of the Water Processing Facility, designed to achieve compli ance with the NPDES permit temperature and fecal coliform requirements, is projected by the applicant to be completed in May 1990. Still and Owl Creek Reservoirs The water quality of Still Creek Reservoir is very good throughout the pool. No major adverse water quality effects are expected due to drawdown of the reservoir. There does not appear to be any significant point sources of pollutants within the watershed that would be diluted less by the reduced pool volume. An aeration system is in constant use in the near-dam (deepest water) part of the pool. This system was installed to solve certain water quality problems associated with summer stratification and hypolimnetic deoxygenation. The aeration system assures that the subsurface waters are oxygenated, appears to prevent stratification, and promotes circulation of virtually the entire water mass in the lower half of the pool. It is likely that the upper part of the pool does not have seasonal stratification due to, among other things, its shallow depth. No bottom sediment-related problems have been encountered since installation of the aeration system and allevia tion of anoxic bottom water conditions. Still Creek dam is protected with stone riprap and the lower half of the reservoir has mostly a gravel rubble with sand shoreline. Periodic drawdowns have revealed no major erosion problems. However, the applicants will initi ate a water quality monitoring program if the drawdown becomes greater than 10 feet. The applicant has considered the impacts on the aquatic environment and determined no long-term or major impacts. An assessment of the conditions of the Still and Owl Creek Dams under expected drawdown conditions was performed by the applicant. At the Still Creek Dam, the maximum daily drawdown rate will increase from 0.3 ft/day as listed in a previous application (1986) to 0.7 ft/day. Gannett Fleming, the original designer of Still Creek Dam, reviewed the stability of the dam and concluded that the dam is stable under all conditions. The maximum drawdown of the Lower Owl Creek Reservoir should not exceed 10 feet at a rate not exceeding 1.0 foot per day. Due to the steep upstream slope of the Upper Owl Creek Dam and the fact that the Phase I Inspection Report indicated poor workmanship relating to the embankment, the maximum drawdown of the Upper Owl Creek Reservoir should not exceed 10 feet at a rate not to exceed 0.5 foot per day.

D-69-210 CP (F4.nal)(Rev. 10) (PECO) 6 Drawdown of the Upper Owl Creek Reservoir is not expected to have significant adverse effects on the water quality or biota for much the same reasons as discussed for Still Creek Reservoir. Both the Upper and Lower Owl Creek Reservoirs have been drawn down to the maximum allowable drawdown proposed due to the applicant's releases (10 feet) on a periodic basis with no adverse effects observed by Tamaqua officials. The water quality in the Owl Creek reservoirs and in Owl Creek is excellent. Pickerel, sunfishes, minnows, suckers, and bullhead are known to be present in both pools. Impact on downstream uses Because the Point Pleasant Water Diversion system was not completed until August 1989, the release of water from Tamaqua reservoirs (Still and Owl Creeks) for use at Limerick has been occurring on an interim basis since 1986. During the four summers that water was released from Tamaqua for use at Limerick, the applicant reports no adverse impact to the Schuylkill River, and also notes that the release of high quality water from the Tamaqua reservoirs improved the water quality in the Little Schuylkill River and main stem Schuylkill River, from Tamaqua to the Limerick plant intake. The Pennsylvania Department of Environmental Resources, (PADER), Bureau of Water Resources Management, has developed an operating curve for Still Creek Reservoir to protect Tamaqua's available water supply since, in an extended drought, Still Creek Reservoir, unlike the Owl Creek Reservoirs, was found not to refill each year. This curve, attached hereto and marked Attachment No. 1, indicates when releases for downstream withdrawals at. Limerick must be discontinued to insure an adequate supply of water for public use in Tamaqua. This curve was developed by routing 1964, 1965 and 1966 hydrology through Still Creek Reservoir along with Tamaqua public water supply demands of 6.25 mgd from Still Creek. These demands alone pulled Still Creek Reservoir down by 1.196 billion gallons over a 19-month period. The shape of the curve reflects TamaquaIs actual drawdown during the 1965-1966 12-month critical period. A safety factor of approximately 800 million gallons of storage (1/3 of total storage) was applied to the curve for contingencies including more severe drought conditions, maintenance of aquatic life, possible additional siltation losses and unexpected problems that could arise from low reservoir levels not previously experienced. Impact on Flood Flows Comments were noted at the April 15, 1986 hearing as to the need for an emergency flood warning plan for the South Pottstown area due to the reser voir releases. It is noted that the maximum release from the reservoir would be 56 cfs and the flood stage at Pottstown (stage when damage begins) is at gage height 13.0 feet or-a flow of 25,350 cfs. In view of this low percent age of the total flow at Pottstown, there is no need to develop a flood warning plan as a result of the proposed releases.

D-69-210 CP (Final)(Rev. 10) (PECO) 7 Titus and Cromby Generating Stations The Titus Generating Station is two miles downstream from Reading, Pa. and approximately twenty-three miles upstream from the Limerick Generating Station. Accordingly, any cutbacks in the consumptive use at Titus and transfer for consumptive use at Limerick will increase the quantity of streamflow in the Schuylkill River from Titus to Limerick. The flow increase for the twenty-three mile segment would be a maximum of 3.5 mgd (5.4 cfs). Cromby Generating Station is located approximately nine miles below the Limerick facilities and conversely, the cutback in consumptive use at Cromby and transfer for consumptive use at Limerick will decrease the quantity of streamflow in the Schuylkill River from Limerick to Cromby. The decrease in streamflow could be a maximum of 1.7 mgd (2.6 cfs). This represents approxi mately one percent of the Q7 -12 flow for that section of the Schuylkill River. Below Cromby there wou d be no change in the flow regime caused by the proposed transfer. The transfer of the location of the consumptive use from Titus to Limerick would result in a slight lowering of total dissolved solids level in the Schuylkill River between Titus and Limerick. At a flow of 360 cfs and with the Titus units operating, the TDS level averages about 375 mg/l and calculations indicate that if the three units were shut down, the TDS should drop to 370 mg/l. At Limerick, when operating with a consumptive use of 5.2 mgd, the TDS would increase from 370 mg/l to 378 mg/i and below Cromby there should be no change in TDS resulting from the proposed transfer. Titus Units 1, 2, and 3 are coal fired, having an electric generating capacity of 234 mw and Cromby Unit 2 is oil fired and has an electric gener ating capacity of 201 mw. If the three Titus units and Cromby Unit 2 are all shut down and the generating capacity of Limerick Units Nos. I or 2 is limited to the transferred consumptive use (250 mw), there would be a net reduction of generating capacity of 185 mw.

D-69-210 CP (Final)(Rev. 10) (PECO) 8 Monitoring & Dissolved Oxygen The Limerick Generating Station was included in the Comprehensive Plan by Docket decision No. D-69-210 CP (Final) on November 5, 1975, which also incorporated the project description and docket decision D-69-210 CP dated March 29, 1973. Docket No. D-69-210 CP (3/29/73) includes a section headed "FINDINGS" subheading "Source of Water Supply 1. Schuylkill River" which reads as follows:

     "Schuylkill River water at the plant site may be used for noncon sumptive use whenever the effluent discharged back to the river meets.all applicable water quality standards.
     "Schuylkill River water at the plant may be used for consumptive use when flow (not including future augmentations of flow from Commission-sponsored projects) as measured at the Pottstown gage is in excess of 530 cfs (342 mgd) with one unit in operation and 560 cfs (362 mgd) with two units in operation with the following exceptions:
           "(a) There shall be no withdrawals when river water tempera tures below the Limerick station are above 15° C except during April, May and June when the flow as measured at the Pottstown gage is in excess of 1791 cfs (1158 mgd).
           "(b) Use of the Schuylkill River will be limited to a with drawal that will result in an effluent that meets all applicable water quality standards.
     "The constraints on nonconsumptive use of Schuylkill River water are necessary to prevent violation of total dissolved solids, stream quality objectives and effluent quality requirements of the Commission's water quality regulations.       The constraint on con sumptive use of Schuylkill River water is to protect water quant ity.and water quality below the Limerick Station. Both sets of constraints would be suspended in the event of any operational emergency requiring a shutdown of the plant."

As part of previous temporary revisions to docket decision No. D-69-210 CP (Final), paragraph (a) above was revised for the period ending December 31, 1985, to read as follows:

     "(a) No withdrawals for consumptive use shall be made from the Schuylkill River or the natural flow of any of its tribu taries whenever dissolved oxygen in the Schuylkill River at or below Limerick as measured at any one or more of the monitoring locations:     (W) is less than 7.0 mg/l instantane ous during the  period  March   I to June 15, or (ii) is equal to or less than 5.1 mg/l daily average or equal to or less than 4.2 mg/l instantaneous value during the remainder of the year."

D-69-210 CP (Final)(Rev. 10) (PECO) 9 Monitoring data collected between August 9 through November 30, 1985, shows that there were 31 more days that Schuylkill River water was available for consumption using the D.O. limitation in lieu of the existing temperature limit. If the D.O. limit had been in effect for all of 1985, the record indicates a gain of 58 days when Schuylkill River water would have been available for consumptive use at Limerick. A similar number of days of availability have been recorded for each year since 1985. In a previous temporary approval to substitute D.O. limits for tempera ture during 1985, a limit of 7.0 mg/l from March I to June 15 was included in response to the recommendation of the Pennsylvania Fish Commission (PFC). In response to a pending application for 1986, the PFC, under date of January 17, 1986, requested that additional monitoring stations be required towards the head end of Plymouth, Norristown and Black Rock pools to monitor the D.O. and to use the limit of 7.0 mg/l as measured at those sites during the March I - June 15 period to keep those areas suitable for spawning of smallmouth bass. In a subsequent letter dated April 4, 1986, the PFC stated the D.O. limits in game fish spawning areas should be an average of 7.0 mg/i and a minimum of 6.0 mg/l. For this application, in order to justify the reduction in monitoring from six year-round sites and three spawning season sites, the applicant has reviewed the data collected at each site every day since 1985. A statistical review of the six dam monitoring sites shows that the Norristown Dam has a much higher rate of non-compliance than any of the other sites. For this reason, the applicant suggests the Norristown Dam continue to be monitored through August 1, 1990. Vincent Dam would also continue to be monitored because it had the third highest number of non-compliances and it is the first dam downstream from the Limerick Plant and would therefore be the most likely location to detect any adverse impact from the withdrawal at Limerick. The following Table A shows the number of day the permit limit was exceeded for instantaneous D.O. readings at each dam site since 1985. TABLE A Number of Days that D.O. < 4.2 mg/l Dam Site 1985 1986 1987 1988 1989 Total Fairmount 10 5 3 1 0 19 Flat rock 5 5 10 0 0 20 Plymouth 2 2 28 1 0 33 Norristown 28 28 32 21 4 113 Black Rock 1 2 16 3 1 23 Vincent 7 3 12 6 0 28 Total 53 45 101 32 5

D-69-21 0 CP (Final)(Rev. 10) (PECo) 10 The following Table B shows that over 81 percent of time when D.O. is low at any site, the Norristown and/or Vincent Dam is also below permit. TABLE B Comparison of Norristown Dam D.O. Levels to Other Dam D.O. Levels 1985 1986 1987 1988 1989 Total Number of days of 40 35 47 28 4 154 low D.O. at one or more dam sites 28 28 32 21 4 113 Days Norristown dam < 4.2 mg/l Days that Norristown 12 7 15 7 0 41 > 4.2 mg/l but another dam < 4.2 mg/l 6 7 14 2 0 29 Days that Norristown and/or Vincent > 4.2 mg/l but another dam < 4.2 mg/l Days of Norristown low D.O. , 113 days

                                                  -    73.3%

Total Days of low D.O. 154 days Days of Norristown and/or Vincent low D.O. 154 - 29 days 154 days - 81.2% Total Days of low D.O. Because of the importance of the D.O. levels in the spawning areas, the applicant proposes to continue to monitor each of the three spawning sites every four hours during the April 1 through June 15 spawning season. No consumptive withdrawals would be made if the D.O. levels are below the limits contained herein for either the spawning sites or the two dam monitoring sites. The loss of generating capacity from Limerick Generating Station because of a problem with the supplementary water supply system could have a sub stantial effect on the reliability of the electrical service within the region as well as result in increased costs to the customers.

D-69-210 CP (Final)(Rev. 10) (PECO) 11 DECISION I. No Commission action is taken herein concerning the request by the applicant to revise Docket No. D-69-210 CP (Final) to allow the transfer, in an emergency, of existing consumptive use allocations from the Titus and Cromby Generating Station to the Limerick Generating Station. In the event of an emergency requiring immediate action, the applicant may request an emergency certificate from the Executive Director of the DRBC authorizing the applicant to take such action, in accordance with Section 2-3.9 of the DRBC Rules of Practice and Procedure. II. The project as described in Docket No. D-69-210 CP (Final) and supplemented above, with modifications specified hereinafter, is hereby added to the Comprehensive Plan. III. The project is approved pursuant to Section 3.8 of the Compact, subject to the following conditions: A. (1) The provisions of Docket No. D-69-210 CP, [attached and included as part thereof to D-69-210 CP (Final)] headed "FINDINGS," "Sources of Water Supp ," "1. Schuylkill River" paragraph "(a)" on page 5 are temporarily suspended and in place thereof the following provision is substituted through August 1, 1990: (a) No withdrawals for consumptive use shall be made from the Schuylkill River or the natural flow of any of its tributaries whenever dissolved oxygen Ui) is less than 7.0 mg/l daily average or 6.0 mg/1 instan taneous during the period April 1 to June 15 at any one of the three monitoring sites in riffle spawning areas (at the head end of Plymouth, Norristown, and Black Rock Pools) or (ii) is equal to or less than 5.1 mg/l daily average or equal to or less than 4.2 mg/l instantaneous value at two stations (Norristown Dam and Vincent Dam) of the six existing monitoring stations temporarily approved by DRBC Docket No. D-69-210 CP (Final)(Revised). (2) After August 1, 1990, the provisions of Docket No. D-69-210 CP, (attached and included as part thereof to D-69-210 CP (Final)] headed "FINDINGS," "Sources of Water Supply," "1. Schuylkill River" paragraph "(a)" on page 5 shall revert back to the following: (a) There shall be no withdrawals when river water teiperatures below the Limerick station are above 15 C except during April, May and June when the flow as measured at the Pottstown gage is in excess of 1791 cfs (1158 mgd).

6 - D-69-210 CP (Final)(Rev. 10) (PECO) 12 (3) The provisions of Docket No. D-69-210 CP [attached and included as part thereof to D-69-210 CP (Final)]' headed "FINDINGS," "Sources of Water supply," "I. Schuylkill River," is revised by the addition of a new paragraph

                        "(c)" on page 5 which reads as follows:

(c) If the Point Pleasant Water Diversion System is unavailable or if the Limerick consumptive water demand is greater than the quantity that can be cooled by the water processing facility, water may be withdrawn for consumptive use at Limerick, whenever that consumptive use has been replaced in equal volume by water released from Still Creek and/or Owl Creek Reservoirs. B. The following conditions shall be added to the provisions of Docket No. D-69-210 CP (Final), "DECISION" on page 15, subheaded "II":

o. Releases from Still Creek and Owl Creek Reservoirs will be regulated and controlled to prevent erosion in the reservoir or in the receiving streams downstream. The applicant shall inspect all areas for erosion each day releases are made, repair any erosion problems that occur and immediately take steps necessary to eliminate any recurrence of an erosion problem.

p. The applicant shall monitor the dissolved oxygen content in the discharges prior to entering Still and/or Owl Creeks and 200-300 yards downstream in Still and/or Owl Creeks each day during periods of releases. D.O. read ings shall be taken between 8 and 9 a.m. The Executive Director may modify the D.O. monitoring program if moni toring results indicate a change is desirable. The Executive Director may modify or suspend releases if evidence indicates that releases are causing D.O.

problems in the receiving waters.

q. There shall be no releases from Still Creek Reservoirs for consumptive use at Limerick Units Nos. 1 or 2 when ever the water level in the reservoir pool is below the operating rule curve shown on "Attachment No. I.

Aý D-69-210 CP (Final)(Rev. 10) (PECO) 13

r. The applicants shall maintain detailed accurate records of reservoir releases. The applicant will notify DRBC each morning of any planned starting, stopping or changing in releases and provide the timing and the quantities involved.

This information on releases together with the dissolved oxygen monitoring required above and a report on the erosion inspection required above shall be submitted weekly when releases have been made. Also, the water elevation in each of Still and Owl Creek Reservoirs and the daily average, minimum and maximum flow at Pottstown shall be included in the weekly data report. C. The following temporary conditions shall be added to the provisions of Docket No. D-69-210 CP (Final), "DECISION" on page 15, subheaded "II." through August 1, 1990: aa. Accurate dissolved oxygen measurements shall be taken at two sites (Norristown Dam and Vincent Dam) of the six existing monitoring sites. The applicant shall monitor also the three riffle spawning sites (at the head end of Plymouth, Norristown, and Black Rock pools), previously approved by the Executive Director in consultation with the Pennsylvania Fish Commission, and shall use the D.O. limit of 7 mg/l daily average or 6.0 mg/l instantaneous during the period from April 1 to June 15. bb. The calibration, maintenance and operation of all dis solved oxygen monitors and any interim manual measure ments of dissolved oxygen shall be under the supervision and control of the U.S. Geological Survey. cc. Weekly records of all dissolved oxygen monitoring shall be submitted to the commission in writing within three working days, together with a log of power plant opera tions and consumptive water use. such information shall be a matter of public record. dd. The applicant shall immediately notify the Commission whenever dissolved oxygen levels at any monitoring station trigger the criteria set forth in this docket, and advise the Commission of all alternative steps taken. If, at any time, the Executive Director determines that the proposed project is not operating as planned or is causing substantial impacts on the water resources of the Basin, he may cancel or suspend this approval and all operation thereunder shall terminate until subsequent action by the Commission. BY THE COMMISSION DATED: April 25, 1990

Ii

                                     ,  I I  '                                                1,1.

I. I.

                                                                        .9 I. t     .9 Is I.

• I 0 *:1: g...

I. C, 99 I> )I9I

                                                                                     '?
     'II I

0

          'C.
         'I.

I.

                                                                               *1 44
         '3-.

• I x

(3 I.. H H A I N

                                                                              .1 I..
                             .9'
                             -. 9, I

A I I - I - I I 7Y! I - I - I-

              .1..

7 I 71FU

                                               **.e,~,, "I' 3'H
                     ,!), ZZE1 9??

DOCKET NO. D-69-210 CP (Final) (Revision 9) DELAWARE RIVER BASIN COMMISSION Philadelphia Electric Company Limerick Electric Generating Station Limerick Township, Montgomery County, Pennsylvania Borough of Tamaqua and Tamaqua Borough Authority Diversion from Still Creek and Owl Creek Reservoirs Rush Township and the Borough of Tamaqua, Schuylkill County, Pennsylvania PROCEEDINGS The Philadelphia Electric Company (PECO), jointly with the Borough of Tamaqua (BOT) and Tamaqua Borough Authority (TBA), applied on December 29, 1988, for extension and amendment of Docket D-69-210 CP (Final)(Revision 6), which expired on December 31, 1988. The application was reviewed for temporary revision of the project in the Comprehensive Plan and approval of these temporary changes under Section 3.8 of the Delaware River Basin Compact. A public hearing on this applica tion was held by the Delaware River Basin Commission (DRBC) on February 22, 1989. DESCRIPTION Purpose.- The purpose of this joint application is to request approval for the diversion, through December 31, 1989, of water from upstream storage facilities for discharge into the Little Schuylkill River for subsequent withdrawal and consumptive use by Limerick Units Nos. I and 2. Location.- No changes are proposed in the location of any existing facilities associated with the application. Still Creek Reservoir is located in Schuylkill County, 2.3 miles north of Hometown, Pa., and approximately 5000 feet above the confluence of Still Creek and the Little Schuylkill River, in Rush Township, Schuylkill County. The existing dam is located at River Mile 92.47 - 102.1 - 30.15 - 1.0. The Owl Creek Reservoirs are located in the Borough of Tamaqua, Schuylkill County. The existing dams are located at River Miles 92.47 102.1 - 22.1 - 1.7 and 92.47 - 102.1 - 22.1 - 2.3.

D-69-210 CP (Final)(Rev. 9) (Joint Applic.) 2 Physical features

a. Design criteria.- The applicants propose that when existing Schuylkill River flow constraints [Ref. DRBC "Docket No. D-69-210 CP (Final)"] or dissolved oxygen limitations [Ref. DRBC "Docket No. D-69-210 CP (Final)(Revision 8)"] restrict the consumptive use of Schuylkill River water for Limerick Units Nos. I and 2 to the quantity transferred from reduced operation at Titus and Cromby Generating Stations [Ref. DRBC "Docket No.

D-69-210 CP (Final)(Revision 8)"], water would be released from Tamaqua reservoirs such that the total quantity would be equal to or greater than that needed to replace the consumptive use at Limerick Units Nos. 1 and 2.) The applicants propose to release high quality water (TDS - 32 mg/1) from Still and Owl Creek Reservoirs, and claim that after mixing downstream the proposed project will not only maintain the water quality of the Schuylkill River, but will improve it under certain low flow conditions. The applicants report that the Still and Owl Creek Reservoirs, at the headwaters of the Schuylkill River, have sufficient capacity to supply the needs of the Tamaqua area and to provide an additional billion gallons of water in 1989 to PECO. This water would go a long way in supplying the additional consumptive needs of Limerick under moderate drought conditions. The applicants' proposed operating plan for supplying cooling water for consumptive use by Limericks Units Nos. 1 and 2 during 1989 is:

    "I. Withdraw water from the Schuylkill River when the flow, as measured at the Pottstown gage, is greater than 530 cfs (I unit) or 560 cfs (2 units) and temperature, as measured at the Linfield Bridge, is less than 590 F. Should the measurement of dissolved oxygen in lieu of temperature be approved, shift to withdrawing water as long as flow and D.O. values are satisfactory. Use past experience to judge when flows or D.O. might not be satisfactory and be prepared to shift to alternate sources.
     "2. Release water from Tamaqua when it is predicted that flow or D.O. conditions may reach restrictive limits. Three percent more water will be discharged from Tamaqua than is required to allow for potential losses in transit."

Using the above operating plan, the applicants have projected the impact on total dissolved solids (TDS) above and below the Limerick discharge for a release of 56 cfa under various low flow conditions:

D-69-210 CP (Final)(Rev. 9) (Joint Applic.) 3 TABLE A Pottstown TDS above/below Limerick (ppm) Schuylkill Maximum Augmented flow (cfs) River Natural Flow (cfs) TDS (ppm) 56 cfs 550 395 361/397 500 405 367/408 450 415 372/418 400 428 379/432 350 438 382/443 300 450 384/455 The Still Creek and Owl Creek Reservoirs, owned by the Borough of Tamaqua, are used for municipal water supply. Consulting engineers for Tamaqua estimated that Tamaqua has an excess stored water supply of about 1.35 billion gallons. Of this amount, it is estimated that 1 billion gallons could be made available for PECO's consumptive use during 1989. The Tamaqua reservoir system consists of Still Creek Reservoir and two Owl Creek Reservoirs. Due to their close proximity to one another, the two Owl Creek Reservoirs are assumed to function as a single reservoir of combined capacity.

b. Facilities.- The Still Creek Reservoir is formed by an earthfill dam, with an ungated concrete spillway at elevation 1,182.0 feet. The capacity at the spillway elevation is 8,290 acre-feet or 2,700 million gal lons (mg) of water; 2,630 mg of which is estimated to be active storage.

Still Creek has a surface area of 332 acres and is 77 feet deep. The Still Creek drainage area is 6.9 square miles. The Owl Creek Reservoirs have a combined capacity of 332 mg, 299 mg of which is estimated to be active storage. Upper Owl Creek Reservoir has a surface area of 67 acres and is 35 feet deep. Lower Owl Creek Reservoir has a surface area of 26 acres and is 30 feet deep. The Owl Creek drainage area .is 2.0 square miles. Discharges from the Still and Owl Creek Reservoirs, for Tamaqua-s use, are made directly through pipelines to the municipal water system. Treatment at the point of discharge includes chlorination and the addition of zinc compound for corrosion protection of the piping system.

D-69-210 CP (Final)(Rev. 9) (Joint Applic.) 4 The amount of water released into Still and Owl Creeks will be within the capacity of the receiving streams. Spill records for both Still and Owl Creek Reservoirs indicate that, in the course of a year, the receiving streams regularly rry more water than the 56 cfs maximum release for Limerick (54 cfs for consumptive use plus a 3 percent allowance for losses). During spring months, spill releases from Still Creek routinely exceed the maximum release (54 cfs) proposed for use at Limerick. No erosion or other adverse effects were observed by the reservoir operator as a result of these spills. Discharges from Still Creek Reservoir will be made through an existing discharge channel which is approximately 175 yards long. This consists of a concrete section about 80 feet long. The remaining distance along Still Creek to the point where the spillway water is reintroduced into the creek is an excavated channel. This discharge channel is approximately 35 feet wide and 10 to 12 feet deep. The channel gets larger at its point of intersection with the spillway flow. The discharge channel was originally constructed to allow emergency releases from the reservoir to the creek, and has the capacity to discharge Limerick's required releases. The Still Creek stream channel from the spillway outfall to the mouth is wide; the bottom and sides are comprised mostly of rock and boulders. The release of water for Limerick should cause no major erosion. Water from the Still and Owl Creek Reservoirs will be released through existing outlet control facilities. All existing facilities of the Limerick Electric Generating Project remain as previously approved. No new facilities are proposed at the Limerick site as part of this application. Cost.-- There are no construction costs associated with the implementation of this project. Relationship to the Comprehensive Plan.-- The Limerick Nuclear Generating Station was included in the Comprehensive Plan, November 5, 1975, by Docket D-69-210 CP (Final), which incorporated the project description and docket decision D-69-210 CP. Certain provisions of this docket were temporarily suspended by Docket No. D-69-210 CP (Final)(Revision 5) and Docket No. D-69-210 CP (Final)(Revision 6). Revisions Nos. 5 and 6 expired on December 31, 1988.

D-69-210 CP (Final)(Rev. 9) (Joint Applic.) 5 FINDINGS The applicant has evaluated the various combinations of the alternatives being considered and the resulting economic penalties attributed to reduced operation of Limerick if 1989 is a repeat of the flows and temperature/oxygen levels recorded during 1985. Operational Restrictions for Equivalent Drought of 1985 Additional Equivalent Unit Equivalent Water Full Power Days Shutdown Available of Operation Days None-No Approvals 0 166 Still & Owl Creek 57 109 Reservoirs Still and Owl Creek 78 88 Reservoirs, Cromby-Titus The applicants' evaluation indicates that Still and Owl Creek Reservoirs alone can supply Limerick for 57 days of anticipated and actual needs with one unit operating at full power. Using the allocation of Titus and Cromby on all 166 days of postulated shortage together with the 1 billion gallons of Tamaqua water increased the number of days covered to 78. The water quality of Still Creek Reservoir is very good throughout the pool. No major adverse water quality effects are expected due to drawdown of the reservoir. There does not appear to be any significant point sources of pollutants within the watershed that would be diluted less by the reduced pool volume. An aeration system is in constant use in the near-dam (deepest water) part of the pool. This system was installed to solve certain water quality problems associated with summer stratification and hypolimnetic deoxygenation. The aeration system assures that the subsurface waters are oxygenated, appears to prevent stratification, and promotes circulation of virtually the entire water mass in the lower half of the pool. It is likely that the upper part of the pool does not have seasonal stratification due to, among other things, its shallow depth. No bottom sediment-related problems have been encountered since installation of the aeration system and allevia tion of anoxic bottom water conditions. Still Creek dam is-protected with stone riprap and the lower half of the reservoir has mostly a gravel rubble with sand shoreline. Periodic drawdowns have revealed no major erosion problems. However, the applicants will initi ate a water quality monitoring program if the drawdown becomes greater than 10 feet. The applicants have considered the impacts on the aquatic environ ment and determined no long-term or major impacts.

