Welcome to the Exelon third quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. (Operator Instructions) I’d now like to turn the conference over to Karie Anderson, Vice President of Investor Relations. Please go ahead.

Thank you, Beverley. Good morning, welcome to Exelon’s third quarter 2009 earnings review and conference call update. Thank you for joining us today. We issued our earnings release this morning; if you haven’t received that the release is available on the Exelon website at www.exeloncorp.com or you can call Dolores Munguia at 312-394-5222 and she will fax or email the release to you. Before we begin today’s discussion let me remind you that the earnings release and other matters we discuss on today’s call contain forward-looking statements and estimates that are subject to various risks and uncertainty, as well as adjusted non-GAAP operating earnings. Please refer to today’s 8-K or other filings for discussions of factors that may cause results to differ from management’s projections, forecasts and expectations and for a reconciliation of operating to GAAP earnings. Leading the call today are John Rowe, Exelon’s Chairman and Chief Executive Officer; and Matthew Hilzinger, Exelon’s Senior Vice President and Chief Financial Officer. They are joined by other members of Exelon’s Senior Management Team’s who will be available to answer your questions. We have scheduled 60 minutes for this call. I will now turn the call over to John Rowe, Exelon’s CEO.

Thank you, Karie. Good morning everyone. My key messages for today are on slide three of your materials, but first, we are achieving our financial commitments despite difficult weather, difficult economic and difficult marketing conditions. We again delivered excellent generation and utility performance through the summer months. We have increased our financial flexibility by using tools given by the improving capital markets and also by Federal pension legislation. The Illinois legislature passed the bad debt rider for ComEd, which is now awaiting Illinois Commerce Commission implementation. Our utilities unveiled Smart Grid plans totaling $1 million of potential investment and have filed applications for Federal stimulus dollars for part of those funds. In Washington we continue to be very active in the push for climate change legislation. Now let me turn to our financial and operating results for the quarter. We reported operating earnings of $0.96 per share for the quarter. That is in the upper half of our guidance range of $0.90 to $1 per share. We achieved this in spite of $0.07 per share of unfavorable weather conditions at ComEd and PECO during the third quarter as compared to our normal weather assumption. The generation fleet performed well with a capacity factor of 94.7% in the nuclear fleet for the quarter. Our fossil fleet had the highest year-to-date commercial availability factor that it has at 94.1%, this is the highest since we started tracking in 2005. The hedges we entered into in prior years when markets were better again proved effective at Exelon Generation, with average realized energy margins only 1% lower quarter-over-quarter despite, spot prices being 60% and 50% lower at PJM-West hub and Ni-Hub. Our delivery companies continue to execute with ComEd delivering the best year-to-date results in its recorded history for both outage duration and outage…

Thank you, John, and good morning, everyone. As John mentioned, Exelon produced results consistent with our expectations for the quarter despite historically cool weather at both utilities and the continued impacts of the economy on our business. I’ve highlighted my key messages for this morning on slide four. Moving to slide five, we reported operating earnings of $0.96 per share in the third quarter of 2009 compared to $1.07 in the third quarter of 2008. Our results reflect higher earnings at ComEd offset by reduced earnings at Exelon generation with PECO holding flat. Turning to Exelon Generation on slide six, Generation’s results were $0.16 per share lower quarter-over-quarter driven by portfolio and market conditions as depressed power prices continue to be seen across all regions. We saw a $0.06 per share decline in market conditions with $0.03 per share coming from our South Region portfolio due to declines in natural gas prices and spark spreads. We also saw $0.04 of unfavorability in rate around fuel related to higher nuclear fuel cost and lower nuclear volumes. Yet despite increases in pension and OPEB expenses Generation held O&M flat in the third quarter compared to the prior year and is on track to meet its increased goal for the full year O&M cost savings. As you can see on slide seven, our 2009 hedged amounts of 98% to 100% reflect a fully hedged position for us as we always leave a small amount of operational length to address unplanned outages in the fleet. Our ratable hedging program has an enabled us to realize revenue in our portfolio at significantly higher levels than spot market prices, because we are on a 36 month ratable plan we locked in the large majority of our 2009 sales in 2007 and 2008, which has resulted in…

(Operator Instructions) Your first question comes from Hugh Wynne - Sanford Bernstein.