D-69-21 0 CP (Final)(Rev. 9) (Joint Applic.) 6 An assessment of the conditions of the Still and Owl Creek Dams under expected drawdown conditions was performed by the applicants. At the Still Creek Dam, the maximum daily drawdown rate will increase from 0.3 ft/day as listed in the original application (1986) to 0.7 ft/day. Since the original application, Gannett Fleming, the original designer of Still Creek Dam, has reviewed the stability of the dam and has concluded that the dam is stable under all conditions. Due to the steep upstream slope of the Lower Owl Creek Dam (1 on 2) and the fact that the embankment has been modified several times, the maximum drawdown of the Lower Owl Creek Reservoir will not exceed 10 feet at a rate not exceeding 1.0 foot per day. Due to the steep upstream slope of the Upper Owl Creek Dam (1 on 2) and the fact that the Phase I Inspection Report indi cated poor workmanship relating to the embankment, the maximum drawdownof the Upper Owl Creek Reservoir will not exceed 10 feet at a rate not to exceed 0.5 foot per day. Drawdown of the Upper Owl Creek Reservoir is not expected to have any significant adverse effects on the water quality or biota for much the same reasons as discussed for Still Creek Reservoir. Both the Upper and Lower Owl Creek Reservoirs have been drawn down to the maximum allowable drawdown proposed due to PECO releases (10 feet) on a periodic basis with no adverse effects observed by Tamaqua officials. The water quality in the Owl Creek reservoirs and in Owl Creek is excellent. Pickerel, sunfishes, minnows, suckers, and bullhead are known to be present in both pools. Section 3.10.3A.1.b. of DRBCUs Basin Regulations - Water Quality as included in the Comprehensive Plan limits the increase of TDS in any stream to 133 percent of background. Impact on downstream uses The applicant has stated that the proposed plan of operation will not cause the TDS concentration in the Schuylkill River at Pottstown to be any higher than it would be without the proposed plan of operation. (Ref. Table A, page 3 above.) In the same table, the applicant has also computed the impact on TDS concentrations downstream of Limerick when Units Nos. 1 and 2 are allowed to operate at these low flows. It should be noted that when just Tamaqua water has been released, there is essentially no change. Releases from Tamaqua reservoirs only will actually reduce the TDS levels that would otherwise occur upstream of Limerick and will not cause any degradation of TDS downstream of Limerick from that which would have existed without Limerick Units Nos. I and 2 and without the proposed releases. Use of water from Tamaqua reservoir would have nearly the same impacts downstream of Limerick as using the approved diversion from the Delaware River.

10 CP (Final)(Rev. 9) (Joint Applic.) 7 D-69-2 PADER, Bureau of Water Resources Management, has reviewed this plan of operation and developed an operating curve for Still Creek Reservoir to protect Tamaqua's available water supply since, in an extended drought, Still Creek Reservoir, unlike the Owl Creek Reservoirs, was found not to refill each year. This curve, attached hereto and marked Attachment No. 1, indicates when releases for downstream withdrawals at Limerick must be discontinued to insure an adequate supply of water for public use in Tamaqua. This curve was developed by routing 1964, 1965 and 1966 hydrology through Still Creek Reservoir along with Tamaqua public water supply demands of 6.25 mgd from Still Creek. These demands alone pulled Still Creek Reservoir down by 1.196 billion gallons over a 19-month period. The shape of the curve reflects Tamaqua's actual drawdown during the 1965-1966 12-month critical period. A safety factor of approximately 800 million gallons of storage (1/3 of total storage) was applied to the curve for contingencies including more severe drought conditions, maintenance of aquatic life, possible additional siltation losses and unexpected problems that could arise from low reservoir levels not previously experienced. The combination of substituting 5.2 mgd of consumptive use from Cromby and Titus Stations with the release of up to one billion gallons from Tamaqua Reservoirs will provide in excess of 78 days of operation of Limerick Units Nos. 1 or 2 during an equivalent drought of 1985. Impact on Flood Flows Comments were noted at the April 15, 1986 hearing as to the need for an emergency flood warning plan for the South Pottstown area due to the reser voir releases. It is noted that the maximum release from the reservoir would be 56 cfs and the flood stage at Pottstown (stage when damage begins) is at gage height 13.0 feet or a flow of 25,350 cfs. In view of this low percent age of the total flow at Pottstown, there is no need to develop a flood warning plan as a result of the proposed releases. DECISION I. The Comprehensive Plan of the DRBC, as amended by Docket No. D-69-210 CP (Final) on November 5, 1975, is hereby revised as follows: (1) For the period ending December 31, 1989, the provisions of Docket No. D-69-210 CP [attached and included as part thereof to D-69-210 CP (Final)] headed "FINDINGS," "Sources of Water supply," "I. Schuylkill River," is revised by the addition of a new paragraph "(d)" on page 5 which reads as follows:

                   "(d)  Water may be withdrawn for consumptive use at Limerick, regardless of all above constraints except "(b),"

whenever that consumptive use has been replaced in equal volume by water released from Still Creek and/or Owl Creek Reservoirs."

9) (Joint Applic. ) 8 D-69-210 CP (Final)(Rev.

(2) For the period ending December 31, 1989, the following con ditions shall be added to the provisions of Docket No. D-69-210 CP (Final), "DECISION" on page 15, subheaded "I1" and as temporarily amended by Docket D-69-210 CP (Final)(Revision

8) on February 22, 1989:

              "z. Releases from Still Creek and Owl Creek Reservoirs will be regulated and controlled to prevent erosion in the*

reservoir or in the receiving streams downstream. The applicant shall inspect all areas for erosion each day releases are made, repair any erosion problems that occur and immediately take steps necessary to eliminate any recurrence of an erosion problem.

              "aa. The applicant shall monitor the dissolved oxygen content in the discharges prior to entering Still and/or Owl Creeks and 200-300 yards downstream in Still and/or Owl Creeks each day during periods of releases.       D.O. read ings  shall  be  taken between  8 and 9 a.m. The  Executive Director may modify the D.O. monitoring program if monitoring results indicate a change is desirable.       The Executive Director may modify or suspend releases if evidence indicates that releases are causing D.O.

problems in the receiving waters.

               "bb. There shall be no releases from Still Creek Reservoirs for consumptive use at Limerick Units Nos. I or 2 whenever the water level in the reservoir pool is below the operating rule curve shown on "Attachment No. l." A plan of operation designed to minimize the unnecessary release of water but also recognizing the need to not cause further diminution of streamflow during low flow periods, must be submitted to and approved by the Executive Director prior to initiation of releases.
               "cc. The applicants shall maintain detailed accurate records of reservoir releases.      PECO will notify DRBC each morn ing of any planned starting, stopping or changing in releases and provide the timing and the quantities involved.
                     "This information on releases together with the dissolved oxygen monitoring required above and a report on the erosion inspection required above shall be submitted weekly when releases have been made. Also, the water elevation in each of Still and Owl Creek Reservoirs and the daily average, minimum and maximum flow at Pottstown shall be included in the weekly data report."

D-69-210 CP (Final)(Rev. 9) (Joint Applic.) 9 (3) The provisions set forth in paragraphs (1) and (2) above shall terminate on December 31, 1989, unless otherwise extended or directed by the Commission, and all provisions of Docket D-69-210 CP and Docket D-69-210 CP (Final) temporarily sus pended by this docket shall become operative in full force and effect. II. The above revisions of the Limerick Nuclear Generating Station project are approved pursuant to Section 3.8 of the Compact, subject to the conditions above. BY THE COMMISSION DATED: February 22, 1989,

ii

                                                                                                             ,.

a,

                                                                                               ,             ..
                                                                                                                                .     .   - -,

a,  ?

                                                                                                      .. tii*
                                                                                                           .
                                                                                                                      .8 U
                                                                                                                                   . a.

a I', j'I* ** 0 aI 'I I *I *. am

• a I

                                                       .:     ,**           *. .1                                 I I

I, a I. 4 .I

                                                                                                            *
                                                                                                                *....
                                                                                                                               .1.1'
                                                                                                                                        *1 U.
                                                        .1          J                                                         ii.'.,
 '3        I.                                       'I:                                                           a w                                                             ':1 a,

I.

                                                                                                                   .

a-I. 0 '0

• I I

      '4 I  0
  'a.
      '3                           I!             a
                                                    *1
                                                        ,:

I.:

                                                                                                                              *;*, 1 H

H I *

                                                                                                                          *   .

Q I', V) I' U

                                                                                                 ..
                                                                                                               .1       _
                                                                                                                            . :1                    &
                                                   ..      ..       ..
                                                                                     .
       "a.

I V. SI Iii . I

                                                                                                    .

a.. a

                        &
                       'a                                                                                                                             N
                                                                     .a I
                                                                                                                                    ..

z 4 -I-. a'

              -r          Iw     -
                                          'a                                      'a I.                   .

I 4 I

                                                           .1 lit 9 "

ZZ19 go&(

DOCKET NO. D-69-210 CP (Final)(Revision No. 8) DELAWARE RIVER BASIN COMMISSION Philadelphia Electric Company Limerick Electric Generating Station Limerick Township, Montgomery County, Pennsylvania PROCEEDINGS The Philadelphia Electric Company (PECO) applied, on December 29, 1988, for extension and amendment of Docket No. D-69-210 CP (Final)(Revision 5), which expired on December 31, 1988. The application was reviewed for temporary revision of the project in the Comprehensive Plan and approval of these temporary changes under Section 3.8 of the Delaware River Basin Compact. A public hearing on this applica tion by PECO was held by the Delaware River Basin Commission (DRBC) on February 22, 1989. DESCRIPTION Purpose.--The purpose of this application is to obtain temporary relief, through December 31, 1989, from two existing docket limitations and thereby increase the frequency that water may be withdrawn from the Schuylkill River for evaporation at Limerick Units Nos. 1 and 2. The two existing limitations are: (1) PECO may not withdraw water from the Schuylkill River for evaporative use at its Limerick Station when the temperature rises above 590 F and (2) water for evaporative use may not be withdrawn from the Schuylkill River when the flow at Pottstown gage (not augmented by releases from Commission sponsored reservoir storage) falls below 530 cfs for one Limerick unit in operation or 560 cfs for 2 units in operation. PECO requested temporary substitution of dissolved oxygen (DO) monitoring in place of temperature restriction in the original docket and they also requested the option of transferring the existing consumptive use of Schuylkill Basin waters from currently operating generating units on the Schuylkill River to the Limerick Units Nos. 1 and 2. This would allow the. operation of the nuclear fueled units in lieu of existing fossil fueled units when existing docket limitations would otherwise preclude consumptive use of the Schuylkill River water for the Limerick Generating Units Nos. I and 2.

D-69-210 CP (Final)(Revison No. 8) (PECO/DO/Temperature) 2 Location.--Existing intake facilities are located as follows: Intake River Mile Titus 92.47 - 71.15 Limerick 92.47 - 48.22 Cromby 92.47 - 39.1 Dissolved oxygen monitors have been installed approximately 200 feet upstream of each of six dams and at the Limerick site. The six dams are located as follows: Fairmount Dam 92.47 - 8.49 Flat Rock Dam 92.47 - 15.6 Plymouth Dam 92.47 - 20.7 Norristown Dam 92.47 - 23.95 Black Rock Dam 92.47 - 36.6 Vincent Dam 92.47 - 44.7 Physical features

a. Design criteria.--The applicant proposes substitution of dissolved oxygen limitations of a daily average of 5.1 mg/1 0 and 4.2 mg/l instantaneous in lieu of the current temperature limitation (59 F) in order to reduce the number of days that PECO would be required to replace evaporative losses or cut back the operation of the Limerick Units Nos. 1 and 2. PECO has requested approval to withdraw water from the Schuylkill River for consumptive use at Limerick whenever flow conditions are met and DO values at five of the six designated stations exceed the 5.1 mg/1 minimum daily average and the 4.2 mg/1 minimum instantaneous values.

The applicant also proposes that when existing Schuylkill River flow constraints [Ref. DRBC Docket No. "D-69-210 CP (Final)"] or the above requested DO constraints restrict the consumptive use for Limerick Units Nos. 1 and 2, operation of Units 1, 2 and 3 at the Titus Generating Station of the Metropolitan Edison Company and Unit 2 at the Cromby Generating Station of the Philadelphia Electric Company be curtailed as necessary to allow the equivalent consumptive use at the Limerick Generating Station. Docket No. D-74-32 (Revised), approved on October 8, 1980, acknowl edged that the addition of a cooling tower at the Titus Station would result in a maximum consumptive use of 3.5 mgd. The Cromby Generating Station was operating prior to the formation of the DRBC and the water use has not subsequently been substantially altered. Accordingly, there are no docket decisions establishing the con sumptive use at that station. However, in 1976, the DRBC issued a Certifi cate of Entitlement to PECO establishing the quantities of water that could be used at the Cromby Station and not be subject to DRBC water use charges. The entitlement established a quantity of 88.401 mg/month (2.9 mgd) for the Cromby Station. Proportioning the total consumptive use between Unit 1 (150 mw) and Unit 2 (201 mw) indicates that up to 50.628 mg/month (1.7 mgd) is the maximum consumptive use for Unit 2.

8) (PECO/DO/Temperature) 3 D-69-210 CP (Final)(Revison No.

Transferring the 3.5 mgd from Titus Units 1, 2 and 3 and 1.7 mgd from Cromby Unit 2 would provide up to 5.2 mgd for consumptive use at Limerick. This 5.2 mgd, if used for operation of Limerick Unit 1 or Limerick Unit 2, would enable the respective Unit to generate power at levels up to approximately 25 percent of full power.

b. Facilities.--All existing facilities of the Limerick Electric Generating Project remain as approved by Dockets Nos. D-69-210 CP (Final) and D-69-210 CP (Final)(Revised). No new facilities are required at the existing Titus or Cromby generating stations. The DO monitors were installed as described in DRBC Docket No. D-69-210 CP (Final)(Revised), which was approved on May 29, 1985.

Relationship to the Comprehensive Plan.-- The Limerick Nuclear Generating Station was included in the Comprehensive Plan, November 5, 1975, by Docket No. D-69-210 CP (Final), which incorporated the project description and docket decision D-69-210 CP. Certain provisions of this docket were temporarily suspended by Docket No. D-69-210 CP (Final)(Revision 5) and Docket No. D-69-210 CP (Final)(Revision 6). Revisions Nos. 5 and 6 expired on December 31, 1988. Cost.-There are no construction costs associated with the implementa tion of this project. FINDINGS The Limerick Generating Station was included in the Comprehensive Plan by Docket decision No. D-69-210 CP (Final) on November 5, 1975, which also incorporated the project description and docket decision D-69-210 CP dated March 29, 1973. Docket No. D-69-210 CP (5/29/73) includes a section headed "FINDINGS" subheading "Source of Water Supply 1. Schuylkill River" which reads as follows:

     "Schuylkill River water at the plant site may be used for noncon sumptive use whenever the effluent discharged back to the river meets all applicable water quality standards.
      "Schuylkill River water at the plant may be used for consumptive use when flow (not including future augmentations of flow from Commission-sponsored projects) as measured at the Pottstown gage is in excess of 530 cfs (342 mgd) with one unit in operation and 560 cfs (362 mgd) with two units in operation with the following exceptions:
           "(a) There shall be no withdrawals when river water tempera tures below the Limerick station are above 150 C except during April, May and June when the flow as measured at the Pottstown gage is in excess of 1791 cfs (1158 mgd).
           "(b) Use of the Schuylkill River will be limited to a with drawal that will result in an effluent that meets all applicable water quality standards.

8) (PECO/DO/Temperature) 4 D-69-210 CP (Final)(Revison No.

    "The constraints on nonconsumptive use of Schuylkill River water are necessary to prevent violation of total dissolved solids, stream quality objectives and effluent quality requirements of the Commission's water quality regulations. The constraint on con sumptive use of Schuylkill River water is to protect water quant ity and water quality below the Limerick Station. Both sets of constraints would be suspended in the event of any operational emergency requiring a shutdown of the plant."

As part of the docket decision No. D-69-210 CP (Final)(Revised) para graph (a) above was revised for the period ending December 31, 1985, to read as follows:

    "(a) No withdrawals for consumptive use shall be made from the Schuylkill River or the natural flow of any of its tribu taries whenever dissolved oxygen in the Schuylkill River at or below Limerick as measured at any one or more of the monitoring locations: (i) is less than 7.0 mg/1 instantane ous during the period March 1 to June 15, or (ii)    is equal to or  less than 5. 1 mg/l daily average or equal to  or less than 4.2 mg/i instantaneous value during the remainder of the year."

Monitoring data collected between August 9 through November 30, 1985, shows that there were 31 more days that Schuylkill River water was available for consumption using the D.O. limitation in lieu of the existing temperature limit. If the D.O. limit had been in effect for all of 1985, the record indicates a gain of 58 days when Schuylkill River water would have been* available for consumptive use at Limerick. A similar number of days of availability have been recorded for each year since 1985. PECO has requested that the proposed D.O. limits be met at five out of six monitoring points noting that individual monitoring sites may be impacted by localized conditions resulting from point source discharges. However, one of the purposes of the original 590 F temperature limita tion was to prohibit any further degradation of D.0. during low D.O. con ditions, by allowing depletion of streamflow via consumptive use at Limerick. Regardless of the cause of low D.O. at any one of the monitoring sites, depletion of streamflow by consumptive use at Limerick could aggrevate the D.O. problem. PECO has also requested that the proposed D.O. limits of 5.1 mg/l aver age and 4.2 mg/l instantaneous apply throughout the year and have stated that a more restrictive limit during the fish spawning season is overly conservative.

8) (PECO/DO/Temperature) 5 D-69-210 CP (Final)(Revison No.

In the previous temporary approval to substitute D.O. limits for tem was perature during 1985, a limit of 7.0 mg/l from March 1 to June 15 included in response to the recommendation of the Pennsylvania Fish Commis In response to a pending application for 1986, the PFC, under sion (PFC). date of January 17, 1986, requested that additional monitoring stations be Rock pools to required towards the head end of Plymouth, Norristown and Black sites monitor the D.O. and to use the limit of 7.0 mg/l as measured at those spawning during the March I - June 15 period to keep those areas suitable for of smallmouth bass. In a subsequent letter dated April 4, 1986, the PFC stated the D.O. limits in game fish spawning areas should be an average of 7.0 mg/l and a minimum of 6.0 mg/l. Approval of the portion of the application to transfer existing con sumptive use from Titus and Cromby to Limerick and allow the transferred consumptive use by Limerick Units Nos. 1 and 2 to occur regardless of the existing docket constraints also requires revision of the project in the Com prehensive Plan and approval of those revisions under Section 3.8 of the Compact. The Titus Generating Station is two miles downstream from Reading, Pa. and approximately twenty-three miles upstream from the Limerick Generating Station. Accordingly, any cutbacks in the consumptive use at Titus and transfer for consumptive use at Limerick will increase the quantity of streamflow in the Schuylkill River from Titus to Limerick. The flow increase for the twenty-three mile segment would be a maximum of 3.5 mgd (5.4 cfs). Cromby Generating Station is located approximately nine miles below the Limerick facilities and conversely, the cutback in consumptive use at Cromby and transfer for consumptive use at Limerick will decrease the quantity of streamflow in the Schuylkill River from Limerick to Cromby. The decrease in streamflow could be a maximum of 1.7 mgd (2.6 cfs). This represents approxi mately one percent of the Q flow for that section of the Schuylkill River. Below Cromby there *Zd be no change in the flow regime caused by the proposed transfer. The transfer of the location of the consumptive use from Titus to Limerick will result in a slight lowering of total dissolved solids level in the Schuylkill River between Titus and Limerick. At a flow of 360 cfs and with the Titus units operating, the TDS level averages about 375 mg/l and calculations indicate that if the three units were shut down, the TDS should drop to 370 mg/l. At Limerick, when operating with a consumptive use of 5.2 mgd, the TDS would increase from 370 mg/i to 378 mg/l and below Cromby there should be no change in TDS resulting from the proposed transfer. Titus Units 1, 2, and 3 are coal fired, having an electric generating capacity of 234 mw and Gromby Unit 2 is oil fired and has an electric gener ating capacity of 201 mw. If the three Titus units and Cromby Unit 2 are all the shut down and the generating capacity of Units Nos. 1 or 2 is limited to transferred consumptive use (250 mw), there will be a net reduction of generating capacity of 185 mw. The applicant has indicated this loss of with no generating capacity, if needed, will be replaced with power generated additional consumption of Delaware Basin water.

D-69-210 CP (Final)(Revison No. 8) (PECO/DO/Temperature) 6 The PJM (Pennsylvania, New Jersey and Maryland) Interconnection system has reviewed the PJM load and capacity situation for 1989 summer peak load conditions and considered the reduction of 185 mw in PJM generating capacity and concluded that the temporary loss of capacity associated with this appli cation will not cause the PJM system to be short of capacity to meet the demand. Additionally, if needed, PECO has agreed that in the event of a PJM shortage, they would curtail Limerick and allow Titus and Cromby to resume operation as needed to meet demands. DECISION I. The Comprehensive Plan of the DRBC as amended by Docket No. D-69-210 CP (Final) on November 5, 1975, is hereby revised as follows: (1) For the period ending December 31, 1989, the provisions of Docket No. D-69-210 CP, [attached and included as part thereof to D-69-210 CP (Final)] headed "FINDINGS," "Sources of Water Supply," "l. Schuylkill River" paragraph "(a)"' on page 5 are temporarily suspended, and in place thereof the following provision is substituted:

               "(a) No withdrawals for consumptive use shall be made from the Schuylkill River or the natural flow of any of its tribu taries whenever dissolved oxygen (i) is less than 7.0 mg/l daily average or 6.0 mg/l instantaneous during the period March 1 to June 15 at any one of the monitoring sites in riffle spawning areas located below Limerick approved by the Executive Director in consultation with the Pennsylvania Fish Commission (PFC) or (ii) is equal to or less than 5.1 mg/l daily average or equal to or less than 4.2 mg/l instantaneous value at any of the six exisiting monitoring stations temporarily approved by DRBC Docket No. D-69-210 CP (Final)(Revised)."

(2) For the period ending December 31, 1989, the provisions of Docket No. D-69-210 CP, [attached and included as part thereof to D-69-210 CP (Final)] headed "FINDINGS," "Source of Water Supply," "I. Schuylkill River" is further revised by the addition of a new paragraph "(c)" on page 5 which reads as follows:

               "(c) Water may be withdrawn for consumptive use at Limerick whenever the consumptive use at Titus Generating Station or the Cromby Generating Station has been curtailed. The consumptive use at Limerick  shall not exceed the volume equal to a quantity saved by the curtailment of generat ing units at Titus and/or Cromby generating stations.

The maximum quantity that can be considered saved in this process is 3.5 mgd at Titus and 1.7 mgd at Cromby."

D-69-210 CP (Final)(Revison No. 8) (PECO/DO/Temperature) 7 (3) For the period ending December 31, 1989, the following condi tions shall be added to the provisions of Docket No. D-69-210 CP (Final), "DECISION" on page 15, subheaded "II.":

              "o. Accurate dissolved oxygen measurements shall be taken at all sites designated by the Executive Director in consultation with the PFC from March 1 to June 15.
              "p. Detailed plans of the location of each new dissolved oxygen monitoring site shall be submitted to and approved by the Executive Director and the PFC.
              "q. The calibration, maintenance and operation of all dis solved oxygen monitors and any interim manual measure ments of dissolved oxygen shall be under the supervision and control of the U.S. Geological Survey.
              "11r. Weekly records of all dissolved oxygen monitoring shall be submitted to the Commission in writing within three working days, together with a log of power plant opera tions and consumptive water use. Such information shall be a matter of public record.
              "s. PECO shall immediately notify the Commission whenever dissolved oxygen levels at any monitoring station trigger the criteria set forth in this docket, and advise the Commission of all alternative steps taken.
              "t. Philadelphia Electric Company shall maintain accurate records of all water withdrawals and discharges at the Limerick generating plant. The time of any change in the rate of water withdrawal must be recorded. PECO shall maintain records of water withdrawals at the Cromby generating station. The time of any change in the rate of withdrawal due to a change in the operation of Unit 2 shall be recorded.
              "u. PECO shall arrange for Metropolitan Edison Company to maintain accurate records of all water withdrawals at the Titus generating station. The time of any change in the rate of water withdrawal due to a change in the operation of Units 1, 2 and 3 shall be recorded. This information shall be submitted to PECO and a copy to DRBC each time there is a change in the operation of Units 1, 2 and 3.
              "v. PECO- will compile the information recorded for the Limerick and Cromby plants together with the information supplied by Metropolitan Edison Company for the Titus plant, into a format that clearly demonstrates compliance with the operating requirements of this docket.

D-69-210 CP (Final)(Revison No. 8) (PECO/DO/Temperature) 8 "w. Water may not be withdrawn for use at Limerick in lieu of operating Titus Units 1, 2 and 3 unless Titus Units 1, 2 and 3 have not operated for the previous 10 hours.

               "x. Water may not be withdrawn for use at Limerick in lieu of operating Cromby Unit 2 unless Cromby Unit 2 is reduced within 5 hours of the use of the transferred water at Limerick.
               "y. PECO will notify DRBC staff by telephone each time there is a change in the operation of Titus Units 1, 2 and 3 and/or Cromby Unit 2 operations as a result of the condi tions imposed by this docket. The notification shall be in advance or at the time of the change. In addition, PECO will submit to DRBC a copy of all recorded informa tion once each week.

If, at any time, the Executive Director determines that the proposed project is not operating as planned or is causing substantial impacts on the water resources of the Basin, he may cancel or suspend this approval and all operation thereunder shall terminate until subsequent action by the Commission." (4) The provisions set forth in paragraphs (1), (2) and (3) above shall terminate on December 31, 1989, unless otherwise extended or directed by the Commission, and all provisions of Docket No. D-69-210 CP temporarily suspended by this docket shall become operative in full force and effect. II. The above revisions of the Limerick Nuclear Generating Station project are approved pursuant to Section 3.8 of the Compact, subject to the conditions listed above. BY THE COMMISSION DATED: February 22, 1989

I-DOCKET NO. D-69-210 CP (Final) (Revision 6) DELAWARE RIVER BASIN COMMISSION Philadelphia Electric Company Limerick Electric Generating Station Limerick Township, Montgomery County, Pennsylvania Reading Anthracite Company Diversion from Beechwood Pool New Castle Township, Schuylkill County, Pennsylvania Borough of Tamaqua and Tamaqua Borough Authority Diversion from Still Creek and Owl Creek Reservoirs Rush Township and Rahn Township, Schuylkill County, Pennsylvania PROCEEDINGS The Philadelphia Electric Company (PECO), jointly with the Reading Anthracite Company (RAC), the Borough of Tamaqua (BOT) and Tamaqua Borough Authority (TBA), applied on March 4, 1986, for an additional temporary modification of Docket D-69-210 CP (Final). The application was reviewed for temporary revision of the project in the Comprehensive Plan and approval of these temporary changes under Section 3.8 of the Delaware River Basin Compact. A public hearing on this applica tion was held by the Delaware River Basin Commission .(DRBC) on April 15, 1986, and the record remained open until April 21, 1986. In addition, the hearing record compiled in connection with the DRBC's January 22, 1986, hearing on PECO's application, known as "Revision No. 5," was incorporated into and considered part of the hearing record for this application. DESCRIPTION Purpose.- The purpose of this joint application is to request approval for the diversion, through December 31, 1986, of water from upstream storage facilities for discharge into the Little Schuylkill River and the West Branch Schuylkill River for subsequent withdrawal and consumptive use by Unit 1 at the Limerick Generating Station. The application requests that use of the water withdrawn from storage not be subject to the current limitations imposed by DRBC docket decisions.