You mentioned that, you expect cash from operations to rise by about $150 million to $5.6 billion, even though you are now contributing $350 million to your pension fund, implying that you’ve been able to increase cash generation of the business by something like $500 million. When I look at your financial coverage ratios, it seems to be having a materially positive impact. Now, based on your cash flow statement, the improvement seems to derive from deferred income taxes, which are $740 million at the end of nine months as compared to about $150 million at the end of six months. My question then is, what have you been able to do on the tax front? Is this a benefit that’s going to reverse next year or can this cash be put in the bank? What should we expect on a going-forward basis?

Let me just start with overall where we are with cash, that the $850 million is against our original planning assumptions and guidance that we had given to the Street, so about $400 million of that is coming from the stimulus plan. About $300 million of that is coming from some tax planning that Tom Terry and the tax groups have done around repairs deductions. This quarter we got a methodology change with the IRS around repairs reduction, that’s going to generate about $300 million this year. There’s a piece of that that will flow into next year and the remaining balance is really coming from some of the PJM changes that we get in working capital. So that’s where the $850 million is coming from. You are seeing the deferred taxes change a little bit. It’s primarily around the manufacturer’s deduction that we see and the repairs allowance that we expect to get a benefit from. So the manufacturer’s deduction, I think next year is expected to increase and we may get a little bit of a benefit up and beyond where we are this year and the repairs deduction, as I said, is more onetime and we’ll get a little bit as we go into next year.

Matt, can you try to the comment just quickly on the forward hedging program? It seems that your estimated open gross margin in 2011 is now about $400 million lower than you estimated at the end of Q1 and that has occurred despite a slight increase of $0.20 in the price of natural gas and it seems to reflect about a $2.50 reduction in ATC Energy prices at Ni-Hub and PJM West. My question is, do you see that compression and forward spark spreads as persisting? What impact, if any has that forward spark spread compassion had on your hedging?

Ken Cornew, is much better to answer that than, Matt, for me. Ken.

As you know, we study these prices in the Midwest and across our whole portfolio very carefully. I think your short and quick analysis is right. We’ve seen those estimated open gross margins fall as power prices have fallen. We have been able to take the opportunity to hedge, while that was occurring and add some value with our hedges and you can see and calculate that, when you get to the expected gross margin level. Midwest power prices currently are somewhat depressed and our view is there is some upside in Midwest power prices relative to current forwards. Obviously, the prices are driven by gas and coal, future demand for electricity, new generation build such as wind build out and transmission constraints that we’ve been also following very carefully. When we analyze all those factors holistically, Hugh, we see that prices have upside, several dollars of upside in Midwest power prices. We watch the Ni-Hub spread very carefully and if you looked at 2011 earlier in the year, those spreads were significant and they have contracted and we’ve seen some very recent contraction in those spreads, which is feeding into what I just talked about. I think the power prices are a little low and have some upside to them and we’re starting to see a little bit of that movement right now in these prices.

Your next question comes from Jonathan Arnold - Deutsche Bank.

I wanted to ask another question on the open gross margin. Looking specifically at the Q3 disclosure on 2011 you’re showing a number that’s about $200 million lower than you showed at Q2 and in the reference prices that you give us are down less than $1 in terms of power and based on your own sensitivities that would kind of my math suggests explain about $50 million of the move in gross margin. So I’m just wondering what else is going on in that open gross margin number other than power price moves that would be significant?

Ken will follow up on that too, but just let me say we continue to make some sales and that’s part of the answer to the question. Ken, will you pick up?

Yes, Jonathan, as you know, the open gross margin is the implied margin of our portfolio completely unhedged, so $1 move in power price is a much larger move. We have 140,000 gigawatt-hours of nuclear power and incremental marginal power. So if you make a $1 move in price, you’re going to see a much bigger move in expected estimated open gross margin that our sensitivities are tailored toward the move in expected gross margin as a result of our hedging and hopefully I think that explains the difference.