I D-69-210 CP (Final)(Rev. 6). (Joint Applic.) 2 Location.-- No changes are proposed in the location of any existing facilities associated with the application and the only new construction proposed is the discharge from Beechwood Pool. Still Creek Reservoir is located in Schuylkill County, 2.3 miles north of Hometown, Pa., and approximately 5000 feet above the confluence of Still Creek and the Little Schuylkill River, in Rush Township, Schuylkill County. The existing dam is located at River Mile 92.47 - 102.1 - 30.15 - 1.0. The Owl Creek Reservoirs are located approximately 1.5 miles southeast of the Borough of Tamaqua in Rahn Township-, Schuylkill County. The existing dams are located at River Miles 92.47 - 102.1 - 22.1 - 1.7 and 92.47 - 102.1 - 22.1 - 2.3. Beechwood Pool is located adjacent to the West Branch Schuylkill River in the southwest corner of New Castle Township, Schuylkill County, Pennsylvania. The water diverted from Beechwood Pool would be discharged 0.2 mile downstream from the pool at River Mile 92.47 - 119.65 - 9.5. Physical features

a. Design criteria.-- The applicants propose that when existing Schuylkill River flow constraints [Ref. DRBC "Docket No. D-69-210 CP (Final)"] or dissolved oxygen limitations [Ref. DRBC "Docket No. D-69-210 CP (Final)(Revision 5)"] restrict the consumptive use of Schuylkill River water for Limerick Unit I to the quantity transferred from reduced operation at Titus and Cromby Generating Stations [Ref. DRBC "Docket No. D-69-210 CP (Final)(Revision 5)"], water would be released from Tamaqua reservoirs and at times, the release would be supplemented with diversions from Beechwood Pool such that the total quantity would be equal to or greater than that needed to replace the consumptive use the Limerick Unit 1.

The applicants propose to release water from Still and Owl Creek Reservoir and from Beechwood Pool in a coordinated plan designed to minimize the impacts of the high total dissolved solids (1708 mg/i) in Beechwood Pool. The application proposes to release high quality water (TDS = 32 mg/i) from Still and Owl Creek Reservoirs and divert limited quantities of Beechwood Pool water and claims that after mixing downstream the proposed project will not only maintain the water quality of the Schuylkill River, but will improve it under certain low flow conditions. The application reports that the Still and Owl Creek Reservoirs, at the headwaters of the Schuylkill River, have sufficient capacity to supply the needs of the Tamaqua area and to provide an additional billion gallons of water in 1986 to PECO and to supplement this by some 300 million gallons of water from the Beechwood Pool which would go a long way to supplying the additional consumptive needs of Limerick under moderate drought conditions.

D-69-210 CP (Final)(Rev. 6) (Joint Applic.) 3 The applicants proposed operating plan includes the following limitations:

1. No Beechwood Pool water will be discharged to the West Branch of the Schuylkill River when the natural flow of the Schuylkill River at Pottstown is-below 400 cfs.

2. The use of Beechwood Pool water will be adjusted or cut off so as to maintain less than 455 ppm TDS at the Citizens Home Water intake below Limerick.

3. The maximum Beechwood Pool pumpage will be 7 cfs and will be less than 30 percent of the total Tamaqua/Beechwood discharges.

4. Three percent more water will be discharged from Tamaqua than is required to allow for potential losses in transit.

The applicants' proposed operating plan for supplying cooling water for consumptive use by Limerick Unit 1 during 1986 is:

    "1. Withdraw water from the Schuylkill River when the flow, as measured at the Pottstown gage, is greater than 530 cfs and temperature, as measured at the Linfield Bridge, is less than 590 F. Should the measurement of dissolved oxygen in lieu of temperature be approved, shift to withdrawing water as long as flow and D.O. values are satisfactory. Use past experience to judge when flows or D.O. might not be satisfactory and be prepared to shift to alternate sources.
    "2. Release 14 cfs from Tamaqua and 5 cfs from Beechwood when it is predicted flow or D.O. conditions may reach restrictive limits. Allowance must be made for the flow transit time-of 3 days. Thus, when natural Schuylkill River flows drop to the neighborhood of 600 cfs or D.O. readings drop to about 1 ppm above the cut off point, reservoir releases will be made even though they may not be required.
    "3. Alert Titus and Cromby personnel that shutdowns may be required to make their allocations available to Limerick.

The flow time of 10 hours can be accommodated by using water stored on site and/or by reducing unit output from 100 to 75 percent. This power adjustment can be made in less than 2 hours.

    "4. When needed, continue reservoir releases at paragraph 2 values for a minimum of 2 weeks so that data may be taken relative to reservoir performance and stream conditions.

D-69-210 CP (Final)(Rev. 6) (Joint Applic.) 4 "5. For the following 2 week period of need, release 20 cfs from Tamaqua and 7 cfs from Beechwood, thereby releasing Titus and Cromby units for service and eliminating the approximate

            $1 million/month fuel cost penalty incurred through these units not operating. Monitor reservoir and stream conditions.
     "6. Future periods of need would be met by either the plan of paragraph 4 or 5 depending on the total supplemental water used to date and the projected requirements for the balance of the summer. As a general rule, a combined total of 15 to 20 cfs will be released from Tamaqua and Beechwood whenever the docket approved levels of flow and D.O. are in jeopardy of being reached. Due to the unpredictable variation in D.O. levels  historically   experienced during the summer months, it is anticipated that releases may be required for the majority of the summer period.       Pre-releasing water will assure that only modest power reductions will be required when permissible withdrawal limits are reached.         The trans fer of the Titus and Cromby allocations would then be made and river augmentations increased.       The on-site storage volume will permit power    production   to continue while a transfer is made to the use of the Titus-Cromby allocations since the storage is equivalent to two days use of such allocations."

Using the above operating plan, the applicant has projected the impact on total dissolved solids (TDS) above and below the Limerick discharge for the three release combinations as proposed under various low flow conditions and obtained the following: TABLE A Pottstown TDS above/below Limerick (ppm) Schuylkill Maximum Augmented flow (cfs) River Natural 27 20 14 Tamaqua Flow (cfs) TDS (ppm) 0 7 5 Beechwood 550 395 378/396 398/417 392/411 500 405 386/406 408/430 401/423 450 415 393/416 418/442 410/435 400 428 403/430 422/451 350 438 409/440 Unacceptable 300 450 415/452 The Still Creek and Owl Creek Reservoirs, owned by the Borough of Tamaqua, are used for municipal water supply. Consulting engineers for Tamaqua, estimated that Tamaqua has an excess stored water supply of about 1.35 billion gallons, of this amount, it is estimated that 1 billion gallons could be made available for PECO-s consumptive use during 1986.

D-69-210 CP (Final)(Rev. 6) (Joint Applic.) 5 The Tamaqua reservoir system consists of three sources, namely, Still Creek Reservoir and two Owl Creek Reservoirs. Due to their close proximity to one another, the two Owl Creek Reservoirs are assumed to function as a single reservoir of combined capacity.

b. Facilities.-- The Still Creek Reservoir is formed by an earthfill dam, with an ungated concrete spillway at elevation 1,182.0 feet. The capacity at the spillway elevation is 8,290 acre-feet or 2,700 million gal lons (mg) of water; 2,630 mg of which is estimated to be active storage.

Still Creek has a surface area of 332 acres and is 77 feet deep. The Still Creek drainage area is 6.9 square miles. The Owl Creek Reservoirs have a combined capacity of 332 mg, 299 mg of which is estimated to be active storage. Upper Owl Creek Reservoir has a surface area of 67 acres and is 35 feet deep. Lower Owl Creek Reservoir has a surface area of 26 acres and is 30 feet deep. The Owl Creek drainage area is 2.0 square miles. Discharges from the Still and Owl Creek Reservoirs, for Tamaqua's use, are made directly through pipelines to the municipal water system. Treatment at the point of discharge includes chlorination and the addition of zinc compound for corrosion protection of the piping system. The amount of water released into Still and Owl Creeks will be within the capacity of the receiving streams. Spill records for both Still and Owl Creek Reservoirs indicate that, in the course of a year, the receiving streams regularly carry more water than the 28 cfs maximum release for Limerick (27 cfs for consumptive use plus a 3 percent allowance for losses). From 1981 through 1985, 5 to 18 percent of the spill releases per year from Still Creek were in excess of the proposed maximum release for Limerick. No erosion or other adverse effects were observed by the reservoir operator as a result of these spills. Discharges from Still Creek Reservoir will be made through an existing discharge channel which is approximately 175 yards long. This consists of a concrete section about 80 feet long. The remaining distance along Still Creek to the point where the spillway water is reintroduced into the creek is an excavated channel. This discharge channel is approximately 35 feet wide and 10 to 12 feet deep. The channel gets larger at its point of intersection with the spillway flow. The discharge channel was originally built to allow emergency releases from the reservoir to the creek. it can easily handle Limerick's required releases. The Still Creek stream channel from the spillway outfall to the mouth is large; the bottom and sides are comprised mostly of rock and boulders. No major erosional effects are expected due to the release of water for Limerick. The release of water from the Still and Owl Creek Reservoirs will require installation of additional release control facilities added to the existing outlet pipes through the Reservoirs to regulate discharges to the Little Schuylkill River.

6) (Joint Applic.) 6 D-69-210 CP (Final)(Rev.

The abandoned strip mine pit known as "Beechwood Pool" is approxi mately 2500 feet long, 1000 feet wide, up to 300 feet deep at the maximum dimensions and is estimated to contain 2.2 billion gallons of water. The concentration of total dissolved solids (TDS) in the pit water is consider ably higher than the TDS concentration in the West Branch Schuylkill River adjacent to the pool. The application proposes to discharge the diverted enters pool water 0.2 mile downstream at the point where acid mine drainage the West Branch Schuylkill River. The release of water from the Beechwood Pool will require installation of rental pumps in the Beechwood Pool. These would discharge into a pipeline that is already in place from the pool to the West Branch Schuylkill River. All existing facilities of the Limerick Electric Generating Project remain as previously approved. No new facilities are proposed at the Limerick site as part of this application. Cost.- The new outlet pipes at the Tamaqua Reservoirs are estimated to cost $60,000. The discharge pipeline at Beechwood Pool is in place and the installation of rental pumps is estimated to be $5,000. Design, supervision and legal costs are expected to add $30,000 for a total project cost of $95,000. FINDINGS The applicant has evaluated the various combinations of the alternatives being considered and the resulting economic penalties attributed to reduced operation of Limerick if 1986 is a repeat of the flows and temperature/oxygen levels recorded during 1985. Operational Restrictions for Equivalent Drought of 1985 Additional Equivalent Equivalent Water Full Power Days Shutdown Available of Operation Days None-No Approvals 0 166 Still & Owl Creek 57 109 Reservoirs Still & Owl Creek 74 92 Reservoir, Beechwood Pool Still and Owl Creek 102 64 Reservoirs, Cromby-Titus, No Beechwood Pool Still and Owl Creek 121 45 Reservoirs, Beechwood Pool, Cromby-Titus

D-69-210 CP (Final)(Rev. 6) (Joint Applic.) 7 The applicants' evaluation indicates that Still and Owl Creek Reservoirs alone can supply Limerick for 57 days of anticipated and actual needs. Adding Beechwood increases this to 74 days. Using the allocation of Titus and Cromby on all 166 days of postulated shortage together with the 1 billion gallons of Tamaqua water increased the number of days covered to 102. Adding Beechwood increases this to 121 days. The applicants have assumed an operating plan which requires releases, based on predictions of flow at Pottstown, up to 3 days in advance to accom modate the travel time from Tamaqua's reservoirs to Limerick. Based on their proposed plan of operation, they have assigned 0.35 billion gallons of avail able storage to be used for losses and wastage. If all of the 0.35 bg could be used when needed and not wasted, it would provide an additional 20 days and combined with Cromby and Titus transfers, could provide the equivalent of 28.5 days of full power operation. The water quality of Still Creek Reservoir is very good throughout the pool. No major adverse water quality effects are expected due to drawdown of the reservoir. There does not appear to be any significant point sources of pollutants within the watershed that would be diluted less by the reduced pool volume. An aeration system is in constant use in the near-dam (deepest water) part of the pool. This system was installed to solve certain water quality problems associated with summer stratification and hypolimnetic deoxygenation. The aeration system assures that the subsurface waters are oxygenated, appears to prevent stratification, and promotes circulation of virtually the entire water mass in the lower half of the pool. It is likely that the upper part of the pool does not have seasonal stratification due to, among other things, its shallow depth. No bottom sediment-related problems have been encountered since installation of the aeration system and allevia tion of anoxic bottom water conditions. Still Creek dam is protected with stone riprap and the lower half of the reservoir has mostly a gravel rubble with sand shoreline. Periodic drawdowns have revealed no major erosion problems. However, the applicants will initi ate a water quality monitoring program if the drawdown becomes greater than 10 feet. The applicants have considered the impacts on the aquatic environ ment and determined no long-term or major impacts. An assessment of the conditions of the Still and Owl Creek Dams under expected drawdown conditions was performed by the applicants. This assess ment is based on available data including the Phase I Inspection Reports for each dam prepared by the Corps of Engineers, construct.ion drawings, and visual inspections in 1985. Based on available knowledge of the construction of Still Creek Dam and the upstream slope (I on 2.5), a drawdown at a rate not exceeding 0.3 foot per day appears satisfactory to enable the embankment to withstand drawdown conditions. A drawdown of 26 feet has been proposed as the maximum allowable drawdown due to releases for Limerick Unit. 1. The applicants claims a 26 foot drawdown to elevation 1,156 feet provides a remaining water supply to enable the Borough of Tamaqua to have an adequate water supply in the event of a number of years of drought conditions. if further drawdowns are necessary to meet Tamaqua's demands, the drawdown will be at a much lower rate and will not adversely affect embankment stability.

D-69-210 CP (Final)(Rev. 6) (Joint Applic.) 8 Due to the steep upstream slope of the Lower Owl Creek Dam (I on 2) and the fact that the embankment has been modified several times, the maximum drawdown of the Lower Owl Creek Reservoir will not exceed 10 feet at a rate not exceeding 1.0 foot per day. Due to the steep upstream slope of the Upper Owl Creek Dam (1 on 2) and the fact that the Phase I Inspection Report indi cated poor workmanship relating to the embankment, the maximum drawdown of the Upper Owl Creek Reservoir will not exceed 10 feet at a rate not exceed 0.5 foot per day. Drawdown of the Upper Owl Creek Reservoir is not expected to have any significant adverse effects on the water quality or biota for much the same reasons as discussed for Still Creek Reservoir. Both the Upper and Lower Owl Creek Reservoirs have been drawn down to the maximum allowable drawdown proposed due to PECO releases (10 feet) on a periodic basis with no adverse effects observed by Tamaqua officials. The water quality in the Owl Creek reservoirs and in Owl Creek is excellent. Pickerel, sunfishes, minnows, suckers, and bullhead are known to be present in both pools. The Beechwood Pool is a former strip mine and the application acknow ledges the water diverted from the pool would contain approximately 1708 mg/l of TDS. Accordingly, any diversion of the Beechwood Pool water into the Schuylkill River Basin would result in significantly higher TDS concentra tions in the receiving downstream waters and the application proposes to mitigate the high TDS water by making simultaneous releases of water contain ing very low TDS. While the concept appears simple, there are several problems with the proposed plan of operation. Impact on the West Branch Schuylkill River The water from Beechwood Pool will be pumped Into the West Branch of Schuylkill River more than 9 miles upstream from its confluence with the Little Schuylkill River. Accordingly, the West Branch of Schuylkill River, which already has high TDS during low flows due to mine drainage, would have significantly higher TDS when water is diverted from Beechwood Pool. Very limited low flow data is available for the West Branch Schuylkill River in the area near Beechwood Pool or at the proposed point of discharge. However, the Pennsylvania Department of Environmental Resources (PADER), using an areal relationship with a downstream gaging station at Cressona, has estimated the Q7-10 to be 2.7 cfs at the point of discharge. PADER has collected some TDS data on the West Branch at Cressona, which is 9.0 miles downstream. No simultaneous flow data was collected. Using data collected during July and August (29 values) as representing low flows, the TDS averaged 541 mg/l. Adding 7 cfs of water from Beechwood Pool would cause the TDS in the West Branch to increase more than 250 percent.

6) (Joint Applic.) 9 D-69-210 CP (Final)(Rev.

Section 3.10.3A.1.b. of DRBC's Basin Regulations - Water Quality as included in the Comprehensive Plan limits the increase of TDS in any stream to 133 percent of background. The applicant's proposed plan of operation would conflict with the Comprehensive Plan. Impact on downstream uses The applicant has stated that the proposed plan of operation will not cause the TDS concentration in the Schuylkill River at Pottstown to be any higher than it would be without the proposed plan of operation. (Ref. Table A, page 4 above and/or Table 2, page 5 of PECO's Response to Comments on Its Application for DO Measurements in Lieu of Temperature--Its use of Titus Cromby Allocations and use of Tamaqua and Beechwood Water). In the same table, the applicant has also computed the impact on TDS concentrations downstream of Limerick when Unit 1 is allowed to operate at these low flows. It should be noted that when just Tamaqua water has been released, there is essentially no change. However, in each operating mode where water would be pumped from Beechwood Pool, the TDS concentration downstream of Limerick would significantly increase above that which would occur under existing approvals. This would be a significant increase in concentration of TDS in the water available to all downstream Schuylkill River water users. Ability to operate plan as proposed The application recognizes some of the difficulties in operating facilities which are separated by more than 77 stream miles and in addition, must not cause stream quality degradation in areas which are more than 124 miles downstream of the requested controls. The proposed operating plan (Ref. page 3 above) states that releases will commence based on predicted conditions with a 3-day travel time allowance and states that releases will be made even though they may not be required. The plan does not recognize the travel time required to regulate the concentration of TDS at the critical locations downstream. Figure 24 on page 48 of a Pennsylvania report titled, "Water Resources of the Schuylkill River Basin," prepared cooperatively by the U. S. Department of Interior's Geologi cal Survey in 1968 indicates the travel time for a chemical constituent under various flow conditions. Unfortunately, the study began at Berne and the results must be extrapolated upstream almost 40 miles for Beechwood Pool and, therefore, must be considered an approximation. At flows of 520 cfs and 340 cfs at Pottstown, the travel times should be around 210 and 275 hours, respectively. Trying to extrapolate to a Q - 7 0 (250 cfs) indicates the travel time would probably be in excess of 300 hours. With these vary long times of travel for TDS control and only approxi mately 3 days travel time for a wave of flow, any operation plan that adequately protected against increased TDS or degradation at the existing users would waste more water than the quantity gained by the use of Beechwood Pool.

6) (joint Applic.) 10 D-69-210 CP (Final)(Rev.

the TDS Releases from Tamaqua reservoirs only will actually reduce not cause any levels that would otherwise occur upstream of Limerick and will have existed degradation of TDS downstream of Limerick from that which would Use of water from without Limerick Unit 1 and without the proposed releases. same impacts downstream of Limerick Tamaqua reservoir would have nearly the as using the approved diversion from the Delaware River. PADER, Bureau of Water Resources Management, has reviewed this applica curve for Still tion including all attachments and has developed an operating since, in an Creek Reservoir to protect Tamaqua's available water supply extended drought, Still Creek Reservoir, unlike the Owl Creek Reservoirs, was found not to refill each year. This curve, attached hereto and marked at Attachment No. 1, indicates when releases for downstream withdrawals supply of water for Limerick must be discontinued to insure an adequate public use in Tamaqua. This curve was developed by routing 1964, 1965 and Tamaqua public water 1966 hydrology through Still Creek Reservoir along with Creek. These demands alone pulled supply demands of 6.25 mgd from Still by 1.196 billion gallons over a 19-month period. Still Creek Reservoir down reflects Tamaqua's actual drawdown during the The shape of the curve 1965-1966 12-month critical period. A safety factor of approximately 800 the curve million gallons of storage (1/3 of total storage) was applied to maintenance of for contingencies including more severe drought conditions, unexpected problems aquatic life, possible additional siltation losses and experienced. The that could arise from low reservoir levels not previously some 120 million gallons higher than bottom part of the curve was found to be analysis which allows drawdowns of 26 the bottom part of the Gannett-Fleming gallons remaining before releases for feet to elevation 1156 with 790 million The higher 910 million gallon PADER proposed cutoff at PECO are cut off. full power elevation 1159 or 23 feet of drawdown only eliminates 6.9 days of during a 1960"s drought and, therefore, PADER feels operation of Limerick this additional protection is prudent. PADER also noted, and PECO confirmed at the April 15, 1986, hearing, that Limerick Unit 1 is planned to be shutdown from May 2 to June 15 while specific tests are conducted as required by the Nuclear Regulatory Commis sion. Beginning at the end of the six-week shutdown period and using the data collected during 1985 indicates that in a repeat of 1985 drought not conditions there could be a total of 80 days that Limerick Unit I could operate without alternate supplies of water for consumption. The combination of substituting 5.2 mgd of consumptive use from Cromby Tamaqua and Titus Stations with the release of up to one billion gallons from operation. If a plan of Reservoirs will provide in excess of 81 days of total 1.35 billion operation that minimizes wastage is implemented and the Unit 1, gallons is available for replacement of consumptive use at Limerick Unit 1 is gained without up to 109.5 days of full power operation by Limerick any use of Beechwood Pool. Accordingly, if unnecessary releases can be minimized, the use of Still Creek and Owl Creek Reservoirs in combination with the transfer from Cromby and Titus Stations will enable full operation of Limerick Unit 1 during 1986 unless a drought more severe than 1985 occurs in 1986.

D-69-210 CP (Final)(Rev. 6) (Joint Applic.) 1I Impact on Flood Flows Comments were noted at the April 15, 1986 hearing as to the need for an emergency flood warning plan for the South Pottstown area due to the reser voir releases. It is noted that the maximum release from the reservoir would be 28 cfs and the flood stage at Pottstown (stage when damage begins) is at gage height 13.0 feet or a flow of 25,350 cfs. In view of this low percent age of the total flow at Pottstown, there is no need to develop a flood warning plan as a result of the proposed releases. DECISION I. The Comprehensive Plan of the DRBC, as amended by Docket No. D-69-210 CP (Final) on November 5, 1975, and as temporarily revised by Docket No. D-69-210 CP (Final)(Revision 5) on April 26, 1986, is hereby further revised as follows: (1) For the period ending December 31, 1986, the provisions of Docket No. D-69-210 CP [attached and included as part thereof to D-69-210 CP (Final)] headed "FINDINGS," "Sources of Water supply," "I. Schuylkill River," is revised by the addition of a new paragraph "(d)" on page 5 which reads as follows:

                "(d) Water may be withdrawn for consumptive use at Limerick, regardless of all    above constraints except "(b),"

whenever that consumptive use has been replaced in equal volume by water released from Still Creek and/or Owl Creek Reservoirs." (2) For the period ending December 31, 1986, the following con ditions shall be added to the provisions of Docket No. D-69-210 CP (Final), "DECISION" on page 15, subheaded "II" and as temporarily amended by Docket D-69-210 CP (Final)(Revision

5) on April 29, 1986:

                "z. Releases from Still     Creek and Owl Creek Reservoirs will be regulated and controlled to prevent erosion in the reservoir or in the receiving streams downstream.        The applicant shall inspect all      areas for erosion each day releases are made, repair any erosion problems that occur and immediately take steps necessary to eliminate any recurrence of an erosion problem.
                "aa. The applicant shall monitor the dissolved oxygen content in the discharges prior to entering Still       and/or Owl Creeks and 200-300 yards downstream in Still       and/or Owl Creeks each day during periods of releases.        D.O. read ings shall be taken between 8 and 9 a.m.        The Executive Director may modify the D.O. monitoring program if monitoring results indicate a change is desirable.         The Executive Director may modify or suspend releases if evidence indicates that releases are causing D.0.

problems in the receiving waters.

D-69-210 CP (Final)(Rev. 6) (Joint Applic.) 12 "bb. There shall be no releases from Still Creek Reservoirs for consumptive use at Limerick Unit 1 whenever the water level in the reservoir pool is below the operating rule curve shown on "Attachment No. I." A plan of operation designed to minimize the unnecessary release of water but also recognizing the need to not cause further diminution of streamflow during low flow periods, must be submitted to and approved by the Executive Director prior to initi ation of releases.

               "cc. The applicants  shall maintain detailed accurate      records of reservoir releases.       PECO will notify DRBC each morn ing of any planned starting, stopping or changing in releases and provide the timing and the quantities involved.
                    "This information on releases together with the dissolved oxygen monitoring required above and a report on the erosion inspection required above shall be submitted weekly when releases have been made.        Also, the water elevation  in each  of Still    and Owl  Creek Reservoirs and the daily average, minimum and maximum flow at Pottstown shall be included in the weekly data report."

(3) The provisions set forth in paragraphs (1) and (2) above shall terminate on December 31, 1986, unless otherwise extended or directed by the Commission, and all provisions of Docket D-69-210 CP and Docket D-69-210 CP (Final) temporarily sus pended by this docket shall become operative in full force and effect. II. The above revisions of the Limerick Nuclear Generating Station project are approved pursuant to Section 3.8 of the Compact, subject to the conditions above. BY THE COMMISSION DATED: April 29, 1986

Sun so WE 191106#44 640"0.41 .,. . 10"If*46 , 11, 46 132206 T IHA14P F-, - I

• K '-I I I Tr war A- - .1

                  .1..

a.

                                                                                              *1            III
                                                                                                            'Ii I

Got I. I. I I, p , I a IA I 1% 'a. IA

                                                                   ..t.:iU.                                                                                  'a.

Ii I

                                     .
                                                                                                                                                      -1 A'
     ':                                                                                                                                           hi
                                                            .
                                                                                                                                                  'I          z
                                                                                                                                                  'I   0%      0 I'                                                                                                                             Qh I

• a

                                                                                                                    ... .. . . .

hi I..

                   * .
                                                       .              Ig i               :Ii ..!

II.... h II

i  !*

1:

I.:

                    *
                                       ..a
                                          .         *
                                                                  .

I; [ i Ii Iii 'I.

                     **
                          .4Iii  **'             I   I                  jII..I

• a I ii j* L I

 '-4 t                                                                                                                                                         I I   I

DOCKET NO. D-69-210 CP (Final)(Revision No. 5) DELAWARE RIVER BASIN COMMISSION Philadelphia Electric Company Limerick Electric Generating Station Limerick Township, Montgomery County, Pennsylvania PROCEEDINGS The Philadelphia Electric Company (PECO) applied, on December 16, 1985, for a temporary modification of Docket No. D-69-210 CP (Final). The appli was amended with a submission of supplemental information on cation January 22, 1986. The application was reviewed for temporary revision of the project in under Section the Comprehensive Plan and approval of these temporary changes Compact. A public hearing on this applica 3.8 of the Delaware River Basin tion by PECO was held by the DRBC on January 22, 1986. The hearing record remained open until 5:00 p.m. February 14, 1986. Twenty comments were received and entered into the hearing record on this application. DESCRIPTION Purpose.-The purpose of this application is to obtain temporary relief, through December 31, 1986, from two existing docket limitations and thereby increase the frequency that water may be withdrawn from the Schuylkill River for evaporation at Limerick Unit 1. The two existing limitations are: (1) PECO may not withdraw water from the Schuylkill River for gvaporative use at their Limerick Station when the temperature rises, above 59 F and (2) water for evaporative use may not be withdrawn from the Schuylkill River when the flow at Pottstown gage (not augmented by releases from Commission sponsored reservoir storage) falls below 530 cfs for one Limerick unit in operation. in They requested temporary substitution of dissolved oxygen (DO) monitoring place of temperature restriction in the original docket and they also requested the option of transferring the existing consumptive use of Schuyl kill. Basin waters from currently operating generating units on the Schuylkill River to the Limerick Unit 1 generating unit. This would allow the operation of the nuclear fueled unit in lieu of existing fossil fueled units when existing docket limitations would otherwise preclude consumptive use of the Schuylkill River water for the Limerick Generating Unit 1.

5) (PECO/DO/Temperature) 2 D-69-210 CP (Final)(Revison No.

Location.--Existilng intake facilities are located as follows: Intake River Mile Titus 92.47 - 71.15 Limerick 92.47 - 48.22 Cromby 92.47 - 39.1 200 feet Dissolved oxygen monitors have been installed approximately upstream of each of six dams and at the Limerick site. The six dams are located as follows: Fairmount Dam 92.47 - 8.49 Flat Rock Dam 92.47 - 15.6 Plymouth Dam 92.47 - 20.7 Norristown Dam 92.47 - 23.95 Black Rock Dam 92.47 - 36.6 Vincent Dam 92.47 - 44.7 Physical features dissolved

a. Design criteria.--The applicant proposes substitution of instantaneous oxygen limitations of a daily average of 5.1 mg/l and 4.2 mg/l in lieu of the current temperature limitation (59 F) in order to reduce the losses or number of days that PECO would be required to replace evaporative PECO has requested approval cut back the operation of the Limerick Unit 1.

River for consumptive use at Limerick to withdraw water from the Schuylkill DO values at five of the six designated whenever flow conditions are met and minimum stations exceed the 5.1 mg/I minimum daily average and the 4.2 mg/I instantaneous values. The applicant also proposes that when existing Schuylkill River above flow constraints [Ref. DRBC Docket No. "D-69-210 CP (Final)"] or the the consumptive use for Limerick Unit 1, requested DO constraints restrict Station of the Metro operation of Units 1, 2 and 3 at the Titus Generating of the politan Edison Company and Unit 2 at the Cromby Generating Station as necessary to allow the equiva Philadelphia Electric Company be curtailed lent consumptive use at the Limerick Generating Station. Docket No. D-74-32 (Revised), approved on October 8, 1980, acknowl would result edged that the addition of a cooling tower at the Titus Station in a maximum consumptive use of 3.5 mgd. The Cromby Generating Station was operating prior to the formation of the DRBC and the water use has not subsequently been substantially altered. Accordingly, there are no docket decisions establishing the con sumptive use at that station. However, in 1976, the DRBC issued a Certifi water that could cate of Entitlement to PECO establishing the quantities of to DRBC water use charges. be used at the Cromby Station and not be subject mg/month (2.9 mgd) for the The entitlement established a quantity of 88.401 Proportioning the total tonsumptive use between Unit 1 (150 Cromby Station. to 50.628 mg/month (1.7 mgd) is the mw) and Unit 2 (201 mw) indicates that up maximum consumptive use for Unit 2.

D-69-210 CP (Final)(Revison No. 5) (PECO/DO/Temperature) 3 Transferring the 3.5 mgd from Titus Units 1, 2 and 3 and 1.7 mgd from Cromby Unit 2 would provide up to 5.2 mgd for consumptive use at Limerick. This 5.2 mgd, if used for operation of Limerick Unit 1, would enable the Unit to generate power at levels up to approximately 25 percent of full power.

b. Facilities.--All existing facilities of the Limerick Electric Generating Project remain as approved by Dockets Nos. D-69-210 CP (Final) and D-69-210 CP (Final)(Revised). No new facilities are required at the existing Titus or Cromby generating stations. The DO monitors were installed as described in DRBC Docket No. D-69-210 CP (Final)(Revised), which was approved on May 29, 1985 and expired on December 31, 1985.

Cost.--There are no construction costs associated with the implementa tion of this project. Relationship to the Comprehensive Plan.--The applicant is requesting revision of the Limerick Generating Station Project as included in the Com prehensive Plan by Docket No. D-69-210 CP (Final). FINDINGS The Limerick Generating Station was included in the Comprehensive Plan by Docket decision No. D-69-210 CP (Final) on November 5, 1975, which also incorporated the project description and docket decision D-69-210 CP dated March 29, 1973. Docket No. D-69-210 CP (5/29/73) includes a section headed "FINDINGS" subheading "Source of Water Supply 1. Schuylkill River" which reads as follows:

     "Schuylkill River water at the plant site may be used for noncon sumptive use whenever the effluent discharged back to the river meets all applicable water quality standards.
     "Schuylkill River water at the plant may be used for consumptive use when flow (not including future augmentations of flow from Commission-sponsored projects) as measured at the Pottstown gage is in excess of 530 cfs (342 mgd) with one unit in operation and 560 cfs (362 mgd) with two units in operation with the following exceptions:
          "(a) There shall be no withdrawals when river water tempera tures below the Limerick station are above 150 C except during April, May and June when the flow as measured at the Pottstown gage is   in excess of 1791 cfs (1158  mgd).
           "(b) Use of the Schuylkill River will be limited to a with drawal that will result in an effluent that meets all applicable water quality standards.

I - D-69-210 CP (Final)(Revison No. 5) (PECO/DO/Temperature) 4 "The constraints on nonconsumptive use of Schuylkill River water are necessary to prevent violation of total dissolved solids, stream quality objectives and effluent quality requirements of the Commission-s water quality regulations. The constraint on con sumptive use of Schuylkill River water is to protect water quant ity and water quality below the Limerick Station. Both sets of constraints would be suspended in the event of any operational emergency requiring a shutdown of the plant." As part of the docket decision No. D-69-210 CP (Final)(Revised) para graph (a) above was revised for the period ending December 31, 1985, to read as follows:

         "(a) No withdrawals for consumptive use shall be made from the Schuylkill River or the natural flow of any of its tribu taries whenever dissolved oxygen in the Schuylkill River at or below Limerick as measured at any one or more of the monitoring locations:     (i) is less than 7.0 mg/l instantane ous during the period March 1 to June 15, or (ii)           is equal to or less than 5.1   mg/l   daily  average   or  equal  to   or less than 4.2  mg/l instantaneous     value  during   the  remainder   of the year."

Monitoring data collected between August 9 through November 30, 1985, shows that there were 31 more days that Schuylkill River water was available for consumption using the D.O. limitation in lieu of the existing temperature limit. If the D.O. limit had been in effect for all of 1985, the record indicates a gain of 58 days when Schuylkill River water would have been available for consumptive use at Limerick. PECO has requested that the proposed D.O. limits be met at five out of six monitoring points noting that individual monitoring sites may be impacted by localized conditions resulting from point source discharges. However, one of the purposes of the original 59 F temperature limita tion was to prohibit any further degradation of D.O. during low D.O. con ditions, by allowing depletion of streamflow via consumptive use at Limerick. Regardless of the cause of low D.O. at any one of the monitoring sites, depletion of streamflow by consumptive use at Limerick could aggrevate the D.O. problem. PECO has also requested that the proposed D.O. limits of 5.1 mg/l aver age and 4.2 mg/l instantaneous apply throughout the year and have stated that a more restrictive limit during the fish spawning season is overly conservative.

D-69-210 CP (Final)(Revison No. 5) (PECO/DO/Temperature) 5 In the previous temporary approval to substitute D.O. limits for tem perature during 1985, a limit of 7.0 mg/l from March 1 to June 15 was included in response to the recommendation of the Pennsylvania Fish Commis sion (PFC). In response to this pending application for 1986, the PFC, under date of January 17, 1986, requested that additional monitoring stations be required towards the head end of Plymouth, Norristown and Black Rock pools to monitor the D.O. and to use the limit of 7.0 mg/l as measured at those sites during the March 1 - June 15 period to keep those areas suitable for spawning of smallmouth bass. In a subsequent letter dated April 4, 1986, the PFC stated the D.O. limits in game fish spawning areas should be an average of 7.0 mg/l and a minimum of 6.0 mg/l. Approval of the portion of the application to transfer existing con sumptive use from Titus and Cromby to Limerick and allow the transferred consumptive use by Limerick Unit I to occur regardless of the existing docket constraints also requires revision of the project in the Comprehensive Plan and approval of those revisions under Section 3.8 of the Compact. The Titus Generating Station is two miles downstream from Reading, Pa. and approximately twenty-three miles upstream from the Limerick Generating Station. Accordingly, any cutbacks in the consumptive use at Titus and transfer for consumptive use at Limerick will increase the quantity of streamflow in the Schuylkill River from Titus to Limerick. The flow increase for the twenty-three mile segment would be a maximum of 3.5 mgd (5.4 cfs). Cromby Generating Station is located approximately nine miles below the Limerick facilities and conversely, the cutback in consumptive use at Cromby and transfer for consumptive use at Limerick will decrease the quantity of streamflow in the Schuylkill River from Limerick to Cromby. The decrease in streamflow could be a maximum of 1.7 mgd (2.6 cfs). This represents approxi mately one percent of the Q7- 1 0 flow for that section of the Schuylkill River. Below Cromby there would be no change in the flow regime caused by the proposed transfer. The transfer of the location of the consumptive use from Titus to Limerick will result in a slight lowering of total dissolved solids level in the Schuylkill River between Titus and Limerick. At a flow of 360 cfs and with the Titus units operating, the TDS level averages about 375 mg/l and calculations indicate that if the three units were shut down, the TDS should drop to 370 mg/l. At Limerick, when operating with a consumptive use of 5.2 mgd, the TDS would increase from 370 mg/i to 378 mg/i and below Cromby there should be no change in TDS resulting from the proposed transfer. Titus Units 1, 2, and 3 are coal fired, having an electric generating capacity of 234 mw and Cromby Unit 2 is oil fired and has an electric gener ating capacity of 201 mw. If the three Titus units and Cromby Unit 2 are all shut down and Limerick Unit 1-s generating capacity is limited to the trans ferred consumptive use (250 mw), there will be a net reduction of generating capacity of 185 mw. The applicant has indicated this loss of generating capacity, if needed, will be replaced with power generated with no additional consumption of Delaware Basin water.

D-69-210 CP (Final)(Revison No. 5) (PECO/DO/Temperature) 6 The net effect on fuel and interchange costs resulting from the proposed transfer range from a savings of $3.5 million/month to an additional cost of 0.7 million/month. The savings would occur if the 185 mw could be purchased from economical units outside the Delaware River Basin. The additional cost was computed assuming a 10 percent reduction in consumptive use was in effect and the 185 mw were generated within the Delaware Basin by gas turbines. The PJM (Pennsylvania, New Jersey and Maryland) Interconnection system has reviewed the PJM load and capacity situation for 1986 summer peak load conditions and considered the reduction of 185 mw in PJM generating capacity and concluded that the temporary loss of capacity associated with this appli cation will not cause the PJM system to be short of capacity to meet the demand. Additionally, if needed, PECO has agreed that in the event of a PJM shortage, they would curtail Limerick and allow Titus and Cromby to resume operation as needed to meet demands. DECISION I. The Comprehensive Plan of the DRBC as amended by Docket No. D-69-210 CP (Final) on November 5, 1975, is hereby revised as follows: (1) For the period ending December 31, 1986, the provisions of Docket No. D-69-210 CP, [attached and included as part thereof to D-69-210 CP (Final)] headed "FINDINGS," "Sources of Water S ," "I. Schuylkill River" paragraph "(a)" on page 5 are temporarily suspended, and in place thereof the following provision is substituted:

                  "(a) No withdrawals for consumptive use shall be made from the Schuylkill River or the natural flow of any of its              tribu taries     whenever   dissolved   oxygen  (i)  is  less  than 7.0 mg/l daily average or 6.0 mg/l instantaneous during the period March 1 to June 15 at any one of the monitoring sites    in riffle    spawning areas located below Limerick approved by the Executive Director in consultation with the Pennsylvania Fish Commission (PFC) or (ii)             is equal to or less than 5.1 mg/l daily average or equal to or less than 4.2 mg/l instantaneous value at any of the six exisiting monitoring stations temporarily approved by DRBC Docket No. D-69-210 CP (Final)(Revised).

(2) For the period ending December 31, 1986, the provisions of Docket No. D-69-210 CP, [attached and included as part thereof to D-69-210 CP (Final)] headed "FINDINGS," "Source of Water s y," "l. Schuylkill River" is further revised by the addition of a new paragraph "(c)" on page 5 which reads as follows:

D-69-210 CP (Final)(Revison.No. 5) (PECO/DO/Temperature)

              "(c) Water may be withdrawn for consumptive use at Limerick whenever the consumptive use at Titus Generating Station or the Cromby Generating Station has been curtailed. The consumptive use at Limerick shall not exceed the volume equal to a quantity saved by the curtailment of generat ing units at Titus and/or Cromby generating stations.

The maximum quantity that can be considered saved in this process is 3.5 mgd at Titus and 1.7 mgd at Cromby." (3) For the period ending December 31, 1986, the following condi tions shall be added to the provisions of Docket No. D-69-210 CP (Final), "DECISION" on page 15, subheaded '"II.":

              "o. Accurate dissolved oxygen measurements shall be taken at all sites designated by the Executive Director in consultation with the PFC from March 1 to June 15.
              "p. Detailed plans of the location of each new dissolved oxygen monitoring site shall be submitted to and approved by the Executive Director and the PFC.
              "q. The calibration, maintenance and operation of all dis solved oxygen monitors and any interim manual measure ments of dissolved oxygen shall be under the supervision and control of the U.S. Geological Survey.
              "r. Weekly records of all dissolved oxygen monitoring shall be submitted to the Commission in writing within three working days, together with a log of power plant opera tions and consumptive water use. Such information shall be a matter of public record.
              "s. PECO shall immediately notify the Commission whenever dissolved oxygen levels at any monitoring station trigger the criteria set forth in this docket, and advise the Commission of all alternative steps taken.
              "t. Philadelphia Electric Company shall maintain accurate records of all water withdrawals and discharges at the Limerick generating plant. The time of any change in the rate of water withdrawal must be recorded. PECO shall maintain records of water withdrawals at the Cromby generating station. The time of any change in the rate of withdrawal due to a change in the operation of Unit 2 shall be recorded.

D-69-210 CP (Final)(Revison No. 5) (PECO/DO/Temperature) 8 "u. PECO shall arrange for Metropolitan Edison Company to maintain accurate records of all water withdrawals at the Titus generating station. The time of any change in the rate of water withdrawal due to a change in the operation of Units 1, 2 and 3 shall be recorded. This information shall be submitted to PECO and a copy to DRBC each time there is a change in the operation of Units 1, 2 and 3.

                 "v. PECO will compile the information recorded for the Limerick and Cromby plants together with the information supplied by Metropolitan Edison Company for the Titus plant, into a format that clearly demonstrates compliance with the operating requirements of this docket.
                 "w. Water may not be withdrawn for use at Limerick in lieu of operating Titus Units 1, 2 and 3 unless Titus Units 1, 2 and 3 have not operated for the previous 10 hours.
                 "x. Water may not be withdrawn for use at Limerick in lieu of operating Cromby Unit 2 unless Cromby Unit 2 is reduced within 5 hours of the use of the transferred water at Limerick.
                 "y. PECO will notify DRBC staff by telephone each time there is a change in the operation of Titus Units 1, 2 and 3 and/or Cromby Unit 2 operations as a result of the condi tions imposed by this   docket. The notification shall be in advance or at the time of the change.       In addition, PECO will submit to DRBC a copy of all     recorded informa tion once each week.

If, at any time, the Executive Director determines that the proposed project is not operating as planned or is causing substantial impacts on the water resources of the Basin, he may cancel or suspend this approval and all operation thereunder shall terminate until subsequent action by the Commission." (4) The provisions set forth in paragraphs (1), (2) and (3) above shall terminate on December 31, 1986, unless otherwise extended or directed by the Commission, and all provisions of Docket No. D-69-210 CP temporarily suspended by this docket shall become operative in full force and effect. II. The above revisions of the Limerick Nuclear Generating Station project are approved pursuant to Section 3.8 of the Compact, subject to the conditions listed above. BY THE COMMISSION DATED: April 29, 1986

DOCKET NO. D-69-210 CP (Final)(Revision No. 4) DELAWARE RIVER BASIN COMMISSION Philadelphia Electric Company Limerick Electric Generating Station Limerick Township, Montgomery County, Pennsylvania PROCEEDINGS The Philadelphia Electric Company (PECO) applied, on September 20, 1985, for an additional temporary modification of Docket D-69-210 CP (Final). The application was reviewed for temporary revision of the project in the Comprehensive Plan and approval of these temporary changes under Section 3.8 of the Delaware River Basin Compact. A public hearing on this applica tion by PECO was held by the Delaware River Basin Commission (DRBC) on October 29, 1985. DESCRIPTION Purpose.- The purpose of this application is to request a temporary, through December 31, 1985, reduction in the Schuylkill River flow limitation included in Docket D-69-210 CP (Final). A reduction in the flow limitation will increase the time that Limerick Unit No. I could operate and thereby increase the opportunity to complete the required testing program when exist ing docket limitations would otherwise preclude the consumptive use of Schuylkill River water. Location.- No changes are proposed in the location of any facilities associated with this application. Physical features

a. Design criteria.- The applicant proposes that the existing limit, which prohibits the consumptive use of the Schuylkill River water whenever the flow at the Pottstown gauge is less than 530 cfs when one generating unit is operating, be lowered, on a temporary basis, to 415 cfs. If below-normal precipitation in the Schuylkill Basin continues, this temporary revision of the flow limitation will significantly increase the time that Limerick Unit 1 can operate in accordance with the planned test program. With near normal weather conditions, the flow should exceed the 530 cfs limit and utilization of this temporary change would not be needed.

D-69-210 CP (F)(R4) PECO 2 2

b. Facilities.-- All existing facilities of the Limerick Electric Generating Project remain as approved by Dockets D-69-210 CP (Final) and D-69-210 CP (Final)(Revised). No new facilities are proposed by the applicant.

Relationship to the Comprehensive Plan.- The applicant is requesting temporary revision of the Limerick Generating Station Project as included in the Comprehensive Plan by Docket D-69-210 CP (Final) and as revised by Dockets D-69-210 CP (Final)(Revised) and D-69-210 CP (Final)(Revision No. 2). FINDINGS The Limerick Generating Station was included in the Comprehensive Plan by Docket decision D-69-210 CP (Final) on November 5, 1975, which also incor porated the project description and docket decision D-69-210 CP dated March 29, 1973. Docket D-69-210 CP (5/29/73) includes a section headed "FINDINGS" subheading "Source of Water Supply 1. Schuylkill River" which reads as follows:

     "Schuylkill River water at the plant site may be used for noncon sumptive use whenever the effluent discharged back to the river meets all applicable water quality standards.
     "Schuylkill River water at the plant may be used for consumptive use when flow (not including future augmentations of flow from Commission-sponsored projects) as measured at the Pottstown gage is in excess of 530 cfs (342 mgd) with one unit in operation and 560 cfs (362 mgd) with two units in operation with the following exceptions:
           "(a) There shall be no withdrawals when river water tempera tures below the Limerick station are above 150 C except during April, May and June when the flow as measured at the Pottstown gage is in excess of 1791 cfs (1158 mgd).
           "(b) Use of the Schuylkill River will be limited to a with drawal that will result in an effluent that meets all applicable water quality standards.
     "The constraints on nonconsumptive use of Schuylkill River water are necessary to prevent violation of total dissolved solids, stream quality objectives and effluent quality requirements of the Commission's water quality regulations.       The constraint on consumptive use of Schuylkill River water      is to protect water quantity and water quality below the Limerick Station.        Both sets of constraints would be suspended in the event of any operational emergency requiring a shutdown of the plant."

D-69-210 CP (F)(R4) PEC0 3 As part of the docket decision D-69-210 CP (Final)(Revised) paragraph (a) above was revised for the period ending December 31, 1985, to read as follows:

    "(a) No withdrawals for consumptive use shall be made from the Schuylkill River or the natural flow of any of its tribu taries whenever dissolved oxygen in the Schuylkill River at or below Limerick as measured at any one or more of the monitoring locations: (i) is less than 7.0 mg/l instantane ous during the period March 1 to June 15, or (ii)    is equal to or less than 5.1 mg/l daily average or equal to or less than 4.2 mg/l instantaneous value during the remainder of the year."

Docket decision D-69-210 CP (Final) was further revised by docket decision D-69-210 CP (Final)(Revision No. 2) which (in part) added a new paragraph "(c)" to follow (a) and (b) above. The inserted paragraph "(c)" reads as follows:

     "(c) Water may be withdrawn for consumptive use at Limerick whenever the consumptive use at Titus Generating Station or the Cromby Generating Station has been curtailed.      The consumptive  use  at Limerick shall not exceed  the volume equal to a quantity saved by the curtailment of generating units at Titus and/or Cromby generating stations.      The maximum quantity that can be considered saved in this process is 3.5 mgd at Titus and 1.7 mgd at Cromby."

Approval of this application to temporarily lower the minimum pass-by flow requirement would permit continued full power testing of Limerick Unit I Generating facility on more low flow days than would be allowed by the existing flow limitations. The flow limitations were included in the original docket approval to prevent any diminution of Schuylkill River flow during low flow periods when the availability of water for water supply and for maintenance of stream quality would be a concern. The docket D-69-210 CP (Final) also considered the impact of the proposed operation on total dissolved solids and concluded the following. (Ref. D-69-210 CP (Final) Sheet 4, "b. Cooling tower blowdown.")

     "Consumptive evaporative losses of water in the cooling towers will require average blowdown of 13.0 mgd. Because the dissolved solids content of Schuylkill River water is considerably higher than that which would be drawn from the Perkiomen Creek, the maximum increase in dissolved solids content is expected to occur as a result of blowdown discharges to the Schuylkill when 100 percent of make-up water is drawn from the stream. This increase in concentration is expected to average about 11.6 percent just below the blowoff discharge pipe or 50 mg/l (430 mg/l to 480 mg/l)."f

4 , D-69-210 CP (F)(R4) PECO Accordingly, with only one unit operating, that docket decision recognized the maximum total dissolved solids (TDS) that would be expected in the Schuylkill River after mixing with the blowdown discharge would be 455 mg/l. PECO has collected more recent TDS data. If these data are accepted as representative of present conditions, the maximum concentrations likely to occur under various low flow conditions are less than the values previously considered by DRBC staff. Assuming there may have been some recent improve ment in the background TDS levels in the Schuylkill River, this could allow the use of lower values for the maximum concentrations of TDS likely to occur at various flows. Limerick Unit 1, under such circumstances, could operate at flows below the 530 cfs limit on a temporary basis without causing con centrations of TDS to exceed the 455 mg/l, which was recognized in a previous approval. Using the lower values for the maximum concentrations of TDS likely to occur at various low flows and assuming Limerick Unit 1 would operate and evaporate up to 27 cfs with a concentration factor of 3.4 of TDS in the blowdown, it is reasonable that Limerick Unit V could operate at flows down to 415 cfs at the Pottstown gauge, without exceeding the 455 mg/l of TDS, after river mixing of the blowdown discharge from Limerick Unit 1. Prohibit ing Limerick from operating, if the background TDS in the Schuylkill River is above 425 mg/l at the Pottstown gauge, should prevent the TDS from exceeding the 455 mg/l as a result of the blowdown from Limerick Unit 1 operation. The DRBC water quality standard limiting increased TDS levels to no more than 133 percent above background would not be violated as a result of the opera tion of Limerick Unit I in accordance with this proposed application. The Pennsylvania Department of Environmental Resources (PADER) primary drinking water standard of 500 ppm for TDS would not be violated. Preserving the low flow for downstream water supply users is not as critical during the period proposed in this application. Information developed by staff indicates that the depletive water use in the Schuylkill Basin is a maximum during the month of July and is reduced by approximately 35 percent in October, 45 percent in November and 48 percent in December. Accordingly, allowing a 22 percent reduction in the pass-by flow limit for the fall and early winter would not be critical. Preserving low flows for the benefit of stream quality is most important during the hot.summer months. Stream temperatures during October, November and December are always well below the critical July-August period and Docket D-69-210 CP (Final)(Revised) requires the shutdown of Limerick Unit 1 if the dissolved oxygen levels drop below specified limits. Accordingly, reducing the pass-by low flow limitation would not degrade the water quality of the Schuylkill from that recognized in previous approvals.

D-69-210 CP (F)(R4) PECO 5 Fish spawning and habitat are not as critical in the cooler fall and early winter months as they are during the late spring and summer. The proposed trigger flow of 415 cfs is about 23 percent of the average daily flow and ranks between "good streams" and "excellent streams" as derived from the Pennsylvania Fish Commission and the U. S. Fish and Wildlife Service methodologies. In summary, the temporary modification of the pass-by flow limit from 530 cfs to 415 cfs should not cause any elevation in the maximum TDS levels considered in previous actions by DRBC, even though downstream water users will be temporarily subjected to higher TDS levels from the Schuylkill River as a result of PECO-s operations without the availability of Delaware River water. Use by PECO of water from the Delaware River via the partially completed Point Pleasant Pumping Station and Bradshaw Reservoir has been temporarily prevented based upon actions by other parties seeking to prevent construction of that project. PECO claims that delays in proceeding with-the power ascension program above 25 percent will delay commercial operation of the Unit and increase costs of Unit No. 1 by $35 million per month, with an increase in customer fuel cost of $10 million for each month of delay. DECISION I. The Comprehensive Plan of the DRBC as amended by Docket D-69-210 CP (Final) on November 5, 1975, and as subsequently revised by Docket D-69-210 CP (Final)(Revised) on May 29, 1985, and D-69-210 CP (Final)(Revision No. 2), is hereby further revised as follows: (1) For the period ending December 31, 1985, the provisions of Docket D-69-210 CP, [attached and included as part thereof to D-69-210 CP (Final)] headed "FINDINGS," "Source of Water Supply," "I. Schuylkill River" is further revised by the addition of a new paragraph "(d)" on page 5 which reads as follows:

               "(d) Water may be withdrawn for consumptive use at Limerick for the testing of Unit I up to a rate of 27 cfs provided that (i) the flow (not including DRBC-directed releases from upstream reservoirs) as measured at the Pottstown gauge is in excess of 415 cfs (268 mgd), (ii)    the concen tration  of TDS at the Pottstown gauge does not  exceed 425 mg/l. (iii) the instantaneous concentration of TDS at the intake of Citizens Utilities Home Water Company does not exceed 455 mg/l, and (iv) the provisions of paragraphs (a) as revised by docket D-69-210 CP (Final)(Revised) and (b) are met."

D-69-210 CP (F)(R4) PECO 6 (2) For the period ending December 31, 1985, the following condi tions shall be added to the provisions of Docket D-69-210 CP (Final), "DECISION" on page 15, subheaded "II.," as amended by Docket D-69-210 CP (Final)(Revised) and D-69-210 CP (Final)(Revision No. 2).

               "z. PECO shall install accurate recording TDS monitors at the Pottstown gauge, at the intake of Citizens Utilities Home Water Company, and at the U.S.G.S. dissolved oxygen monitor sites located at the Fairmont, Flat Rock, Black Rock, Plymouth, Vincent, and Norristown pools.      The equipment specifications  and monitoring   protocol  for such TDS monitors shall be submitted to the Executive Director for approval prior to installation. The installation, calibration, maintenance, and operation of the TDS monitors and any interim manual measurements of TDS shall be under the supervision and control of the U. S.

Geological Survey (U.S.G.S.).

               "aa. Weekly records of all TDS m6nitoring shall be submitted to the Commission in writing within three working days, together with a log of power plant operations and con sumptive water use. Such information shall be a matter of public record.
               "bb. PECO shall immediately notify the Commission whenever the TDS level at the Pottstown monitoring station exceeds 425 mg/l, or the TDS level at the intake of Citizens Utilities Home Water Company exceeds 455 mg/l, and advise the Commission of steps taken to curtail power plant operations.
               "cc. The U.S.G.S. will provide access to both the DRBC and Pennsylvania Department of Environmental Resources at any time to all "near real time" data on all dissolved oxygen and specific conductance/TDS monitoring sites on the Schuylkill River, and will publish annually the daily minimum, maximum and mean values of dissolved oxygen and specific conductance/TDS at such sites."

(3) The provisions set forth in paragraphs (1) and (2) above shall terminate on December 31, 1985, unless otherwise extended or directed by the Commission, and all prior provisions of Docket D-69-210 CP temporarily revised by this docket shall become operative in full force and effect. II. The above revisions of the Limerick Nuclear Generating Station project are approved pursuant to Section 3.8 of the Compact, subject to the conditions listed above. BY THE COMMISSION DATED: October 30, 1985

DOCKET NO. D-69-210 CP (Final) (Revision No. 2) DELAWARE RIVER BASIN COMMISSION Philadelphia Electric Company Limerick Electric Generating Station Limerick Township, Montgomery County, Pennsylvania PROCEEDINGS The Philadelphia Electric Company (PECO) applied, on May 30, 1985, for an additional temporary modification of Docket D-69-210 CP (Final). The application was amended with a submission of supplemental information on July 9, 1985. The application was reviewed for temporary revision of the project in the Comprehensive Plan and approval of these temporary changes under Section 3.8 of the Delaware River Basin Compact. A public hearing on this applica tion by PECO was held by the Delaware River Basin Commission (DRBC) on July 3, 1985. The hearing record remained open until 5:00 p.m. July 13, 1985. Nine comments were received and entered into the hearing record on this application. DESCRIPTION Purpose.- The purpose of this application is to request approval for the transfer, through December 31, 1985, of the existing consumptive use of basin waters from currently operating generating units on the Schuylkill River to the new Limerick Unit No. 1 generating unit and thereby allow the operational testing of Limerick Unit No. 1 when existing docket limitations would otherwise preclude the consumptive use of the Schuylkill River water for the Limerick Generating Unit 1. Location.- No changes are proposed in the location of any facilities associated with this application. Existing intake facilities are located as follows: Intake River Mile Titus 92.47 - 71.15 Limerick 92.47 - 48.22 Cromby 92.47 - 39.1

D-69-210 CP (Final)(R. 2) PECO 2 Physical features

a. Design criteria.- The applicant proposes that when existing Schuylkill River flow constraints [Ref. DRBC Docket "D-69-210 CP (Final)"] or dissolved oxygen limitations [Ref. DRBC Docket "D-69-210 CP (Final)

(Revised)"] restrict the consumptive use for Limerick Unit 1, operation of Units 1, 2 and 3 at the Titus Generating Station of the Metropolitan Edison Company and Unit 2 at the Cromby Generating Station of the Philadelphia Electric Company will be curtailed as necessary to allow the equivalent consumptive use at the Limerick Generating Station. The operation of all units will be coordinated and the total con sumptive use will not exceed the consumptive use that is currently available for the existing operating units. Docket D-74-32 (Revised), approved on October 8, 1980, acknowledged that the addition of a cooling tower at the Titus Station would result in a maximum consumptive use of 3.5 mgd. The Cromby Generating Station was operating prior to the formation of the DRBC and the water use has not subsequently been substantially altered. Accordingly, there are no docket decisions establishing the con sumptive use at that station. However, in 1976, the DRBC issued a Certifi cate of Entitlement to PECO establishing the quantities of water that could be used at the Cromby Station and not be subject to DRBC water use charges. The entitlement established a quantity of 88.401 mg/month (2.9 mgd) for the Cromby Station. Proportioning the total consumptive use between Unit I (150 mw) and Unit 2 (201 mw) indicates that up to 50.628 mg/month (1.7 mgd) is the maximum consumptive use for Unit 2. Transferring the 3.5 mgd from Titus Units 1, 2 and 3 and 1.7 mgd from Cromby Unit 2 would provide up to 5.2 mgd for consumptive use at Limerick. This 5.2 mgd, if used for operation of Limerick Unit 1, would enable the Unit to generate power at levels up to approximately 25 percent of full power, would enable the first four weeks of the planned testing to be completed without a curtailment due to water availability and would assure water availability to operate at a base capacity through the remainder of 1985. The plan of operation is to schedule the test and operating program for Limerick Unit No. 1 for three days in advance, updating the program each day and directing the curtailment of Titus Units 1, 2 and 3 and Cromby Unit 2 as needed.

b. Facilities.- All existing facilities of the Limerick Electric Generating Project remain as approved by Dockets D-69-210 CP (Final) and D-69-210 CP (Final)(Revised). No new facilities are required at the existing Titus or Cromby generating stations either.

D-69-210 CP (Final)(R. 2) PECO 3 Relationship to the Comprehensive Plan.- The applicant is requesting revision of the Limerick Generating Station Project as included in the Com prehensive Plan by Docket D-69-210 CP (Final) and as revised by Docket D-69-210 CP (Final)(Revised). FINDINGS The Limerick Generating Station was included in the Comprehensive Plan by Docket decision D-69-210 CP (Final) on November 5, 1975, which also incor porated the project description and docket decision D-69-210 CP dated March 29, 1973.* Docket D-69-210 CP (5/29/73) includes a section headed "FINDINGS" subheading "Source of Water Supply 1. Schuylkill River" which reads as follows:

    "Schuylkill River water at the plant site may be used for noncon sumptive use whenever the effluent discharged back to the river meets all applicable water quality standards.
    "Schuylkill River water at the plant may be used for consumptive use when flow (not including future augmentations of flow from Commission-sponsored projects) as measured at the Pottstown gage is in excess of 530 cfs (342 mgd) with one unit in operation and 560 cfs (362 mgd) with two units in operation with the following exceptions:
          "(a) There shall be no withdrawals when river water tempera tures below the Limerick station are above 150 C except during April, May and June when the flow as measured at the Pottstown gage is in excess of 1791 cfs (1158 mgd).
          "(b) Use of the Schuylkill River will be limited to a with drawal that will result in an effluent that meets all applicable water quality standards.
    "The constraints on nonconsumptive use of Schuylkill River water are necessary to prevent violation of total dissolved solids, stream quality objectives and effluent quality requirements of the Commission's water quality regulations. The constraint on consumptive use of Schuylkill River water is to protect water quantity and water quality below the Limerick Station. Both sets of constraints would be suspended in the event of any operational emergency requiring a shutdown of the plant."

D-69-210 CP (Final)(R. 2) PECO 4 As part of the docket decision D-69-210 CP (Final)(Revised) paragraph (a) above was revised for the period ending December 31, 1985, to read as follows:

     "(a)  No withdrawals for consumptive use shall be made from the Schuylkill River or the natural flow of any of its tribu taries whenever dissolved oxygen in the Schuylkill River at or below Limerick as measured at any one or more of the monitoring locations:    (i) is less than 7.0 mg/l instantane ous during the period March 1 to June 15, or (ii)   is equal to or less than 5.1 mg/l daily average or equal to or less than 4.2 mg/l instantaneous value during the remainder of the year."

Approval of this application to transfer existing consumptive use from Titus and Cromby to Limerick and allow the transferred consumptive use by Limerick Unit 1 to occur regardless of the above-cited constraints requires revision of the project in the Comprehensive Plan and approval of those revisions under Section 3.8 of the Compact. The Titus Generating Station is two miles downstream from Reading, Pa. and approximately twenty-three miles upstream from the Limerick Generating Station. Accordingly, any cutbacks in the consumptive use at Titus and transfer for consumptive use at Limerick will increase the quantity of streamflow in the Schuylkill River from Titus to Limerick. The flow increase for the twenty-three mile segment would be a maximum of 3.5 mgd (5.4 cfs). Cromby Generating Station is located approximately nine miles below the Limerick facilities and conversely, the cutback in consumptive use at Cromby and transfer for consumptive use at Limerick will decrease the quantity of streamflow in the Schuylkill River from Limerick to Cromby. The decrease in streamflow could be a maximum of 1.7 mgd (2.6 cfs). This represents approxi mately one percent of the Q7-10 for that section of the Schuylkill River. Below Cromby there would be no change in the flow regime caused by the pro posed transfer. The *transfer of the location of the consumptive use from Titus to Limerick will result in a slight lowering of total dissolved solids level in the Schuylkill River between Titus and Limerick. At a flow of 360 cfs and with the Titus units operating, the TDS level averages about 375 mg/l and calculations indicate that if the three units were shut down, the TDS should drop to 370 mg/l. At Limerick, when operating with a-consumptive use of 5.2 mgd, the TDS would increase from 370 mg/l to 378 mg/l and below Cromby there should be no change in TDS resulting from the proposed transfer.

D-69-210 CP (Final)(R. 2) PECO 5 Titus Units 1, 2, and 3 are coal fired, having an electric generating capacity of 234 mw and Cromby Unit 2 is oil fired and has an electric gener ating capacity of 201 mw. If the three Titus units and Cromby Unit 2 are all shut down and Limerick Unit 1's generating capacity is limited to the trans ferred consumptive use (250 mw) there will be a net reduction of generating capacity of 185 mw. The applicant has indicated this loss of generating capacity, if needed, will be replaced with power generated with no additional consumption of Delaware Basin water. The net effect on fuel and interchange costs resulting from the proposed transfer range from a savings of $3.5 million/month to an additional cost of 0.7 million/month. The savings would occur if the 185 mw could be purchased from economical units outside the Delaware River Basin. The additional cost was computed assuming a 10 percent reduction in consumptive use was in effect and the 185 mw were generated within the Delaware Basin by gas turbines. The PJM (Pennsylvania, New Jersey and Maryland) Interconnection system has reviewed the PJM load and capacity situation for 1985 summer peak load conditions and considered the reduction of 185 mw in PJM generating capacity and concluded that the temporary loss of capacity associated with this appli cation will not cause the PJM system to be short of capacity to meet the demand. Additionally, if needed, PECO has agreed that in the event of a PJM shortage, they would curtail Limerick and allow Titus and Cromby to resume operation as needed to meet demands. DECISION I. The Comprehensive Plan of the DRBC as amended by Docket D-69-210 CP (Final) on November 5, 1975, and as subsequently revised by Docket D-69-210 CP (Final)(Revised) on May 29, 1985, is hereby further revised as follows: (1) For the period ending December 31, 1985, the provisions of Docket D-69-210 CP, [attached and included as part thereof to D-69-210 CP (Final)] headed "FINDINGS," "Source of Water Supply," "I. Schuylkill River" is further revised by the addition of a new paragraph "(c)" on page 5 which reads as follows:

               "(c) Water may be withdrawn for consumptive use at Limerick whenever the consumptive use at Titus Generating Station or the Cromby Generating Station has been curtailed. The consumptive use at Limerick shall not exceed the volume equal to a quantity saved by the curtailment of generat ing units at Titus and/or Cromby generating stations.

The maximum quantity that can be considered saved in this process is 3.5 mgd at Titus and 1.7 mgd at Cromby."

D-69-210 CP (Final)(R. 2) PECO 6 (2) For the period ending December 31, 1985, the following condi tions shall be added to the provisions of Docket D-69-210 CP (Final), "DECISION" on page 15, subheaded "II." as amended by Docket D-69-210 CP (Final)(Revised).

              "t. Philadelphia Electric Company shall maintain accurate records of all water withdrawals and discharges at the Limerick generating plant. The time of any change in the rate of water withdrawal must be recorded. PECO shall maintain records of water withdrawals at the Cromby generating station. The time of any change in the rate of withdrawal due to a change in the operation of Unit No. 2 shall be recorded.
              "u. PECO shall arrange for Metropolitan Edison Company to maintain accurate records of all water withdrawals at the Titus generating station. The time of any change in the rate of water withdrawal due to a change in the operation of Units 1, 2 and 3 shall be recorded. This information shall be submitted to PECO and a copy to DRBC each time there is a change in the operation of Units 1, 2 and 3.
              "v. PECO will compile the information recorded for the Limerick and Cromby plants together with the information supplied by Metropolitan Edison Company for the Titus plant, into a format that clearly demonstrates compliance with the operating requirements of this docket.
              "w. Water may not be withdrawn for use at Limerick in lieu of operating Titus Units 1, 2 and 3 unless Titus Units 1, 2 and 3 have not operated for the previous 10 hours.
              "x. Water may not be withdrawn for use at Limerick in lieu of operating Cromby Unit 2 unless Cromby Unit 2 is reduced within 5 hours of the use of the transferred water at Limerick.
              "y. PECO will notify DRBC staff by telephone each time there is a change in the operation of Titus Units 1, 2 and 3 and/or Cromby Unit 2 operations as a result of the con ditions imposed by this docket. The notification shall be in advance or at the time of the change. In addition, PECO will submit to DRBC a copy of all recorded informa tion once each week.

If, at any time, the Executive Director determines that the proposed project is not operating as planned or is causing substantial impacts on the water resources of the Basin, he may cancel or suspend this approval and all operation thereunder shall terminate until subsequent action by the Commission.4

D-69-210 CP (Final)(R. 2) PECO 7 (3) The provisions set forth in paragraphs (1) and (2) above shall terminate on December 31, 1985, unless otherwise extended or directed by the Commission, and all prior provisions of Docket D-69-210 CP temporarily suspended by this docket shall become operative in full force and effect. II. The above revisions of the Limerick Nuclear Generating Station project are approved pursuant to Section 3.8 of the Compact, subject to the conditions listed above. BY THE COMMISSION DATED: August 9, 1985

NO. 88-5 A RESOLUTION to extend the following Commission Dockets relating to the operation of the Limerick Electric Generating Station by the Philadelphia Electric Company: Docket No. D-69-210 CP (FINAL)(Revision No. 5) Docket No. D-69-210 CP (FINAL)(Revision No. 6). WHEREAS, use of the surface waters of the Delaware Basin for operation of the Limerick Generating Station (LGS) was approved pursuant to Section 3.8 of the Compact on November 5, 1975; and WHEREAS, the Commission's original approval permitted the use of water transferred from the Delaware River whenever restrictions prevented the use of the Schuylkill River for consumptive use; and WHEREAS, court proceedings have delayed the construction of facilities needed to transfer Delaware River water to Limerick and such facilities will not be operational during 1988; and WHEREAS, the shutdown of Limerick Unit 1 is estimated to increase costs to customers by $520,000 per day in replacement fuel costs; and WHEREAS, Philadelphia Electric Compacy (PECO) submitted a request dated December 22, 1987 to extend, through December 31, 1988, temporary approvals to substitute dissolved oxygen limitations in place of the temperature restriction and to transfer existing authorized consumptive use at operating generating units, Cromby Unit 2 and Titus Units 1, 2 and 3, to the Limerick Unit I facility as previously described and approved in DRBC Docket No. D-69-210 CP (FINAL)(Revision No. 5); and

WHEREAS, PECO also submitted a request dated December 22, 1987 to extend, through December 31, 1988, temporary authorization for consumptive use at Limerick regardless of the constraints in the original Docket No. D-69-210 CP (FINAL) whenever the consumptive use has been replaced in equal volume by water released from Still Creek and/or Owl Creek Reservoirs as previously described in DRBC Docket No. D-69-210 CP (FINAL)(Revision No. 6); and WHEREAS, the implementation of these temporary revisions known as No. 5 and No. 6 during 1986 and 1987 allowed the operation of Limerick Unit I at times when it would otherwise have been shutdown; and WHEREAS, the operation of Limerick Unit I in accordance with the temporary conditional approvals granted by Revision Nos. 5 and 6 for 1986 and 1987 did not result in any violation of DRBC standards or policies; and WHEREAS, a public hearing on the request for these extensions was held on February 24, 1988; and WHEREAS, docket decisions D-69-210 CP (FINAL)(Revision No. 5) and D-69-210 CP (FINAL)(Revision No. 6) both provide for possible extension by the Commission; now therefore BE IT RESOLVED by the Delaware River Basin Commission: Docket Nos. D-69-210 CP (FINAL)(Revision No. 5) and D-69-210 CP

6) are hereby extended until December 31, 1988. All (FINAL)(Revision No.

other aspects of the decisions remain in full force and effect.

                                  /s/ James R. Grace James R. Grace, Chairman pro tem is/ Susan M. Weisman Susan M. Weisman,      Secretary ADOPTED:    February 24,   1988

V- 6 c7 - /,ý C'P C(j`=.)f-Y A NO. 87-2 A RESOLUTION to extend the following Commission Dockets relating to the operation of the Limerick Electric Generating Station by the Philadelphia Electric Company: Docket No. D-69-210 CP (FINAL)(Revision No. 5) Docket No. D-69-210 CP (FINAL)(Revision No. 6). WHEREAS, use of the surface waters of the Delaware Basin for operation of the Limerick Generating Station (LGS) was approved pursuant to Section 3.8 of the Compact on November 5, 1975; and WHEREAS, the Commission's original approval permitted the use of water transferred from the Delaware River whenever restrictions prevented the use of the Schuylkill River for consumptive use; and WHEREAS, court proceedings have delayed the construction of facilities needed to transfer Delaware River water to Limerick and such facilities will not be operational during 1987; and WHEREAS, the shutdown of Limerick Unit 1 is estimated to increase costs to customers by $420,000 per day in replacement fuel costs; and WHEREAS', Philadelphia Electric Compacy (PECO) submitted a request dated December 8, 1986 to extend, through December 31, 1987, temporary approvals to substitute dissolved oxygen limitations in place of the temperature restriction and to transfer existing authorized consumptive use at operating generating units, Cromby Unit 2 and Titus Units 1, 2 and 3, to the Limerick Unit 1 facility as previously described and approved in DRBC Docket No. D-69-210 CP (FINAL)(Revision No. 5); and

                                        -2 WHEREAS, PECO also submitted a request dated December 8,        1986 to extend,  through December 31,   1987,   temporary authorization for consumptive use at Limerick regardless of the constraints in       the original Docket No.

D-69-210 CP (FINAL) whenever the consumptive use has been replaced in equal volume by water released from Still Creek and/or Owl Creek Reservoirs as previously described in DRBC Docket No. D-69-210 CP (FINAL)(Revision No. 6); and WHEREAS, the implementation of these temporary revisions known as No. 5 and No. 6 during 1986 allowed the operation of Limerick Unit I at times when it would otherwise have been shutdown; and WHEREAS, the operation of Limerick Unit I in accordance with the temporary conditional approvals granted by Revision Nos. 5 and 6 for 1986 did not result in any violation of DRBC standards or policies; and WHEREAS, a public hearing on the request for these extensions was held on February 25, 1987; and WHEREAS, docket decisions D-69-210 CP (FINAL)(Revision No. 5) and D-69-210 CP (FINAL)(Revision No. 6) both provide for possible extension by the Commission; now therefore BE IT RESOLVED by the Delaware River Basin Commission: Docket Nos. D-69-210 CP (FINAL)(Revision No. 5) and D-69-210 CP (FINAL)(Revision No. 6) are hereby extended until December 31, 1987. All other aspects of the decisions remain in full force and effect. Is/ R. Wayne Ashbee R. Wayne Ashbee, Chairman pro tem

                               /s/ Susan M. Weisman Susan M. Weisman, Secretary ADOPTED:   March 25,  1987

DOCKET NO. D-69-210 CP (FINAL)(REVISED) DELAWARE RIVER BASIN COMMISSION Philadelphia Electric Company Limerick Electric Generating Station Limerick Township, Montgomery County, Pennsylvania PROCEEDINGS The Philadelphia Electric Company (PECO) applied, on March 21, 1985, for a temporary modification of Docket D-69-210 CP (Final). The application was amended with a submission of supplemental information on April 24, 1985. The application was reviewed for temporary revision of the project in the Comprehensive Plan and approval of these temporary changes under Section 3.8 of the Delaware River Basin Compact. A public hearing on this applica tionby PECO was held by the DRBC on May 7, .1985. The hearing record remained open until 5:00 p.m. May 14, 1985. Sixty-one comments were received and entered into the hearing record on this application. DESCRIPTION Purpose.- The purpose of this application is to obtain temporary relief, through December 31, 1985, from two existing docket limitations and thereby increase the frequency that water may be withdrawn from the Schuylkill River for evaporation at Limerick Unit No. 1. The two existing limitations are: (1) PECO may not withdraw water from the Schuylkill River for evap 8 rative use at their Limerick Station when the temperature rises above 59 F and (2) water for evaporative use may not be withdrawn from the Schuylkill River when the flow at the Pottstown gage (not augmented by releases from Commission sponsored reservoir storage) falls below 530 cfs for one Limerick unit in operation. They requested temporary substitution of DO monitoring in place of temperature restriction in original docket. The applicant also has requested, as necessary, release of varying amounts of water not exceeding 32.5 cfs, from water supply storage; and that the con straint contained in said docket, excluding consideration of releases from Commission-sponsored storage in counting flow at Pottstown, to be inappli cable to any such releases. Location.- The only change in location of any project facilities is the proposed location of six dissolved oxygen monitors in lieu of the previously proposed temperature monitor at Pottstown.

I D-69-210 CP (FINAL)(REVISED) 2 The six dissolved oxygen monitors will be located in the pool area behind each of the six dams between the Limerick project site and Fairmount Dam. The six dams and the location of each are as follows: Fairmount Dam 92.47 - 8.49 Flat Rock Dam 92.47 - 15.6 Plymouth Dam 92.47 - 20.7 Norristown Dam 92.47 - 23.95 Black Rock Dam 92.47 - 36.6 Vincent Dam 92.47 - 44.7 A seventh dissolved oxygen monitoring station presently exists at the Limerick site and PECO will continue to sample at this location. No changes are proposed in the location of any of the intake or dis charge facilities as described in Docket D-69-210 CP (Final). Physical features.

a. Design criteria.- The applicant proposes substitution of dissolved oxygen limitations of a daily average of 5.0 mg/l and 4.0 mg/l instantaneous in lieu of the current temperature limitation (59 F) in order to reduce the number of days that PECO would be required to replace evaporative losses at the Limerick Unit I.

The proposed dissolved oxygen monitoring will include water sampl ing at least six times per day at regular intervals. The location of the dissolved oxygen monitors will be in the pool area upstream of each dam where the minimum level of dissolved oxygen should occur and the specific location of each monitor will be based on accessibility, availability of power and protection from vandalism. The probe will be positioned below the midpoint of the water column to avoid surface effects. The applicant has also requested to release water from storage, whenever the proposed dissolved oxygen limitations or current flow limita tions would require PECO to replace all evaporative losses. Both of these amendments are proposed in order to allow PECO to start and complete the testing of the Limerick I facility prior to having a permanent alternative water supply available. The quantity of water that will be needed to operate Limerick will vary with the testing schedule as the plant gradually ascends to full power. Following approval of the full power license, PECO would intend to build up to full power over a period of five months. The range of operations expected over this period is as follows: Months 1-2 June-July 10-50% of full power 10 cfs Month 3 August 50-75% of full power 17 cfs Months 4-7 September- 75-100% of full power 22 cfs-average December 27 cfs-peak

I D-69-210 CP (FINAL)(REVISED)

b. Facilities.-- All existing facilities of the Limerick Electric Generating Project remain as approved by Docket D-69-210 CP (Final) and the only new facilities required by this application for revision is the addition of the dissolved oxygen monitors.

The requested release of water from existing storage could include existing storage and release facilities, and would not involve any new construction. Cost.- The overall cost of the proposed dissolved oxygen monitors is estimated to be $95,000. Relationship to the Comprehensive Plan.-- The applicant is requesting revision of the Limerick Generating Station Project as included in the Com prehensive Plan by Docket D-69-210 CP (Final). The applicant has also requested .that water be released from storage regulated by the Commission whenever docket constraints would otherwise pro hibit the evaporative use at the Limerick Generating Station. The only storage presently owned and regulated by DRBC in the Schuylkill Basin is storage in Blue Marsh Reservoir. The DRBC Comprehensive Plan provisions governing the use of Blue Marsh Reservoir are included in DRBC Resolution No. 84-7, adopted on April 25, 1984, and also included in Article 2 of the Com mission's Water Code of the Delaware River Basin; Section 2.5.5. Coordinated Operation of Lower Basin and Hydroelectric Reservoirs During a Basinwide Drought. FINDINGS The Limerick Generating Station was included in the Comprehensive Plan by Docket decision D-69-210 CP (Final) on November 5, 1975, which also incor porated the project description and docket decision D-69-210 CP dated March 29, 1973. Docket D-69-210 CP (5/29/73) includes a section headed "FINDINGS" subheading "Source of Water Supply 1. Schuylkill River" which reads as follows:

     "Schuylkill River water at the plant site may be used for noncon sumptive use whenever the effluent discharged back to the river meets all applicable water quality standards.
     "Schuylkill River water at the plant may be used for consumptive use when flow (not including future augmentations of flow from Commission-sponsored projects) as measured at the Pottstown gage is in excess of 530 cfs (342 mgd) with one unit in operation and 560 cfs (362 mgd) with two units in operation with the following exceptions:

I - D-69-210 CP (FINAL)(REVISED) 4

                "(a)  There shall be no withdrawals when river water tempera tures below the Limerick station are above 15° C except during April, May and June when the flow as measured at the Pottstown gage is in excess of 1791 cfs (1158 mgd).
                "(b)  Use of the Schuylkill River will be limited to a with drawal that will result in an effluent that meets all applicable water quality standards.
          "The constraints on nonconsumptive use of Schuylkill River water are necessary to prevent violation of total dissolved solids, stream quality objectives and effluent quality requirements of the Commission's water quality regulations.      The constraint on consumptive use of Schuylkill River water is to protect water quantity and water quality below the Limerick Station.      Both sets of constraints would be suspended in the event of any operational emergency requiring a shutdown of the plant."

DRBC Resolution No. 84-7 (Basin Water Code, Section 2.5.5) incorporates into the Comprehensive Plan provisions governing the operation of major basin reservoirs during periods of drought. Pertinent provisions include:

         "During 'drought' conditions as defined by Figure 1 in Section 2.5.3A, the Francis E. Walter, Prompton, Beltzville, Blue Marsh, Nockamixon, Lake Wallenpaupack and Mongaup hydroelectric reser voirs will be utilized to complement the drought management operations of the New York City reservoirs.
         "While it   is  clearly understood that the water supply storage at Beltzville and Blue Marsh reservoirs is to be used for water supply and to control salinity intrusion into the Delaware estuary during low flow periods, it is also recognized that extensive recreational development is established on these lakes, which should be protected to the extent possible.       Accordingly, the operation plans for both of these reservoirs, as well as Nockamixon, in drought emergencies have recognized these multiple uses, with water supply having precedence."

Substitution of DO monitoring for the existing temperature constraint would provide only marginal additional water availability for testing at the Limerick Unit I facility. The applicant has estimated that the impact of substituting the' proposed dissolved, oxygen limitations for the temperature constraint during various hydrologic conditions would be as follows.

        -      Under a repeat of the drought year 1966, water could only have been withdrawn for 122 days under present constraints of flow and tem perature. Substituting a DO standard for temperature would have permitted withdrawals 50 more days. However, only 20 more of those days would have been in the months of June through December (the period of the Limerick testing program).

A D-69-210 CP (FINAL)(REVISED) 5

     -     In a repeat of drought year 1980, substitution of a DO standard would have permitted Limerick withdrawals only 4 additional days.
     -     In 1981, use of DO standard in place of temperature limitation would have allowed Limerick to use Schuylkill water only 5 more days between June and December.
     -     In 1968 (a normal year), water would have been available for Limerick on 177 days under present temperature and flow con straints. Substitution of a DO standard for temperature would have allowed water withdrawals 41 more days.

The beneficial impacts to PECO of substituting DO conditions for the current temperature restriction during the proposed testing program is uncer tain. In its amended application, PECO states:

     "In conclusion, the effect of the removal of the temperature restriction is uncertain at best, particularly during a drought year; and it is clear that supplemental water from storage is essential. Nevertheless, the temperature limitation should be lifted for 1985 and the DO monitoring approach adopted because it appears likely that at least a few days would be 'saved' in 1985 with the corresponding reduction in need for water from storage."

(emphasis added) On the other hand, during the course of the DRBC hearing, Vincent S. Boyer (PECO Senior Vice President - Nuclear Power) testified that if the DO standards were triggered, plant operations could be suspended rapidly by tripping the reactor shutdown, but reductions "under a controlled manner" would take a matter of 8-10 hours. If DO conditions improved, it would take 10 to 15 hours to bring the plant back to the power levels prior to shutdown, in order to allow the continuation of the testing program. Mr. Boyer further testified that the test program could be interrupted under certain conditions. The test regimen does not require PECO to operate Limerick a certain number of days at a continuous level. Certain tests need to be run for a period of time to obtain power calibration data and other information, "but these are generally fairly short number of hours," and the "test program can be interrupted or adjusted to accommodate the water requirements." Exhibits introduced into the hearing record by the DRBC General Counsel, David Goldberg, (DRBC-I .and DRBC -2) addressed the rationale for the 590 C trigger restriction. In those exhibits, it is pointed out that DRBC's reason for the 590 C limitation relates to protection of an acceptable dissolved oxygen standard; and further, that higher water temperatures increase the biological demand rate which in turn reduces the dissolved oxygen concentration.

I D-69-210 CP (FINAL)(REVISED) 6 Several issues were raised in the DRBC hearings regarding the adequacy and accuracy of the DO monitoring program proposed by PECO. Location and Specification of Monitoring: PECO has proposed to install automatic recording monitors for DO to sample oxygen levels in "mid-depth" above each of the 6 dams. To date, however, PECO has not identified the precise locations of the proposed monitors, or specifications of the equip ment. PECO initiated inquiries regarding the availability of monitors and installation requirements. The proposed monitors would utilize a radio signal to transmit date to the Limerick operations center; thus, power supply and telephone connections are not deemed critical. PECO has been asked to provide additional specifications regarding the proposed monitors, including information showing how it intends to obtain access for installation of the facilities. Installation of the DO monitors will require some time to complete. In the interim, PECO proposes to monitor DO in the 6 pools manually six times per day. This daily monitoring regime is required to track the diurnal changes of DO in the river water. The Pennsylvania Fish Commission has stated that it could approve the substitution of the DO monitoring for the temperature restriction, upon certain conditions. Among other requirements, the Fish Commission has recommended that:

          "An accurate recording D.O. meter must be installed above and within 200 feet of each dam located below the Limerick intake on the Schuylkill River. These must be connected to the control center at the Limerick plant and must be properly maintained to insure the meters' accuracy."

Accuracy of Monitors: PECO has proposed to use automatic telemetered DO monitors located in the pools above the Schuylkill River dams below Limerick. Proper operation of such monitors requires careful calibration and checking. Data recovery with automatic telemetered monitors is approximately 95 percent according to the U. S. Geological Survey (USGS). With multiple monitors, as proposed by PECO, more reliability would be built into the monitoring system. Company v. Independent Monitoring: PECO-s application contemplates operation of the monitoring network by the Company. Witnesses at the DRBC hearing criticized this proposal as a "conflict of interest" in letting the "fox guard the chicken coop." The monitoring program would be less subject to criticism if undertaken by an independent agency, for example, the USGS. USGS has broad experience with similar monitoring schemes. PECO could con tract with USGS for such services, through a qualified public "cooperator," such as DRBC or PADER. The DRBC presently contracts with the USGS to perform monitoring functions elsewhere in the Delaware Basin.

D-69-210 CP (FINAL)(REVISED) 7 In comparison to temperature, which is relatively stable and easy to measure, DO in river water varies over the day by a fairly wide range. Such variability creates difficulties in setting appropriate trigger criteria, and adjusting power plant operations and water withdrawals on the basis of such changing conditions. PECO has formally proposed that withdrawal by Limerick for consumptive use be allowed when Pennsylvania water quality standards for DO are not violated. The applicable standards set forth in 25 Pennsylvania Code Chapter 93 are 5.0 mg/1 minimum daily average and 4.0 mg/1 minimum instantaneous value. In testimony, however, PECO representatives stated that if the Company saw that DO was "trending towards" the 5 mg/i or 4 mg/1 standards, it would seek a release of water from Blue Marsh. The Company "could pick a value" above the 4 or 5 mg/1 levels as a trigger point to request a release, but would "need some experience" to identify such a trigger to protect the DO standards. The lack of such specificity in the proposal makes even more troublesome the concept of allowing PECO to self-monitor DO and adjust plant operations as it judges appropriate. Choice of DO Standard: PECO has proposed to base Limerick operations on Pennsylvania's water quality standards for the Schuylkill. Other witnesses, however, suggested that more restrictive standards may be appropriate to protect fish and aquatic life in the River. Philadelphia Suburban Water Company (PSWC) noted that "high temperature stress increases the sensitivity of aquatic organisms to disease and toxic pollutants, making the attainment of proper dissolved oxygen criteria par ticularly important." PSWC recommended the trigger criteria be set according to the National Water Quality Criteria for Dissolved Oxygen. Specifically, the warm water criteria for early life stages is 6.0 mg/1 seven day mean and 5.0 mg/l daily concentration. Adoption of such criteria would further reduce the number of days in which Limerick could take water from the Schuylkill without compensation; although a precise calculation of the effect of this revised standard is not available. Recognizing the special seasonal needs of aquatic life, the Pennsylvania Fish Commission has recommended a two-tiered DO standard for Limerick opera tions. The Fish Commission proposes that:

     "From March 1 to June 15 no water to be withdrawn by Limerick if D.O. values fall below 7 ppm. This is the spawning period for the game species found in the Schuylkill River, and 6-8 ppm of D.O. are necessary to insure successful spawning and incubation for most game species. Flows are usually high enough during this time period so that this D.O. level can be maintained."
     "For the remainder of the year the State standards of an average of 5 ppm with no value below 4 ppm would be acceptable providing the lowest readings taken at any of the dams below Limerick are used to determine if the State standards are being met."

D-69-210 CP (FINAL)(REVISED) 8 Because DO varies over the day, and a number of hours are required to shut down power plant operations if the DO criteria are triggered, it is necessary to establish a buffer or "margin of safety" somewhat above Pennsyl vania or Federal water quality standards in order to assure that DO levels will not be violated during actual operations. Use of Blue Marsh Reservoir: To complement the DO proposal, PECO has requested that DRBC provide or authorize the release of water from upstream storage in the Schuylkill River watershed, to compensate for Limerick use on days when either DO or flow constraints are triggered. The only available storage operated by the DRBC in the watershed is Blue Marsh Reservoir (B4rks County). For the period of the testing program, PECO would utilize up to 32.5 cfs of releases daily for Limerick operations. The average consumptive use makeup requirements during the later part of the testing program (September-December) would average 22 cfs. Blue Marsh Reservoir located on the Tulpehocken Creek near Reading is a multi-purpose reservoir, constructed and operated by the U. S. Army Corps of Engineers. As currently authorized and operated, Blue Marsh contains several storage elements, including: (1) 3000 acre-feet of inactive storage (primar* ily used for sediment storage); (2) 8000 acre-feet (4035 cfs-days) of water supply storage; (3) 6600 acre-feet (3333 cfs-days) of water quality/low augmentation storage; and (4) 32,400 acre-feet of flood control storage. Within the 32,400 acre-feet of flood control storage, the Corps has adopted the operational practice of raising pool elevations on a seasonal basis by 5 feet, to elevation 290 feet m.s.l. for enhanced recreation benefits. This summer augmented pool, which is provided from April 16 to September 30, in essence borrows 5,274 acre-feet of storage from the normally empty flood control capacity. According to analyses conducted by PADER and DRBC, Limerick withdrawals from the Schuylkill River during a period of drought, such as 1965, if com pensated out of Blue Marsh, would consume more than 5000 cfs-days of storage at full power operations. In a repeat of 1980-81, Limerick Unit 1 would have consumed 4424 cfs-days of storage in Blue Marsh. During the testing period, the quantity of water consumed by Limerick would be somewhat below average use as the plant builds up to full power. Under to regime proposed by PECO, Limerick would likely require the following quantities of water over the testing period (assuming commencement of opera tions on June 1): June-July 610 cfs-days August 527 cfs-days September 660 cfs-days October 681 cfs-days November 660 cfs-days December 681 cfs-days 3802 cfs-days

i D-69-210 CP (FINAL)(REVISED) Over this 214 day period, assuming continuing drought conditions now being experienced in the Delaware Basin, it is probable that flows on the Schuylkill River during the summer and fall will drop-below the 530 cfs trigger for a majority of the time. (In April 1985, the flow on the Schuyl kill dropped below 530 cfs at one of the earliest times on record, and month ly flows set all time new low records - nearly one-third below those experi enced during the record drought of 1964-65.) Thus, consumptive use makeup demands upon Blue Marsh of 3000 cfs-days or more might be anticipated if the PECO proposal were approved. This quantity would represent 41 percent of the combined water supply and water quality storage in Blue Marsh. PECO estimates of consumptive use needs for Limerick in 1985 are some what lower. PECO projects a use of 1.5 billion gallons (2322 cfs-days) by the end of October. This would represent 32 percent of the water supply and water quality storage in Blue Marsh. Additional water, of course, would be required to continue operations in November and December. Under the Basin Comprehensive Plan provisions relating to "Coordinated Operation of Lower Basin and Hydroelectric Reservoirs During Basinwide Drought," Water Code of the Delaware River Basin, Section 2.5.5 (DRBC Reso lution No. 84-7), the combined storage of Beltzville, Blue Marsh and Nocka mixon Reservoirs is dedicated to provision of releases to augment river flows for salinity control in the Delaware Estuary during periods of basin drought emergency. Operating models developed by DRBC indicate that during a repeat of the drought of record, all of the storage in these three lower basin reservoirs, as well as the New York City reservoirs, would be depleted to meet the requirements of the drought management plan. In the DRBC Exhibit #4 entered into the hearing record by Mr. Goldberg, the "DRBC Staff Issues and Response Document; March-April 1984 Public Hear ing on Proposed Amendment to DRBC Comprehensive Plan Relating to Reservoir Management During Basinwide Drought" dealt with the adverse impacts of evaporating Blue Marsh releases at Limerick:

     "Use of releases from storage in the Blue Marsh Project for consumptive use at the Limerick plant would deprive the entire lower Schuylkill River from Limerick to Fairmount Dam of the water quantity and quality benefits which Blue Marsh storage was intended to provide.
     "Within this reach of the Schuylkill River from the Limerick plant to Fairmount Dam are eleven water supply withdrawal users, who withdrew 380 mgd in 1982. In this same reach, as of 1982, 28 treated waste discharges contributed 70 mgd in wastes requiring assimilation and 8,450 lbs./day BOD 5 ."

At any time, the DRBC may call on releases from Blue Marsh Reservoir to enhance poor water quality in the Schuylkill River. If a portion of such releases are evaporated off at Limerick, then their diluting effect will be lost to downstream users.

A D-69-210 CP (FINAL)(REVISED) 10 On Monday, May 13, 1985, the DRBC formally declared a drought emergency for the entire Delaware River Basin. This action followed separate emergency declarations by the Governors of New Jersey and Pennsylvania, and the Mayor of New York City. Precipitation deficits from August 1984 to the end of April 1985 above Trenton have totalled over 12.9 inches below normal. Nine month precipita tion totals over most of the Basin were the worst evidenced in over 80 years of record. Streamflows in the Delaware, Lehigh, and Schuylkill Rivers have been less than one-half of normal. Since February, river flows have been significantly under flows recorded for the same period during the record drought of 1964-65; and streamflows throughout the Basin set new records for the month of April. Currently, combined storage in the three New York City reservoirs, which should be full, is only 61 percent of capacity. Releases from City Reservoirs to meet Montague flow requirements of 1550 cfs were triggered during the week of May 13-17, much earlier than would be expected. Ground water levels in Basin monitoring wells evidence severe drought stress, with levels in many cases within the lowest 10-15 percentile of record. (For example, 4 of 6 monitoring wells in Bucks County set new record lows for April.) Pursuant to the Commission's drought emergency declaration, DRBC promul gated a series of Conservation Orders invoking the provisions of Water Code 2.5.5 (DRBC Resolution No. 84-7), and placing the storage in the Blue Marsh, Beltzville, Nockamixon, Wallenpaupack and Mongaup Reservoirs under Commission direction for coordinated operation to meet streamflow and salinity control objectives. The Lower Basin Reservoirs currently have around 30.7 billion gallons of storage to meet drought needs this summer and fall. This storage includes 13 BG in Nockamixon, 13 BG in Beltzville, and 4.7 BG in Blue Marsh. DRBC models indicate that under the drought operations plan (with no allocation of water to Limerick), in a repeat of the drought conditions of 1965, recreation would be sacrificed at Blue Marsh around August 9 and the reservoir would be emp tied by approximately September 10. Evidence presented at the DRBC hearings indicates that 1985 is proceeding ahead of conditions experienced in 1965, by nearly 3 weeks. The proposal presented by PECO to allocate water from Blue Marsh during 1985 is clearly inconsistent with the provisions of the DRBC Comprehensive Plan relating to drought operations, and would tend to-further exacerbate the drought stresses and drawdowns on Blue Marsh and other Basin reservoirs. In its application, PECO "recognizes that Blue Marsh must be available to assist in meeting the- needs of downstream users in a drought and that DRBC has authority to utilize the water supply storage of Blue Marsh to meet downstream water quality objectives." Nevertheless, PECO argues:

D-69-210 CP (FINAL)(REVISED) 11

      "[T]he temporary short-term use of Blue Marsh should not be precluded simply because drought conditions might arise which require releases from the water supply storage. Under the "pooled water' concept, drought hardships must be shared equit ably among all Basin users. Equitable demand upon all impound ments would be made to meet flow augmentation needs for water supply and water quality in a drought period."

PECO-s argument appears to miss the critical point. Major basin water storage is being marshalled under the DRBC drought operations plan to meet essential water supply and salinity control needs. Experience and model simulations show that all of this storage may well be exhausted just to meet the requirements of the operating plan in protecting Estuary public water supplies and other existing users. Moreover, the applicant is seeking the approval to operate under drought conditions when existing docket conditions could preclude the operation even if the Delaware diversion into the Perkiomen Creek project was fully opera tional and the flow of the Delaware at Trenton was less than 3000 cfs. PECO's proposal, which would allocate substantial quantities of water for just one user, would place an additional draft on already stressed resources, and tend to exhaust limited storage even earlier under these drought conditions. The result would be to place downstream water users, including those reliant on the Camden and Philadelphia water supply systems, at substantially increased risk. The DRBC Comprehensive Plan policy on priorities of water use during drought emergencies give first priority to those uses which sustain human life, health and safety (Water Code, Delaware River Basin, Section 2.5.2). Summary The objective of the 59 temperature limitation contained in the origi nal docket decision, was to prevent the Limerick project from aggravating dissolved oxygen conditions in the Schuylkill River during critical periods. The temporary substitution of direct dissolved oxygen monitoring at each critical downstream location is consistent with that objective. In addition, the dissolved oxygen monitors will provide data, not otherwise available to the water resource agencies, for better management of the Schuylkill River. The temporary use of water from Blue Marsh Reservoir for evaporation at Limerick Generating Station conflicts with the Comprehensive Plan as cited above. Understanding the application is for the remaining portion of 1985, DRBC has considered the application presently before it and recognizes the seriousness of the current drought emergency already declared by DRBC and Pennsylvania in making these decisions.

4 D-69-210 CP (FINAL)(REVISED) 12 DECISIONS I. The Comprehensive Plan of the DRBC as amended by Docket D-69-210 CP (Final) on November 5, 1975, is hereby revised as follows: (1) For the period ending December 31, 1985, the provisions of Docket D-69-210 CP, [attached and included as part thereof to D-69-210 CP (Final)] headed "FINDINGS", "Sources of Water Supply", "I. Schuylkill River" paragraph "(a)" on page 5 are temporarily suspended, and in place thereof the following provision is substituted:

                 "(a) No withdrawals for consumptive use shall be made from the Schuylkill River or the natural flow of any of its  tribu taries whenever dissolved oxygen in the Schuylkill River at or below Limerick as measured at any one or more of the monitoring locations: (i) is less than 7.0 mg/l instantaneous during the period March 1 to June 15, or (ii) is equal to or less than 5.1 mg/l daily average or equal to or less than 4.2 mg/l instantaneous value during the remainder of the year."

(2) For the period ending December 31, 1985, the following condi tions shall be added to the provisions of Docket D-69-210 CP (Final), "DECISTIO--on page 15, subheaded "II.":

                 "to. An accurate recording dissolved oxygen monitor shall be installed above and within 200 feet of each dam on the Schuylkill River located below the Limerick intake.
                 "p. Detailed plans of the location of each dissolved oxygen monitor and the equipment specifications shall be sub mitted to and approved by the Executive Director prior to installation.
                 "q. The installation, calibration, maintenance and operation of all dissolved oxygen monitors and any interim manual measurements of dissolved oxygen shall be under the supervision and control of the U.S. Geological Survey.
                 "r. Weekly records of all dissolved oxygen monitoring shall be submitted to the Commission in writing within three working days, together with a log of power plant opera tions and consumptive water use. Such information shall be a matter of public record.
                "s. PECO shall immediately notify the Commission whenever dissolved oxygen levels at any monitoring station trigger the criteria set forth in this docket, and advise the Commission of steps taken to terminate power plant operations."

D-69-210 CP (FINAL)(REVISED) 13 (3) The provisions set forth in paragraphs (1) and (2) above shall terminate on December 31, 1985, unless otherwise extended or directed by the Commission, and all prior provisions of Docket D-69-210 CP temporarily suspended by this docket shall become operative in full force and effect. II. The above revisions of the Limerick Nuclear Generating Station project are approved pursuant to Section 3.8 of the Compact, subject to the conditons listed above. III. The request that DRBC release water from storage at Blue Marsh Reservoir or other facilities whenever dissolved oxygen limitations or flow limitations would require PECO to replace all evaporative losses at the Limerick Nuclear Generating Station is hereby denied. BY THE COMMISSION DATED: May 29, 1985

DOCKET NO. D-69-210 C? (Final) -, DELAWARE RIVER BASIN COMMISSION

                                                                                      //

Philadelphia Electric Company Limerick Nuclear Generating Station , Limerick Township, Montgomery County, Pennsylvania PROCEEDINGS This is an application submitted by the Philadelphia Electric Company to the Delaware River Basin Commission on March 5, 1970, for review of a project to withdraw surface water and discharge wastewater' used in the operation of a proposed nuclear-fueled steam-*electric generating station consisting of two nuclear units. By letter dated July 30, 1971, the Philadelphia Electric Company amended its original application to include emergency shutdown water supply. The appli cation was reviewed for inclusion of the project in the Comprehensive Plan and approval under Section 3.8 of the Delaware River Basin Compact. A special public hearing on the project was held by this Commission on July 16, 1970. This hearing was for the stated purpose of receiving testimony on the effects of the project on the water resources in the area. A second public hearing was held on January 23, 1974 to hear addi tional testimony on the project. The project has been approved by the Pennsylvania Department of Environmental Resources, but it is withholding its permit until the project is approved by the Delaware River Basin Commission. The Atomic Energy Commission (now Nuclear Regulatory Commission) was respionsible as lead agency, for preparing the Environmental Impact Statement. It decided to stop proceedings until this Commission gave adequate assurance that an adequate water supply would be available for the project. As a result, this Commission approved the project for withdrawal of surface water subject to conditions as specified in Docket D-69-210 CP on March 29, 1973 (herein "decision of March 29, 1973"), subject to a final environmental impact statement. The Atomic Energy Commission filed its Final Environmental Impact Statement with the Council on Environmental Quality in November, 1973 and issued an Initial Decision authorizing the release of the construction permits on June 14, 1974. The Final Environmental Impact Stat.ement has been .appealed through the Nuclear Regulatoty Commission ("NRC") procedures of review by the Atomic Safety and Licensing Board ("Licensing Board") and the Atomic Safety and Licensing Appeal Board ("Appeal Board"). The decision of the Appeal Board became administrativeiy final on May 23, 1975 and appeal therefrom is now pending in the United States Court of Appeals for the Third Circuit. Meanwhile the project is under construction. The application is now again before this Commission for fina! decision, consistent wilh the findings and conclusions of the decision of March 29, 1973.

                                                                                                      /'

I D-69-210 CP (Final)- Sheet 2 Proceedings The present phase of Commission consideration was initiated when the Commission published not'ice of intention to act upon Docket No. D-69-210 CP (Supplement Na'. 1)at itsJuly3l1 19 74meet ing, and objections were filed by the Environmental Coalition on Nuclear Power ("objector"). The Executive Director acting under the Administrative Manual, deferred further consideration by the Commission, and scheduled an adversary hearing on the objections. The Chairman of the Com mission appointed Honorable Sidney Goldman as hearing examiner, and Judge Goldman conducted a hearing upon the objections on August 14, 1974. At the hearing, a voluminous record of rele vant documents were marked in evidence by consent, including pertinent parts of the testimony taken before the Atomic Energy Commission (now Nuclear Regulartory Commission). The hearing examiner has submitted an able and scholarly report. It was duly served upon the applicant, the objector and counsel to the Commission. Pursuant to the Commission's Rules of Practice and Procedure, the objector filed objections to the report,requesting oral argument before the Commission. Meanwhile on August 18, 1975 Judge Goldman, by letter to the Executive Director, reported that he had thoroughly reviewed the objections and found no reason to amend his report. The Commission heard oral argument by counsel for the objector and the applicant on August 27, 1975. The Commission's decision on this aspect of the case is incorporated below. DESCRIPTION Purpose.-- The purpose of this project is the construction and operation of a nuclear power plant with two units having a net electrical capacity of 1,055 megawatts each, with circulating cooling water for the steam turbines to be furnished from cooling towers with make-up water to be drawn from the Schuylkill River or Perkiomen Creek. Location.-- The project will be located on a 587 acre site on the east bank of the Schuyl kill River, in Limerick Township, Montgomery County, Pennsylvania, about 1 .7 miles south of the nearest part of the Borough of Pottstown. A water intake structure will be located on the Schuylkill River at river mile 92.47 - 48.22 and a blowdown and liquid waste discharge structure will be lo cated at river mile 92.47 - 47.94. An additional water intake structure will be located on Perkio men Creek at river mile 92.47 - 32.3 -(10.5) from which water will be pumped by pipeline to the power plant site. 7 , Service area.-- The Philadelphia Electric Company will be the sole owner of the Limerick project and the power developed at the plant will be distributed throughout its service area. The power will also be available for transmission to other areas via the Pennsylvania-New Jersey-Mary land Interconnection.

D-69-210 CP (Final) Sheet 3 Description Physical features. (a) Facilities.-- The main facilities at the site will be two reactor buildings, two turbine buildings, two hyperbolic cooling towers, administrative building, service buildings, fuel handling building, and water treatment building. The description of the cooling water system and the proposed operating water requirements remain as described in Docket D-6?-210 CP, March 29, 1973. A copy of that Docket Decision is attached hereto for reference. Other facilities of major concern to this Commission because of potential substantial effect on the water resources of the Basin are as follows:

1. Water intake structures- The intake structure proposed for withdrawal of water from the Schuylkill River will permit water to enter the front and sides through trash bars. The water then passes through traveling screens into a pipeline to the pump station. The intake on Perkiomen Creek will be similar but the pumps will be installed in the structure housing the intakes.

Both structures are designed to limit the velocity of tlie water approaching the traveling screens to a maximum of 3/4 foot per second.

2. Wastewater discharge structure- The wastewater discharge structure will be of the multi-port diffuser type. Wastewater will be piped to the center of the Schuylkill River and then flow into a 30 inch diameter diffuser pipe heading toward the shore. The diffuser pipe will have 400 one inch diameter outlet holes to insure rapid mixing and will be installed in the river bed.

Liquid wastes will be discharged via this diffuser outfall and will consist of the follow ing:

a. Liquid radioactive wastes (radwastes) will be handled by four basic aqueo6s li quid collection and treatment subsystems and an environment discharge subsystem. The collection and treatment subsystems are: (1) the equipment-drain subsystem for low-conductivity wastes (high "puritywater); (2) the floor-drain subsystem for high-conductivity wastes; (3) the chemical-drain sub system for solution wastes; and (4) the laundry-drain subsystem for cleaning-agent wastes.

Tanks, equipment, and piping that contain liquid radioactive wastes are en closed within radwaste areas in buildings or tunnels and are shielded where required to permit operation, inspection, and maintenance. Any equipment that handles potentially radioactive water located outside the plant building structures will be enclosed within water-tight dike struc tures. In the event of leaks, spills, or overflows from this equipment, sumps would collect liquid from eachy such.dike structures, andthe liquid would be either drained by gravity to the liquid rad waste system for processing or would be released to the storm sewers if,.after testing for gross radio activity, these 'liquids met the criteria for release to the environment. Any spillage, leakage, or overflows that occur within the building will be contained in the building, thus assuring no re leases to the environment. (

                               . . , "-
                                     **       I 'k

D-69-21 0 CP (Final) Sheet 4 Description - Liquid radiactive wastes Normally, aqueous liquid radwastes from the Limerick Station would be released only from the laundry drain subsystem. These liquids will be diluted with cooling-tower blowdown before being released to the Schuylkill River. The resulting concentration of any radwastes dis charged into the river will be less than onepercent of the maximum permissible concentration (ex cluding tritium) of 1 X 10 "'Z5Ci/ml. specified in the AEC regulations (10 CFR 20). The amount of liquid radio-active wastes discharged will normally not exceed 0.00545 mgd.

b. Cooling tower blowdown. Consumptive evaporative losses of water in the cool ing towers will require average blowdown of 13.0 mgd. Because the dissolved solids content of Schuylkill River water is considerably higher than that which would be drawn from the Perkiomen Creek, the maximum increase in dissolved solids content is expected to occur as a result of blow down discharges to thp Schuylkill when 100% of make-up water is drawn from that stream. This increase in concentration is expected to average about 11 .6% just below the blowoff discharge pipe or 50 mg/I (430 mg/I to 480 mg/I). However, this concentration will be diluted by flow from the Perkiomen further downstream so that overall average increase in concentration at that point will amount only to 4%.

When the measured flow at the Pottstown gage is less than 342 mgd (530 cfs) when one unit is operating or 362 mgd (560 cfs) when both units are operating, make-up water will be taken from Perkiomen Creek. Water taken from Perkiomen Creek will have a lower concentration of dissolved solids and therefore the blowdown will have lower dissolved solids concentration. At the critical low flow in the Schuylkill River, the blowdown will increase the dissolved solids concentra tion in the Schuylkill River approximately 2.5%. The thermal effects of blowdown would be most critical at extreme low flow peri ods in summer. It is estimated that mid-summer blowdown would have a temperature of 90°F, about 6.2 0 F above the river temperature of 83.8 0 F and that heat added to the river would be about 0.027 "x 109 BTU per hour which is only about 0.17116 of the waste heat handled by the cooling tower sys tem, 99.83% of which would be discharged to the atmosphere. The discharge of blowdown would be from a submerged pipeline with outlets spaced to effect rapid mixing with approximately half tl;e flow of the river. For the design low flow of 149 mgd (230 cfs), as measured at Pottstown, the heat content of the blowdown would raise half the design flow, 74.5 mgd (115 cfs), from its back ground temperature of 83.8 0 F to about 84.9 0 F.

c. Chemical additives. Various chemicals would be added to the water in the station for quality control and for control of fouling organisms on heat-exchanger and piping surfaces. The regenerant wastes from the plant make-up water demineralizing system would be discharged 'to the river via the blowdown system. The added solids content of the discharge water due to the use of chemicals will be about 324 pounds per day. This would add an incremental dissolved-solids con centration of 3.0 mg/I to the 13.0 rngd (20 cfs) discharge from the station. After mixing with the seven-day, ten-year low flow of 149 mgd (230 cfs) as measured at Pottstown, which is expected to have a maximum dissolved-solids concentration of 500 mg/I, the mixture would have a maximum concentration of 500.29 mg/I. This increment of dissolved solids added by the Limerick plant would have no measurable effect on the water quality of the Schuylkill River.

D-69-210 CP (Final) Sheet 5 Description

d. Sanitary sewage wastewater: A small sewage treatment plant will be con structed to serve the personnel at the site. The maximum sewage flow will occur during construc tion and is estimated to be 37,500 gallons per day. During construction, the treatment plant will operate as a contact stabilization plant, and then, when serving only the permanent personnel, it will be operated using the extended aeration process. The plant is designed to remove 85% of the BOD 5 and 90% suspended solids and the treated effluent will be chlorinated for disinfection. The sewage treatment plant is not of sufficient size to require a Delaware River Basin Commission re view; however, the treatment plant has been reviewed by the Pennsylvania Department of Environ mental Resources. The Pennsylvania Department of Environmental Resources has approved the pro ject, but is withholding its permit until the industrial waste discharge permit is issued.

3. Otler wastes.-- These wastes include solid and gaseous radioactive wastes (rad wastes) as follows:

a. Solid radwastes. Solid radwastes would include spent demineralizer resins, evaporator bottoms, waste sludges, filter elements, contaminated equipment, and paper, rags, plastic sheeting, and other materials used in decontamination and contamination control. These solid wastes would be placed in containers appropriate for the different types of waste materials, as approved by the U.S. Department of Transportation (D.O.T.) for off-s ite disposal. All evaporator bottoms would be immobilized before being placed in containers. Loaded containers wouid be moni tored for radiation levels and stored in a special area until shipped to an off-site disposal facility.

Solid wastes would be disposed of by licensed contractors in accordance with regulations of the A.E.C., the D.O.T. and the Interstate Commerce Commission (I.C.C.).

b. Gaseous radwastes. The gaseous radwastes of the proposed Limerick<raTior, u,,

of concern to the Delaware River Basin Commission because of their potential for contaminating the water resources of the Basin--via fallout of particulate radwastes carried by the gaseous wastes, or by absorption of the gaseous wastes by surface water or rain falling within the Basin. The potential sources of gaseous radwastes include the main condenser off-gas, primary containment atmosphere, reactor building atmosphere, and gases from chemical laboratories and building services. Off-gas removed from condensers would consist of air that leaks into the con densers, radiolytic hydrogen, radiolytic oxygen, and radioactive noble gases (krypton and xenon). Radioactive hydrogen and oxygen would be recombined to form water, which would be returned to the plant.

D-69-210 CP (Final) Sheet 6 Description The radioactive air would undergo a delay time of at least 30 minutes to allow decay of short-lived isotopes, such as nitrogen-13, nitrogen-]6, and oxygen-1 9. The remaining gases--air, krypton, and xenon--would be cryogenically liqui fied and distilled to separate the krypton and xenon from the air. The separated krypton and xenon would be stored to allow radioactive decay. After decay time sufficient to insure that only the long-lived krypton-85 remains, the stored gases would be released to the atmosphere under controlled conditions, via a vent located at an elevation approximately 200 feet above local grade elevation. Release of radioactive gases would be at a rate such that the levels of radioactivity in these gases would be significantly below the AEC regulations (10 CFR 20). The design of the gaseous radwaste system is based on limiting the off-site whole-body dose levels to one percent of the level allowed (500 mrem) by the AEC regulations (10 CFR 20).

4. Domestic water supply- The permanent domestic water supply will be taken from the surface water river intakes. The water will be treated and chlorinated as necessary. Two small wells will be used during construction. The total withdrawal from both wells is less than 100,000 gallons per day and therefore does not require review by the Delaware River Basin Commission.

5. Dredging- As part of the construction of both intakes, a small amount of stream bed excavation is necessary...

FINDINGS The findings in the decision of D-69-210 CP on March 29, 1973 are reaffirmed with respect to the availability of water supply, except that the Commission by vote of July 31, 1975 has eliminated the option of relying upon Tocks Island water supply. The final environmental impact statement prepared by the Atomic Energy Commission and filed with the Council on Environmental Quality contained the following summary of environmen tal impacts.:

                .a. "The Limerick Generating Station and its substations are expected to occupy 85
       ........ of. the 587 acres of farm and wood land in the site, requirinq the clearing of only a few acres of woods. The adverse effect of the loss of this farmland and wild life habitat is not great since this acreage is an insignificant percentage of the land committed to these uses in the region. Some construction activity in the f6rm of site excavation at the location of major components of the station has already been accomplished. About 7 acres of land will be cleared for a corri dor for construction of a transmission line from the substations to existing trans mission systems. Land activities will be stabilized and seeded with native trees and grasses."

f

D-69-210 CP (Final Sheet 7 Findings

b. "The use of two natural draft cooling towers to dissipate the waste heat from the Limerick station will result in the consumptive use of water by evaporation and drift at a maximum rate of 65 cubic feet per second (cfs) (estimated average annual rate of 54 cfs). The applicant has received a conditional permit from the Delaware River Basin Commission (DRBC) to withdraw this water from the Schuylkill River and/or the Perklomen Creek, augmented as necessary by water from the Delaware River. This allocation of water for consumptive use was made by DRBC after full consideration of the water resources of the Delaware River Basin in comparison to the present and projected future needs for municipal, in dustrial and recreational purposes."

c. " The intake structures in the Schuylkill River and Perkiomen Creek have been designed to limit velocities to less than 3/4 foot per second in order to minimize damage to fish and other aquatic biota by impingement on intake screens and entrainment in the cooling water system ."

d. " The cooling tower blowdown water will be discharged-through a submerged diffuser pipe in the Schuylkill River. The maximum surface excess temperature is expected to be about 1°F in summer and 30 F in winter. The thermal effect of the discharged water is insignificant."

e. " Chemicals may be discharged from the plant as water solutions, principally in the cooling tower blowdown, or as vapor drift from the cooling towers. The chlor ination system proposed by the applicant should result in a total chlorine residual concentration (maximum) of 0.2 ppm in the cooling tower blowdown. Chemical deposition from the drift is ixpected to be insignificant."

f. " Construction of the Limerick Generating Station is expected to produce tempor ary adverse impacts from increased automotive traffic and construction noise. The modern industrial buildings should have very little adverse visual impact because of the screening available from natural vegetation. The cooling towers are the most visible of the plant structures, and the thermal plumes from these towers are not expected to increase significantly the formation of fog or ice."

g. "The construction of the plant is expected to result in the employment of more than 2,000 people in the three years of maximal activity. It is estimated that 70% of these workers will commute from nearby population centers and the others will reside in the area. Local business and school population will increase, but community facilities appear to be adequate to accommodate the expected growth. The total increase in the number of permanent residents after com pletion of construction is expected to be less than 500."

D-69-210 CP (Final) Sheet 8 Findings

h. "Unoccupied land on the site.will be made available to the public for recrea tional purposes and a public information center will be established. Therefore, the educational and recreational impact within the community is beneficial".

i. ?'The risk associated with accidental radiation exposure is very low."

                  "j. "No significant environmental impacts within a 50- mile radius are expected from normal operational releases of radioactive materials. The estimated dose to the population within 50 miles from operation of the plant is 33 man-rera/yr, which is less than the normal fluctuation in the 1,200,000 man-rem/yr back grQund dose this population receives."

k. "The calculated radiation dose to the thyroid of a child from radioactive iodine via the atmosphere - posture - cow-milk pathway is within the guidelines of the Atomic Energy Commission for "as low as practicable" emissions of radio activity from nuclear power plants."

The proposed project is designed to produce a discharge meeting the effluent requirements and stream quality objectives, as set forth in the Water Quality Standards, of the Delaware River Basin Commission. The project does not conflict with nor adversely affect the Comprehensive Plan. It pro vides beneficial use of the water resources, is financially and physically feasible, conforms to accepted policy, and does not adversely influence the present or future use and development of the water resources of the Basin.

                                                              ..............................

Objections and Report Thereon by the Hearing Examiner The Report of the hearing examiner referenced above, found four issues raised by the objections to the docket decision proposed for action on July 31, 1974:

1. Did the objections as filed specify "particularly the grounds thereof" as required by the Administrative Manual, Sections 2-3.10 and 2-3.11 ?

2. Does the environmental review process as to water availability and the disclosure of AEC's Final Environmental Statement and DRBC's Point Pleasant Diversion Environmental Impact Statement justify the Commission's proposed decision (Docket No. D-69-210 CP (Sup plement No. 1) -- Exhibit 10 for Identification) under Section 3.8 of the Delaware River Basin Compact and under NEPA?

I

U-69-210 CP (Final) Sheet 9 Objections and Report---

3. What is the status of AEC's Final Environmental Statement in view of the then pending appeal -- i.e., in regard to the "finality" of the FES for purposes of NEPA in light of the CEQ guidelines?

4. In light of the conclusion reached with respect to the previous issues and the Initial Decision by AEC on June 14, 1974, is DRBC still free to consider the "river follower" mode of operation in its Docket decision?

After thoroughly considering the briefs and argument on the first issue, Judge Goldman concludes and recommends that one of the four objections filed by the Coalition was specific enough to alert the Commission as to the Coalition's principal complaint; namely, that not until the Commission has cqnsidered a specific reservoir site to meet the needs of the -Limerick Station during low flow conditions, and has subjected the site to the environmental review required by NEPA, may the Commission lawfully approve the application. Having determined that this ob jection met the requirements of the rule as to specificity, the report of the hearing examiner pro ceeds to deal with each of the remaining three issues and concludes and recommends that the Commission "may proceed in regular course with the proposed decision in Docket No. D-69-210 CP (Supplement No. 1)." A copy of the complete report of the hearing examiner is part of the Com mission's file in this case, as is a stenographic transcript of the oral argument of counsel. The merits of the case turn on the viability of what is described as the "river follower" mode of operation of the power plant. The "river follower" mode may be defined as the mode re quired by condition "b" of the decision of March 29, 1973, that is:

b. Whenever the flow constraints cited in the above Findings prevent the applicant from operating the plant at full load, the applicant shall operate the plant only at such percentages of full load as the available water supply allows, as determined by the Commission.

Counsel for the Coalition asserts "'that the record does not support the alternative of a river fol lower." Accordingly it is his argument that the project may not be approved under the require ments of NEPA unless and until a site for supplementary reservoir storage (condition "c" in the decision of March 29, 1973) is selected and subjected to a NEPA analysis. The applicant con tends to the contrary; that the river follower mode of operation is feasible, and that the issue of supplementary storage is a separate one to which the applicant would address itself by separate application to the Commission in due course. The Commission's consideration of the issue thus posed at this time suggests the need to restate also condition "c" of approval stated in Docket No. D-69-210 CP, decided March 29, 1973, as follows:

D:-69-210 CP (Final) Sheet 10 Objections and Report--

c. Prior to January1, 1977, the Commission will, in its sole discretion, determine the adequacy of the thenexisting storagefacilities on the Delaware River or its tributaries togetherwith additional storage tobe built tosupply all needs(including the applicant's) for water supply from that source bythe year 1980. If the Commission then determines that the storage will not beadequate for all projected needs of the Basin, the applicant will build or cause to be built, at its own expense, at a location approved by the Commission, for service in 1980, a reservoir of sufficient storage capacity to assure the water supply needed for consumptive use by the Limerick plant, during periods when such use would reduce the flow in the Delaware River at the Trenton gage below3,000cfs. Storage and release of water in such facility will be under the Commission's regulation, at the expense of the applicant.

At the time of the March 29, 1973 decision, the Tocks Island Dam and Reservoir was a possible source of additional water supply storage from which the depletive needs of the Limerick Station could be satisfied along with other needs of the Basin. The future of the project was then in a state of uncertainty, which has since been resolved-by the Commission vote of July 31, 1975. The applicant is willing to accept water availability limited to the river follower mode of operation. The objector contends that such a mode of operation would be uneconomic and that supplementary storage is an inseparable part of the project. The Commission here deals primarily with issues of water supply, and not with issues of nuclear generating plant economics. From this point of view alone, on the basis of Judge Goldman's report and recommendations, and Commission's independent consideration of the record and argument before it, this Commission may conclude that the viability of the river follower mode is an issue in the first instance for the applicant itself and then for the Nuclear Regulatory Commission. The NRC decided, through its Appeal Board decision which became final on May 23, 1975, that the Limerick Station could proceed to construction. This decision, which affirmed in part and reversed in part an initial decision of the NRC's Licensing Board included certain conditions as to water availability, to which there will be further reference below. For present purposes, this Commission may begin with the contention of the applicant that the river follower mode is feasible, and that the applicant is willing to proceed on that basis. Never theless, under this Commission's powers and practice pursuant to Section 3.8 of the Compact and Article 13 of the Compact, conditions may be imposed as part of any project approval. In that con text, this Commission's concerns transcend the issue of "river follower" viability. This Commission, like the NRC, prefers to avoid the secondary effects of ordering a reduction or interruption of power generation in low flow periods. To that end, the Commission may well ultimately find it necessary to call for supplementary water supply storage to make up for depletive uses by atomic fueled power plants in the Basin.

                                * "'*"
                                *"     '* , -r .,* " " * ..

D-69-210 CP (Final) Sheet 11 Objections and Report--- The objector contends that the Limerick Station "would supply approximately 2,300 megawatts of power, would supply the capacity for approximately 50% of the Philadelphia Elec tric system's base load." Based upon data furnished by the applicant, however, it appears that Limerick Unit No. I will be only 10% of Philadelphia Electric's generating capacity in 1981 and only 2% of the PJM interconnected capacity at that time (Table 1 following). TABLE I Generating Capacity of the Philadelphia Electric Company and the PJM Interconnection C/ Philadelphia PJM Electric (MW) (MW)

       * (1)     Present Generating Capacity (as of May 31, 1975)                      7,508               41,810 (2)     Commercial Operation of Limerick Unit 1 (May 1981) 2/             9,971.              53,3413/
                 % Limerick to Total                            10 -'6%               2%

1 Source: Philadelphia Electric Company ,-*

2. The net capacity of each of the Limerick Units is 1,055 MW.

3 These data include the Summit nuclear fueled generating station, which later information indicates-will not be built. The Commission is concerned, however, with the cumulative effect of a mandated shut-down or reduction of generation of all power generating stations under the river follower option, in the Basin. As shown in Table 2, the five generating stations under the river follower option (Limerick, Summit, Hope Creek, Gilbert and Martins Creek) could all be shut down simultaneously and still have sufficient generating capacity including interconnections and reserves to meet the load. More over Martins Creek already has the use of Lake Wallenpaupack and this source could conceivably be mode available to other utilities. An effective use of the resources of the Basin demands that supplementary storage, as needed for all other generating stations should be coordinated and planned with reference to the Master Siting Study of Major Electric Generating Projects, Delaware River Basin, 1972 - 1986 (December 1971, as revised through 1975). From the viewpoint of water supply, altotal of eight generating sta tions is involved. Five stations, using 86 cfs (including Limerick), are or may be, subject to the 3000 cfs operating condition by provisions inserted into the Sections 3.8 dockets. Three of these five stations, using 70.7 cfs, are owned by the same three companies that own the three stations which hcave not been made subject to the 3000 cfs flow constraint, Salem, Eddystone and Edge Moor.

Sl 12 TA.ALE 2 Y Acc. Acc. Plant Plant Cap. Cap. as Plant Acc. Plant Est. Camp. Camp. as percent Est. PJM PJM Year Cor.oany Plant percent Cap. by Company Cap. Reserve of Camp. Cap. Cap. Reserve of PJM Cap. mw -WX

                                       "",....                                                                            mw       percent (I)        (2)       (3)                (4)               (5)                (6)          (7)     -(8)(='5)/(6)x 100       (9)       (10)          (1])=(4)/(9)x 100 1975     PP&L    Martins Cr. 13         800              800                  NA           NA               NA Accumulated Cap. 800                                                                             41810       30.9                    1.9 1977    GPU      Gilbert                 130              130              6688          13.8              1.9 PP&L     Martins Cr. #4         800             1600               6287          55.2             25.4 Accumulated Cap. 1730                                                                             45203.      26.8                    3.8 1981    PECO     Limerick   1j         1055             1055               9971          11.4             10.6 DPL      Summit 11              655              655               3364          28.9             19.4 PECO     Summit 1i               115              115              9971          11.4              1.1 Accumulated Cap. 3555                                                                            53341        21.5                    6.7 1982    PECO     Limerick 12           1055             2110              10904        " 15.6             19.4 PSE&G    Hope Cr. I I           990              990              11184          20.2              8.8 ACE      Hope Cr.' I1            110              110              2257          18.0              4.9 Accumulated Cap. 5710                                                                            58477        26.9                    9.8 1984    PSE&G    Hope Cr. #2            990             1980              12174          19.9             16.3 ACE      Hope Cr. #2             110             220

• 2547 17.0 8.6 DLP Summit 122/ 655 1310 4019 22.9 32.6 PECO Summit 12 115 230 12050 16.1 1.9 Accumulated. Cap. 7580 62757 23.9 12.1 Y/ Compiled from data furnished to DRBC by Delaware River Basin Electric Utility Group, September 22, 1975, and tviAAC Report, April 1, 1975. Note that these data will change over time as the Utilities adopt their plans to changing conditions and.technology; for example, the Summit Generating Station (included above) has been withdrawn within recent days.

Joint ownership - DPL (85%); PECO (15%) 3/ Joint ownership - PSE&G (90%); ACE (10%)

                                                              .0 0..

D-69-210 CP (Final) Sheet 13 Objections and Report--- These three stations have an effective depletive use of 10 cfs. It is reasonable to assume that if these companies decide to build water supply facilities to meet the requirements of the docket decision for one project, they could satisfy similar requirements for all of their projects easily and economically at the same time. For example, Philadelphia Electric Company could readily add storage space to yield 3.9 cfs for PECO's Eddystone station to any facility provided to meet the 54.3 cfs needed by Limerick. The Commission recognizes that over time changes will be made in the utilities' plans for some of these generating stations; some may be abandoned and others added. (See Master Siting Study, June 1975). For example, very recent information indicates that the sponsor has abandoned its present plans for the Summit station. The data are sufficient, however, to illustrate the cumu'la tive effect of the rive'r follower mode on available power generating capacity in the Basin, were five stations to be operating under its full constraints. The Commission concludes that the river fol lower mode is a viable alternative; but it still requires further consideration in the context of overall Basin water resources management. Following its action of July 31, 1975, on the Tocks project, the Commission has undertaken a comprehensive reexamination of the basic water supply elements of the Comprehensive Plan. Studies now in progress are reevaluating the base flow criteria (including the flow of 3,000 cfs at Trenton); the drought frequency planning assumptions; and the priorities to be accorded competing uses under the new conditions of water supply. The results of these studies could substantially in fluence the Commission's judgment as to the extent of the need for supplementary water supply stor age to make up depletive uses by the utilities. In the present case the Commission. by its decision of March 29, 1973 prescribed the condition that prior to January 1, 1977, the Commission will, in its sole discretion, determine whether addi tional water supply storage is required to meet the applicant's needs, and that the applicant will pro vide such storage, if required, for service in 1980 (see Text of condition "c" quoted above). While that condition reflected the context of uncertainty as to the future of Tocks Island, the some condi tion is now pertinent to the outcome of the Commission's current reassessment of its entire water re source management plan without Tacks Island. In the proceed.jngs before the Nuclear Regulatory Commission which followed this Commission's decision of March 29, 1973, a similar water availability condition was included as Section 3.E. (8) of the Construction Permits. That condition requires the applicant to take such measures as may be necessary to assure the availability of compensating water storage capacity at the time of initial operation,, as may be required by this Commission, and to submit a schedule to accomplish this ob jective. On December 19, 1974, the applicant did submit such a schedule, following review and recommendations by DRBC staff, as follows: The schedule is based on meeting three significant dates:

1. December 19, 1974, the date when the.schedule should be presented to the AEC Director of Licensing (as per the AEC Construction Permit for the Lim erick Generating Station).

D.-69-210 CP (Final) Sheet 14 Objections and report

2. January 1, 1977, the latest date the DRBC has scheduled for a decision on a decision on the need for a cooling water supply reservoir (as per DRBC Docket for Limerick).

3. April, 1981, the date when the Limerick plant will begin commercial operation.

The schedule is devided into phases as follows:

1. Site Selection Studies. The objective of this phase is to select the three most promising sites for further study. Factors to be evaluated in these studies are cost, environmental impact, and land acquisition and relocation problems. Only reconnaissance-type field work would be scheduled.

2. Evaluation of Priority Sites. The scope of work and timing for this phase is to select a site, design the project and have ready for transmittal to the proper agencies by January 1, 1977, all required data reports and applications needed to obtain clearance for construction. DRBC established this date as the latest date to determine the need for the reservoir. Some field surveying, sub surface exploration and on-site environmental studies will be required for this phase.

3. Land Acquisition. Land acquisition could begin after selection of the preferred site. However, there is always the possibility that the site may not be acceptable to the state and federal reviewing agencies.

4. Prolect Review, Environmental Review, and Issuance of Permits by Responsible Agencies. A period of 16 months beginning January 1, 1977, is shown for this phase. To meet this schedule, the environmental report must be submitted soon after this date. A draft Environmental Impact Statement (EIS) by the lead agency, the review thereof, preparation of a final EIS, and the Council of Environmental Quality Review can be accomplished during this period. All necessary permit applications will be filed as early as possible during this phase.

5. Preconstruction Engineering. Detailed engineering and data collec tion will proceed concurrently with the Environmental review described as Phase

4. The work for this phase will include topographic surveying, sub-surface ex ploration and detailed design of project facilities to produce the engineering plans and specifications required for contract bidding. A bidding period is scheduled to follow immediately the review period (Phase 4).

A D-69-210 CP (Final) Sheet 15 O'bjections and report

6. Construction. A period of 30 months is shown an the schedule for construction. Procurement and installation of the electrical and mechanical equip ment is the critical item during this phase. However, it is expected that manufac turing, installation and testing of the equipment can be completed prior to January 1, 1981. This will permit reservoir releases to be available, if needed, in the summer of 1981.

7. Filling of the Reservoir. A period of five months is allowed for the first filling, after completion in January, 1981. This will permit the commercial operation of the Limerick plant scheduled for April, 1981, with sufficient water available to-meet cooling requirements for the summer of 1981.

It remains to determine what, if any, environmental real world value would be vindicated by insisting upon a reservoir site selection now, including NEPA review, rather than following such a schedule as above. The Commission concludes that all of the requirements of NEPA have been satisfied and approval of the application can proceed at this time. DECISION

i. The project as described in Docket D-69-210 CP and supplemented above, with the modifications included in the docket decision of March 29, 1973 and specified hereinafter, is hereby added to the Comprehensive Plan.

II. The project is approved pursuant to Section 3.8 of the Compact, subject to the follow ing conditions:

a. Approval is subject to all conditions imposed by the U.S. Nuclear Regulatory Commission (formerly the U.S. Atomic Energy Commission) and the Pennsylvania Department of Environmental Resources.

b. Whenever the flow constraints cited in Docket D-69-210 CP (Findings) prevent the applicant from operating the plant at full load, the applicant shall operate the plant only at such percentages of full load as the available water supply allows, as determined by the Commis sion from time to time.

c. Prior to January 1, 1977, the Commission will, in its sole discretion, deter mine the adequacy of the then existing storage facilities on the Delaware River or its tributaries together with additional storage to be built to supply all needs (including the applicant's) for water supply from that source by the year 1981.. If the Commission then determines that the stor age will not be adequate for all projected needs of the Basin, the applicant will build or cause to be built, at its own expense, at a location approved by the Commission, for service in 1981, a reservoir of sufficent storage capacity to assure the water supply needed for consumptive use by the Limerick plant, during periods when such use would reduce the flow in the Delaware River at the Trenton gage below 3,000 cfs. Storage and release of water in such facility will be under the Commission's regulation, at the expense of the applicant.

D-69-210 CP (Final) Sheet 16 Decisions

d. Beginning one year prior to the first commercial operation date of Unit 1 at the Limerick plant, the applicant will pay for metered quantities of water withdrawn thereafter at the several locations described above. The price of waters so taken from the Schuylkill River, Perkiomen Creek, and the Delaware River will be determined in accordance with the Commissions' water supply policy, heretofore adopted ot as may be amended hereafter.

e. The facility shall be available at all times for inspection by the Delaware River Basin Commission.

f. The facility shall be operated at all times to comply with the requirements of the Water Quality Standards of the Delaware River Basin Commission.

g. The Philadelphia Electric Company shall maintain records of suspended solids discharge and shall furnish a record of net quantities of suspended solids discharge to the U.S.

Army District Engineer at the completion of each six month period, or at such other frequencies as the District Engineer niay require.

h. The discharge of the wastewater shall not increase the natural temperature of the receiving waters by more than 50 F (above the average daily temperature gradient displayed during the 1961-66 period), nor shall such discharge result in a stream temperature exceeding 87PFI except within an assigned heat dissipation area consisting of one-half the stream width and 3,500 feet downstream from the discharge point.

i. Sound practices of excavation, backfill, and reseeding shall be followed to minimize erosion and deposition of sediment in streams.

j. The turbidity standards for the Delaware River, as established by the Delaware River Basin Commission, may not be exceeded outside of mixing areas, as described herein: a dis tance of 100 feet upstream and 500 feet downstream and 1/2 of the stream width at each discharge and intake structure during their construction.

k. The Executive Director of the Delaware River Basin Commission may direct a suspension of streambed excavation operations whenever in his judgment the operations are not being conducted in accordance with this approval, are adversely affecting water quality, or are harmful to the passage 6f anadromous or catadromous fishes.

                *1. Upon completion of construction of the approved project, the sponsor shall submit a statement to the Delaware River Basin Commission, signed by the sponsor's engineer or other responsible agent, certifying to the Commission under oath, that the construction has been completed in compliance with the approved plans and giving the final construction cost of the approved project.

D:-69-210 CP (Final) Sheet 17 Decisions

m. Any future requirements imposed by the U.S. Environmental Protection Agency shall supersede the requirements of this approval insofar as they impose more stringent treatment criteria. . .

n. This approval shall not take effect unless and until the applicant shall file with the Commission its undertaking signed by its duly authorized officers and in a form approved by General Counsel to the Commission, accepting and agreeing to the conditions "b" through "m" above.

Ill. The Executive Director is authorized to issue a water quality certification in accordance with Section 401 of the Federal Water Pollution Control Act Amendments of 1972. BY THE COMMISSION DATED: November 5, 1975 I

I I-TABLE 2 Acc. Acc. Plant Plant Cap. Cap. as Plant Acc. Plant Est. Comp. Comp. as percent Year Company Plant Est. PJM PJM percent Cap . Cap. by Compa~n Cap. Reserve of Comp. Cap. Cap. Reserve of PJM Cop.

                                        .mw                mw                mw          percent                            mw       percent 14]
                                                                             %)*             W   _*I   )=_.)/(6)x 100        (9)             )t    (10) =(4)(9xy1 1975     PP&L     Martins Cr. #3          800              800                NA            NA               NA Accumulated Cap.      800 41810       30.9                  1.9 1977    GPU       Gilbert                 130               130             6688          13.8               1.9 PP&L      Martins Cr. #4         800              1600              6287          55.2             25.4 Accumulated Cap. 1730 45203        26.8                 3.8 1981    PECO      Limerick 11           1055             1055               9971          11.4             10.6 DPL       Summit #1              655              655              3364           28.9 PECO                                                                                             .19.4 Summit H1               115              115             9971           11.4               1.1 Accumulated Cap. 3555 53341       21.5                  6.7 1982    PECO      Limerick 12           1055             2110             10904           15.6             19.4 PSE&G     Hope Cr. #13/          990              990             11184          20.2               8.8 ACE       Hope Cr. #1            110               110             2257           18.0              4.9 Accumulated Cap. 5710 58477       26.9                  9.8 1984    PS E&G   Hope Cr. #2Y            990             1980             12174           19.9             16.3 ACE      Hope Cr. #2             110              220              2547           17.0              8.6 DLP      Summit #22/           .655              1310              4019          22.9             32.6 PECO     Summit 12               115              230             12050          16.1               1.9 Accumulated Cap. 7580                                                                                                              12.1 62757       23.9 jVCompiled from data furnished to DRBC by Delaware River Basin Electric Utility, Group, September 22, 1975, and data will change over time as the Utilities adapt their plans to changing                                          MAAC Report, April 1, 1975. Note that these conditions and technology; for example, the Summit Generating Station (inclvded above) has been withdrawn within recent days.

2/Joint ownership - DPL (85%); PECO (15%) 3/Joint ownership - PSE&G (90%); ACE (10%)

DOCKET NO. D-69-210 CP DELAWARE RIVER BASIN COMMISSION Philadelphia Electric Company Limerick Nuclear Generating Station Limerick Township, Montgomery County, Pennsylvania PROCEEDINGS This is an application submitted by the Philadelphia Electric Company to the Delaware River Basin Commission on March 5, 1970, for review of a project to withdraw surface water and discharge wastewater used in the operation of a proposed nuclear-fueled steam-electric generating station consisting of two nuclear units. By letter dated July 30, 1971, the Philadelphia Electric Company amended its original application to include emergency shutdown water supply. Meanwhile, a special public hearing on the project, together with the concurrently pending Newbold Island project, was held by this Commission on July 16, 1970. This hearing was for the stated purpose of receiving testimony on the effects of these two projects on the water resources in the area. The application was reviewed for inclusion of the project in the Comprehensive Plan and approval under Section 3.8 of the Delaware River Basin Compact. The applicant has also filed Iwo applications, for an industrial waste permit covering effluents from the proposed station and for a stream encroachment permit for intake and outfall structures, with the Commonwealth of Pennsylvania's Department of Environmental Resources. (PaDER). These are expected to be forwarded to the Commission under Administrative Agreements, after action by the department. An application for a construction permit is pending before the Atomic Energy Commission as Docket Nos. 50-352 and 50-353. COMPREHENSIVE PLAN DESCRIPTION Purpose -- The purpose of this project is the construction and operation of a nuclear power plant with two units having a net electrical capacity of 1100 megawatts each, with circulating cooling water for the steam turbines to be furnished from cooling towers with makeup water to be drawn from the Schuylkill River or Perkiomen Creelk. Location -- The project will be located on a 587-acre site on the east bank of the Schuylkill River, in Limerick Township, Montgomery County, Pennsylvania, about 1.7 miles south of the nearest part of the Borough of Pottstown. A water intake structure will be located on the Schuylkill River at river mile 92.47 - 48.22 and a blowdown and liquid waste discharge structure will be located at river mile 92.47 - 47.94. An additional water intake structure will be located on Perkiomen Creek at river mile 92.47 - 32.3 - 10.5, from which water will be pumped by pipeline to the power plant site.

2. Service Area -- The Philadelphia Electric Company will be the sole owner of the Limerick project and the power developed at the plant will be distributed throughout its service area. The power will also be available for transmission to other areas via the Pennsylvania-New Jersey-Maryland Interconnection. Physical features -- (a) Facilities: The main facilities at the site will be two reactor buildings, two turbine buildings, two hyperbolic cooling towers, admin istrative building, service buildings, fuel handling building, and water treatment building. The principal structures involved in the cooling water system are: (1) Water intake structures, both on the Schuylkill River and on the Perkiomen Creek to furnish non-consumptive needs and makeup water to cooling towers. The applicant states that these intake structures will be designed, installed, operated and maintained in accordance with all state, federal and Commission requirements. (2) Two hyperbolic natural-draft cooling towers, each approximately 475 feet in diameter at the base and 500 feet high. (3) Pumping stations and pipelines to move the required quantities of water. (b) Water Requirements: The water requirements of the plant are made up of consumptive, non-consumptive, and emergency shutdown use as follows: Consumptive Use Non-consumptive Use I unit 2 units 1 unit 2 units Normal Operating Average rate - cfs (mgd) 27 (17.5) 54 (35) 10 (6.5) 20 (12.9) Maximum rate - cfs (mgd) 33 (21.3) 65 (42) 12 (7.8) 22 (14.2) Emergency Shutdown* Average rate - cfs (mgd) 31 (20) Maximum rate - cfs (mgd) 38 (24.7) ACTION BY. ATOMIC ENERGY COMMISSION STAFF The applicant, in accordance with established procedures, has applied to the Atomic Energy Commission for a construction permit (which would ultimately be followed at a later stage by an operating permit). During the course of the proceedings before the AEC, staff concluded that it would not be appropriate to assume at this time that the large quantities of water required by the project would necessarily be available from the Tocks Island Dam and Reservoir which has been designed by the Corps of Engin eers but is still awaiting clearance from the CEQ. Accordingly, the AEC Director of Licenzing, on November 30, 1972, wrote to the applicant stating:

• (Emergency Shutdown Use - This use assumes both cooling towers knocked out by earthquake and SchuyTki-Rivcr water pumped by diesel power.)

a-3.

                     "In view of this uncertainty, you are requested to furnish evidence of a firm commitment, not contingent on the approval of the Tocks Island project, from the Delaware River Basin Commission to allocate the required amount of water for plant operation. The regulatory staff will not recommend that a construction permit for Limerick Generating Station be issued until all appropriate and necessary permits, certification, and allocation to assure an adequate supply of water have been obtained from the Delaware River Basin Commission."

Effect of NEPA -- The applicant, thus barred from further consideration by the AEC, pending resolution of its water supply problem, thereupon pressed this Commission for favorable action upon its long-pending application for approval under Section 3.8 of.the Compact, upon which a special public hearing had been held in July 1970. In view of the NEPA,. however, the Commission, as a federal-interstate body, cannot approve the project until the full disclosure provisions of NEPA have been satisfied. In December 1972, a draft environmental statement was circulated by the AEC staff in accordance with applicable guidelines. This Commission and 12 other federal, state and local agencies have been requested to comment on the draft statement (a document of some 500 pages). Such comments have been prepared by this Cbmmis sion's staff and are about to be approved by the Commission for forwarding to AEC. The AEC draft statement of December 1972 concludes as follows:

                   "7. On the basis of the analysis and evaluation set forth in this Statement, after weighing the environmental, economic, technical, and other benefits of Limerick Station, Units 1 and 2, against environmental costs and considering available alternatives, it is concluded that the action called for under NEPA and Appendix D to 10 CFR Part 50 is the issuance of a construction permit for the facility as described subject to the following conditions for protection of the environment...
                  "8. This Draft Environmental Statement has been prepared based upon the assumption -that the Delaware River Basin Commission will issue a permit for allocation of an adequate water supply for the Point Pleasant Diversion project.

Serious questions have been raised concerning this assumption. We have concluded that until the question of water avail ability is resolved, we will not continue the licensing process further than issuing the Draft Environmental Statement and evaluating the resulting comments."

4. It is thus clear from the AEC letter of November 30 and the concluding sentence of the Draft Environmental Statement, that the AEC is calling upon the Delaware River Basin Commission to act upon the water supply aspects of the application before this Commission before a final environmental impact statement will be prepared. This Commission could take the view that there is no way that it may lawfully proceed under NEPA in the absence of a final environmental impact statement under Section 102 of NEPA. Yet the agency which is charged as the "lead agency" under Section 5(b) of the CEQ Guidelines in the environmental assessment process will not bring that process to a conclusion unless this Commission first acts. The impasse as described is the occasion for consideration by this Commission of some form of action which would comply with the letter and spirit of NEPA and also resolve the legitimate concerns of AEC. The problem is peculiarly related to the uniquely complicated type of projec.t under consideration, where more than one agency is involved and the major federal actions significantly affecting the quality of the human environment are divided but inter-related among the involved agencies. The CEQ Guidelines for the preparation of Section 102 statements under these circumstances have suggested the use of a "lead agency" concept. CEQ has advised as follows:

                    "Whichever procedure is followed, the two critical considera tions inherent in the provisions of Section 5(b) are: (1) evaluation of the entire project; and (2) preparation of the 102 statement before any of the participating agencies has taken major or irreversible action with respect to the project. See Upper Pecos Ass'n v. Stans, 23 ERC 1418 (10th Cir. 1971), pet'n for cert.

pending, 40 USLW 3444 No. 71-1133, Mar. 6, 1972."

• This Commission has concluded that the only sensible way of proceeding, given the legal and administrative constraints which have been described, would be for this Commission to consider the water supply aspects of the application, and to act in light of such consideration in such a way that its action will have no environmental effect unless and until an environmental evaluation of the entire project has been completed under Section 102 of NEPA. This can be done by withholding any of the formal approvals which are required under the Delaware River Basin Compact before a project may proceed, and by making any water allocation specifically contingent upon the acceptance by the CEQ of the environmental impact statement prepared and filed by the lead agency. In the Commission's view, such an action would be neither major nor irreversible in its effect on the human environment, within the meaning of the statute, particularly in view of the unique inter-relationship of the AEC as "lead agency" with the proceeding before this Commission.

*Same case, 452 F. 2d 1223, certiorari granted but dismissed as moot after action challenged was withdrawn.
                                                                                    /

5. FINDINGS According to the Commission's projections of water demand throughout the basin and of the available water supply, there would be insufficient supply without the Tocks Island Reservoir to meet the needs of the applicant together with other basinwide needs. (See staff report, "Water Demands in the Delaware River Basin as Related to the Tocks Island Reservoir Project - November 1971", and Section 2-3.4 of the Comprehensive Plan, Section X, Water Quality Standards for the Delaware River Basin.) The doctrine of equitable apportionment would not permit the approval of the water supply aspects of the application under such circumstances, unless other compensating sources of water supply are developed. To require the applicant to await the outcome of the environmental and economic assessment of the Tocks Island project which is currently under way, however, could greatly prejudice the public interest in having adequate electric power supplies available to meet the antic ipated demand. Since it will be several years before the project will actually need a water supply, and the Tocks Island questions can meanwhile be resolved one way or the other, it would be both equitable and prudent to permit the project to proceed, given the safeguard of an alternative source of water supply if Tocks Island were not to be available. Within this framework of decision, the Commission finds: Sources of Water Supply

1. Schuylkill River Schuylkill River water at the plant site may be used for nonconsumptive use whenever the effluent discharged back to the river meets all applicable water quality standards.

Schuylkill River water at the plant may be used for consumptive use when flow (not including future augmentations of flow from Commission-sponsored projects) as measured at the Pottstown gage is in excess of 530 cfs (342 mgd) with one unit in operation and 560 cfs (362 mgd) with two units in operation with the following exceptions: (a) There shall be no withdrawals when river water temperatures below the Limerick station are above 150 C except during April, May and June when the flow as measured at the Pottstown gage is in excess of 1791 cfs (1158 mgd). (b) Use of the Schuylkill River will be limited to a withdrawal that will result in an effluent that meetsall applicable water quality standards. The constraints on nonconsumptive use of Schuylkill River water are necessary to prevent violation of total dissolved solids, stream quality objectives and effluent quality requirements of the Commission's water quality regulations. The constraint on consumptive use of Schuylkill River water is to protect water quantity and water quality below the Limerick Station. Both sets of constraints would be suspended in the event of any operational emergency requiring a shutdown of the plant.

6.

2. Perkiomen Creek Perkiomen Creek water may be used when flows as measured at the Graterford gage are in excess of 180 cfs (116 mgd) with one unit in operation and 21 0 cfs (136 mgd) with two units in operation, exclusive of any water pumped from the Delaware River.

The constraint on the use of Perkiomen Creek waler would permit the use only when the flow at Graterford was above the long-term median flow of 150 cfs.

3. Delaware River The Delaware River, as augmented for the purpose of water supply by upstream reservoirs may be used via the Point Pleasant pumping facilities, a pipeline, the East Branch of Perkiomen Creek and Perkiomen Creek with the limitations that such use will not reduce the flow as measured at the Trenton gage below 3000 cfs (1940 mgd), and that such use will not be permitted when the flow as measured at the Trenton gage is less than 3000 cfs (1940 mgd), provided that annually after pumping from the Delaware River has commenced, the rate of pumping will be maintained at not less than 27 cfs (17.5 mgd) throughout the normal low flow season for the protection of aquatic life in Perkiomen Creek and its East Branch regardless of ultimate downstream consumptive use requirements. During periods of high natural flow in East Branch Perkiomen Creek, pumping from Point Pleasant shall be-kept at a level so as not to aggravate high water levels.

This constraint would prohibit the use of the Delaware River water when such use would reduce the flow in the river at the Trenton gage below 3000 cfs, which is required to meet the salinity objective in the estuary of 250 mg/I at mile 92.47 (mouth of the Schuylkill River). Other The facilities, techniques and procedures for the disposal of liquid, solid and gaseous wastes, as described in the application and supporting documents, and their effect on water quality, and the adequacy of the applicant's proposed program of monitoring the environment cannot be evaluated without an environmental impact statement required by law. DECISION I. Full consideration of the project, as described above, including Compre hensive Plan addition and section 3.8 review, is deferred pending the completion of an environmental impact'statement as required by law. II The water supply features of the project are conditionally approved within the limintations of the above Findings, and subject to the following conditions:

a. Approval is subject to all conditions imposed by the United States Atomic Energy Commission and the Pennsylvania Department of Envt ronmental Resources,

,and it is subject to further review and modifications in accordance with the findings of an environmental impact statement, for which the Atomic Energy Commission is the II I . .. -. _ II

r' 7.

b. Whenever the flow constraints cited in the above Findings prevent it-e applicant from operating the plant at full load, the applicant shall operate the plant only at such percentages of full load as the available water supply allows, as determined by the Commission.

c. Prior to January 1, 1977, the Commission will, in its sole discretion, determine the adequacy of the then existing storage facilities on the Delaware River or its tributaries together with additional storage to be built to supply all needs (including the applicant's) for water supply from that source by the year 1980. If the Commission then determines that the storage will not be adequate for all projected needs of the basin, the applicant will build or cause to be built, at its own expense, at a location approved 'by the Commission, for service in 1980, a reservoir of sufficient storage capacity to assure the water supply needed for consumptive use by the Limerick plant, during periods when such use would reduce the flow in the Delaware River at

'the Trenton gage below 3000 cfs. Storage and release of water in such facility will be under the Cqmmission's regulation, at the expense of the applicant.

d. Beginning one year prior to the first commercial operation date of Unit 1 at the Limerick plant, the applicant will pay for metered quantities of water withdrawn thereafter at the several locations described above. The price of waters so taken from the Schuylkill River, Perkiomen Creek, and the Delaware River will be determined in accordance with the Commissions' water supply policy, heretofore

.adopted or as may be amended hereafter. Ill. Prior to any use, withdrawal or taking of water pursuant to this decision, the applicant shall re-submit the project pursuant to Section 3.8 of the Compact, and this decision shall not be construed to commit the Commission to any particular final action nor will such action be taken unless and until it is justified by a final environ mental impact statement. BY THE COMMISSION DATED: March 29, 1973

DOCKET NO. D-69-210 CP DELAWARE RIVER BASIN COMMISSION Philadelphia Electric Company Limerick Nuclear Generating Stalion Limerick Township, Montgomery County, Pennsylvania PROCEEDINGS This is an application submitted by the Philadelphia Electric Company to the Delaware River Basin Commission on March 5, 1970, for review of a project to withdraw surface water and discharge wastewater used in the operation of a proposed nuclear-fueled steam-electric generating station consisting of two nuclear units. By letter dated July 30, 1971, the Philadelphia Electric Company amended its original application to include emergency shutdown water supply. Meanwhile, a special public hearing on the project, together with the concurrently pending Newbold Island project, was held by this Commission on July 16, 1970. This hearing was for the stated purpose of receiving testimony on the effects of these two projects on the water resources in the area. The application was reviewed for inclusion of the project in the Comprehensive Plan and approval under Section 3.8 of the Delaware River Basin Compact. The applicant has also filed two applications, for an industrial waste permit covering effluents from the proposed station and for a stream encroachment permit for intake and outfall structures, with the Commonwealth of Pennsylvania's Department of Environmental Resources. (PaDER). These are expected to be forwarded to the Commission under Administrative Agreements, after action by the department. An application for a construction permit is pending before the Atomic Energy Commission as Docket Nos. 50-352 and 50-353. COMPREHENSIVE PLAN DESCRIPTION Purpose -- The purpose of this project is the construction and operation of a nuclear power plant with two units having a net electrical capacity of 1100 megawatts each, with circulating cooling water for the steam turbines to be furnished from cooling towers with makeup water to be drawn from the Schuylkill River or Perkiomen Creek. Location -- The project will be located on a 587-acre site on the east bank of the Schuylkill-River, in Limerick Township, Montgomery County, Pennsylvania, about 1.7 miles south of the nearest part of the Borough of Pottstown. A water intake structure will be located on the Schuylkill River at river mile 92.47 - 48.22 and a blowdown and liquid waste discharge structure will be located at river mile 92.47 - 47.94. "An additional water intake structure will be located on Perkiomen Creek at river mile 92.47 - 32.3 - 10.5, from which water will be pumped by pipeline to the power plant site.

2. Service Arca -- The Philadelphia Electric Company will be the sole owner of the Limerick project and the power developed at the plant will be distributed throughout its service area. The power will also be available for transmission to other areas via the Pennsylvania-New' Jersey-Maryland Interconnection. Physical features -- (a) Facilities: The main facilities at the site will be Iwo reactor buildings, two turbine buildings, two hyperbolic cooling towers, admin istrative building, service buildings, fuel handling building, and water treatment building. The principal structures involved in the cooling water system are: (1) Water intake structures, both on the Schuylkill River and on the Perkiomen Creek to furnish non-consumptive needs and makeup water to cooling towers. The applicant states that these intake structures will be designed, installed, operated and maintained in accordance with all state, federal and Commission requirements. (2) Two hyperbolic natural-draft cooling towers, each approximately 475 feet in diameter at the base and 500 feet high. (3) Pumping stations and pipelines to move the required quantities of water. (b) Water Requirements: The water requirements of the plant are made up of consumptive, non-consumptive, and emergency shutdown use as follows: Consumptive Use Non-consumptive Use I unit 2 units 1 unit 2 units Normal Operating Average rate - cfs (mgd) 27 (17.5) 54 (35) 10 (6.5) 20 (12.9) Maximum rate - cfs (mgd) 33 (21.-3) 65 (42) 12 (7.8) 22(14.2) Emergency Shutdown* Average rate - cfs (mgd) 31 (20) Maximum rate - cfs (mgd) 38 (24.7) ACTION BY ATOMIC ENERGY COMMISSION STAFF The applicant, in accordance with established procedures, has applied to the Atomic Energy Commission for a construction permit (which would ultimately be followed at a later stage by an operating permit). During the course of the proceedings before the AEC, staff concluded that it would not be appropriate to assume at this time that the large quantities of water required by the project would necessarily be available from the Tocks Island Dam and Reservoir which has been designed by the'Corps of Engin eers but is still awaiting clearance from the CEQ. Accordingly, the AEC Director of Licensing, on November 30, 1972, wrote to the applicant stating:

                                          /

• (Emerqency Shutdown Use - This use assumes both cooling towers knocked out by earthquake and SchuylkillRiver water pumped by diesel power.)

3.

                  "- "In view of this uncertainty, you are requested to furnish evidence of a firm commitment, not contingent on the approval of the Tocks Island project, from the Delaware River Basin Commission to allocate the required amount of water for plant operation. The regulatory staff will not recommend that a construction permit for Limerick Generating Station be issued until all appropriate and necessary permits, certification, and allocation to assure an adequate supply of water have been obtained from the Delaware River Basin Commission."

Effect of NEPA -- The applicant, thus barred from further consideration by the AEC, pending resolution of its water supply problem, thereupon pressed this Commission for favorable action upon its long-pending application for approval under Section 3.8 of.the Compact, upon which a special public hearing had been held in July 1970. In view of the NEPA,.however, the Commission, as a federal-interstate body, cannot approve the project until the full disclosure provisions of NEPA have been satisfied. In December 1972, a draft environmental statement was circulated by the AEC staff in accordance with applicable guidelines. This Commission and 12 other federal, state and local agencies have been requested to comment on the draft statement (a document of some 500 pages). Such comments have been prepared by this Cbmmis sion's staff and are about to be approved by the Commission for forwarding to AEC. The AEC draft statement of December 1972 concludes as follows:

                  "7. On the basis of the analysis and evaluation set forth in this Statement, after weighing the environmental, economic, technical, and other benefits of Limerick Station, Units 1 and 2, against environmental costs and considering available alternatives, it is concluded that the action called for under NEPA and Appendix D to 10 CFR Part 50 is the issuance of a construction permit for the facility as described subject to the following conditions for protection of the environment...
                  "8. This Draft Environmental Statement has been prepared based upon the assumption that the Delaware River Basin Commission will issue a permit for allocation of an adequate water supply for the Point Pleasant Diversion project.

Serious questions have been raised concerning this assumption. We have concluded that until the question of water avail ability is resolved, we will not continue the licensing process further than issuing the Draft Environmental Statement and evaluating the resulting comments."

                                                                                /

I . 4. It is thus clear from the AEC letter of November 30 and the concluding sentence of the Draft Environmental Statement, that the AEC is calling upon the Delaware River Basin Commission to act upon the water supply aspects of the application before this Commission before a final environmental impact statement will be prepared. This Commission could take the view that there is no way that it may lawfully proceed under NEPA in the absence of a final environmental impact statement under Section 102 of NEPA. Yet the agency which is charged as the "lead agency" under Section 5(b) of the CEQ Guidelines in the environmental assessment process will not bring that process to-a conclusion unless thit Commission first acts. The impasse as described is the occasion for consideration by this Commission of some form of action which would comply with the letter and spirit of NEPA and also resolve the legitimate concerns of AEC. The problem is peculiarly related to the uniquely complicated type of projec.t under consideration, where more than one agency is involved and the major federal actions significantly affecting the quality of the human environment are divided but inter-related among the involved agencies. The CEQ Guidelines for the preparation of Section 102 statements under these circumstances have suggested the use of a "lead agency" concept. CEQ has advised as follows:

                          "Whichever procedure is followed, the two critical considera tions inherent in the provisions of Section 5(b) are: (1) evaluation of the entire project; and (2) preparation of the 102 statement before any of the participating agencies has taken major or irreversible action with respect to the project. See Upper Pecos Ass'n v. Stans, 23 ERC 1418 (10th Cir. 1971), pet'n for cert.

pending, 40 USLW 3444 No. 71-1133, Mar. 6, 1972."

• This Commission has concluded that the only sensible way of proceeding, given the legal and administrative constraints which have been described, would be for this Commission to consider the water supply aspects of the application, and to act in light of such consideration in such a way that its action will have no environmental effect unless and until an environmental evaluation of the entire project has been completed under Section 102 of NEPA. This can be done by withholding any of the formal approvals which are required under the Delaware River Basin Compact before a project may proceed, and by making any water allocation specifically contingent upon the acceptance by the CEQ of the environmental impact statement prepared and-filed by the lead agency. In the Commission's view, such an action would be neither major nor irreversible in its effect on the human environment, within the meaning of the statute,

   .particularly in view of the unique inter-relationship of the AEC as "lead agency" with the proceeding before this Commiission.

t

• Same case, 452 F. 2d 1223, certiorari granted but dismissed as moot after action challenged was withdrawn.

I . 5. FINDINGS According to the Commission's projections of'water and of the available water supply, there would demand'throughout the basin be insufficient supply without the Tocks Island Reservoir to meet the needs of the applicant together with other basinwide needs. (See staff report, "Water Demands in the Delaware River Basin as Related to the Tocks Island Reservoir Project - November 1971 ", and Section 2-3. 4 of the Comprehensive Plan, Section X, Water Quality Standards for the Delaware River Basin.) The doctrine of equitable apportionment would not permit the approval of the water supply aspects of the application under such circumstances, unless other compensating sources of water supply are developed. To require the applicant to await the outcome of the environmental and economic assessment of the Tocks Island project which is currently under way, however, could greatly prejudice the public interest in having adequate electric power supplies available to meet the antic ipated demand. - Since it will be-several years before the project will actually need a water supply, and the Tocks Island questions can meanwhile be resolved one way or the other, it would be both equitable and prudent to permit the project to proceed, given the safeguard of an alternative source of wafer supply if Tocks Island were not to be available. Within this framework of decision, the Commission finds: Sources of Water Supply

1. Schuylkill River Schuylkill River water at the plant site may be used for nonconsumptive use whenever the effluent discharged back to the river meets all applicable water quality standards.

             - Schuylkill River water at the plant may be used for consumptive use when flow (not including future augmentations of flow from Cohmmission-sponsored the Pottstown gage is in excess of 530 cfs (342                             projects) as measured at mgd) with one unit in operation and 560 cfs (362 mgd) with two units in operation with the following exceptions:

(a) There shall be no withdrawals when river water temperatures below the Limerick station are above 150 C except during April, May and June when the flow as measured'at the Pottstown gage is in excess of 1791 cfs (1158 mgd). (b) Use of the Schuylkill River will be limited to a withdrawal that will result in an effluent that meetsall applicable water quality standards. The constraints on nonconsumptive use of Schuylkill prevent violation of total dissolved solids, stream River water are necessary to quality objectives and effluent quality requirements of the Commission's water quality regulations. The constraint on consumptive use of Schuylkill River water is to protect water quantity and water quality below the Limerick Station. Both sets of constraints would be suspended in the event of any operational emergency requiring a shutdown of the plaint.

6.

2. Perkiomen Creek Perkiomen Creek water gage are in excess.of 180 cfs (116may be used when flows as measured at the Graterford mgd) with one unit in operation and with two units in operation, exclusive 210 cfs (136 mgd) of any water pumped from the Delaware River.

The constraint on the use of Perkiomen only when the flow at Graterford Creek water would permit the use was above the long-term median flow of 150 cfs.

3. Delaware River The Delaware River, as augmented reservoirs may be used via the Point for the purpose of water supply Pleasant pumping facilities, a pipeline, by upstream Branch of Perkiomen Creek and Perkiomen the East not reduce the flow as measured at Creek with the limitations that such the Trenton gage below 3000 cfs use will that such use will not be permitted (1940 mgd), and when the flow as measured at the less than 3000 cfs (1940 mgd), provided Trenton gage is that annuqlIly after pumping from River has commenced, the rate of the Delaware pumping will be maintained at not (17.5 mgd) throughout the normal low flow season for the protection less than 27 cfs Perkiomen Creek and its East Branch of aquatic life in regardless of ultimate downstream requirements. During periods of consumptive use high natural flow in East Branch Perkiomen pumping from Point Pleasant shall be kept at a level so as not to aggravate Creek, high water levels.

This constraint would prohibit the use would reduce the flow in the use of the Delaware River river at the Trenton gage below 3000water when such required to meet the salinity objective cfs, which is in the estuary of 250 mg/I at mile 92.47 (mouth of the Schuylkill River). Other The facilities, techniques gaseous wastes, as described in the and procedures for the disposal of liquid, solid and application and supporting documents, on water quality, and the adequacy and their effect of the applicant's proposed program the environment cannot be evaluated of monitoring without an environmental impact statement required by law. e DECISION I. Full consideration of the project, as described above, including Compre hensive Plan addition and section 3.8 review, is deferred pending the completion an environmental impact statement of as required by law. II. The water supply features of the the limitations of the above Findings, project are conditionally approved within and subject to the following conditions:

a. Approval is subject to all conditions Atomic Energy Commission and the imposed by the United States Pennsylvania Department of Environmental

,and it is subject to further review Resources, and modifications in accordance of an environmental impact statement, with the findings for which the Atomic Energy Commission "lead agency." is the

b. Whenever the flow constraints cited in the the applicant from operating the above Findings prevent plant at full load, the applicant plant only at such percentages of full load as the available water shall operate the supply allows as determined by the Commission.

c. Prior to January 1, determine the adequacy of the then 1977, the Commission will, in its sole discretion, existing storage facilities on the or its tributaries together with additional Delaware River (including the applicant's) for water storage to be built to supply all supply from that source by the year needs the Commission then determines 1980. If that the storage will not be adequate needs of the basin, the applicant for all projected will build at a location approved by the Commission, or cause to be built, at its own expense, storage capacity to assure the water for service in 1980, a reservoir of sufficient supply needed for consumptive use plant, during periods when such by the Limerick use would reduce the flow in the the Trenton gage below 3000 cfs. Delaware River at Storage and release of water in such be under the Cqmmission's regulation, facility will at the expense of the applicant.

d. Beginning one year prior to Unit I at the Limerick plant, the the first commercial operation applicant will pay for metered quantitiesdate of withdrawn thereafter at the several of water locations described above. The token from the Schuylkill River, price of waters so Perkiomen Creek, and the Delaware determined in accordance with the River will be Commissions' water supply policyj adopted or as may be amended hereafter. heretofore Ill. Prior to any use, withdrawal the applicant shall re-submit the or taking of water pursuant to this project pursuant to Section 3.8 decision, this decision shall not be construed of the Compact, and to commit the Commission to any action nor will such action be taken particular final unless and until it is justified by a final environ mental impact statement.

BY THE COMMISSION DATED: March 29, 1973

                            /-

DOCKET NO. D-71-167 (amended) DELAWARE RIVER BASIN COMMISSION Jersey Central Power and Light Company Expansion of the Gilbert Electric Generating Station Holland Township, Hunterdon County, New Jersey Delaware River Basin Commission Docket No. D-71-167, originally approved on July 31, 1974, is amended as follows: A. Under "FINDINGS, " Sheet 8 paragraph 6 is changed to read as follows. The original application for the subject project did not provide for the replacement of water consumed in operating the project during period of low flow. The applicant agreed to construct wells to withdraw ground water to replace the consumptive use during periods of low river flow. However, exploratory wells have been unsuccessful in developing an adequate supply from the gravels and indicate deep rock wells would be required to sustain the required yield. Deep rock wells would lower ground water pressure over a wide area. Considering Unit 8 will only be operated as a peaking unit, the applicant requests to operate Unit 8 under the "river follower" procedures until the replacement water is available from another source.

3. Under "DECISION, " Sheet 10 "m" is amended to read as follows.

m. Whenever the flow of the river as measured at the Trenton gauge falls below 1940 mgd (3000 cfs) or is projected to fall below 1940 mgd, for a period of more than three days (or such other flow or such other period as may subsequently be mutually acceptable to the Commission and Jersey Central Power and Light Company), the Company will, during the period prior to the completion and initial filling of augmentation facilities approved by the Commission pursuant to Section 3.8 of the Compact, upon direction of the Commission, reduce the withdrawal of water from one or more of its facilities in the Delaware River Basin (including the Gilbert Station) by an amount averaging 1.29 mgd (24fs)and will, after completion and initial filling of such augmentation facilities, upon direction of the Commission, provide to the river by the use of such facilities, an amount of water equal to the depletive water use of Gilbert Station Unit No. 8.

BY THE COMMISSION DATED: September 30, 1976}}