Then just one other thing, you talked about the $100 million of additional O&M savings; I think you characterized as being one-time items. Can you remind us or talk a little about how much of the $150 million of base savings you expect now to be sustainable versus one time?

The $150 million is sustainable, the additional $100 million that we found in the third quarter, as we said, is not. It’s around areas like, as we said, managing overtime. The utilities have done an excellent job over the summer, the weather has not hampered them to require them significant storm or heat related degradation. The rest of the savings is in a lot of different buckets, it’s materials, contracting, travel, entertainment, it’s significant belt tightening across the business.

Is it fair to say that that will occur more in Q3 than in Q4 or that it was ratable?

We managed it more in three and reduced four’s budgets and baked those numbers in already. We’ll continue to look for our carriers and we believe that we’ll find some more, but this is the most substantial part we found thus far.

Your next question comes from Daniel Eggers - Credit Suisse.

John, you’re talking about climate change legislation and where that’s headed. I was just kind of the knock-on effect of whether we see renewable energy policy along those lines, how you see those policies being married together? Then how you guys would expect renewable policy or greater growth in renewable capacity to affect your power markets?

First, we believe that, like in the House bill, the ultimate Senate package will include both cap and trade and a reasonable renewable package. My latest information supporting that comes from a meeting that U.S. cap folks had with Carol Browner, where she said unequivocally. The administration, does not want an energy only bill it wants an energy and climate bill. I believe that’s where the force is happening. So I’m a little less concerned than I once was that we might get the renewable provision without the cap and trade provision. So I think that’s basically good news. Now obviously, we remain concerned that if renewable portfolio standards go too high the customer hurts, because they pay much too much for the renewables and we hurt because, the renewables depress the market and as far as we’re concerned that it’s not a good situation. I think that both in Illinois and Pennsylvania and at the Federal level, we’re going to keep those to reasonable levels. Anne Pramaggiore is here and she can spell out for you, if you want what the current Illinois standard is. We thought the Waxman-Markey provisions were fairly reasonable on the Federal standard. Frankly, we’ll be just as happy to see a Federal standard, but Anne or Dennis, do want to add anything to that?

No, I would just say in Illinois we have a renewable portfolio standard, it came into play in the 2007 legislation. It starts out at 2% in 2008 and increases to 25% in 2025 and the, I think, helpful feature from a customer standpoint is, there is a cap on impact on customer rate and it cannot exceed 2% increase to the total rate. So that’s helpful, I think in terms of managing the customer impact, but also meeting the expectation that we bring some renewables into the portfolio. Denis O’Brien: In Pennsylvania the renewable legislation was passed in 2004, kicks in the first year that each company comes out of transition. PECO has already done some early compliance with that. We think that legislation makes a lot of sense. There’s another bill in the Legislature in Pennsylvania, House Bill 80, which increases those numbers. The Legislature in Pennsylvania is pretty worn out by the budget proposition and I’m not sure much else happened this session.

I guess just one other question on the outlook for demand. Can you just run through the underlying economic assumptions behind the flattened or flattish and the negative demand growth trends you’re expecting and potential that you feel that is overly conservative versus a middle of the road set of assumptions for next year?

I think we’re pretty much consistent with nearly everybody else, which suggests that the economy has probably bottomed the recession. To quote Larry Summers and others technically ended, but we don’t see much recovery coming back very rapidly at all. In other words, we start to see some upward movement particularly at ComEd in the second half of next year, but we’re not talking about getting back to the kind of levels we were at in ‘07 and ‘08 for four or five years. Denis, Anne, do you want to add to that? Denis O’Brien: I’ll just add from a PECO perspective. 2010, we see a negative growth of 1.3%. If you take out the PECO energy efficiency estimates that are on top of that, the growth is about a negative 0.3%. So we’re seeing that our energy efficiency programs will kick in and add about a negative 1% on growth. If you just strip out the energy efficiency affect for a second, the residential starts with some negative growth in the first half and gets better in the second half. The small C&I, follows the same trend and at this point we’re calling the large C&I flat for the year. We then put the negative 1% overlay for the energy efficiency program and that overlay is being put almost wholly on the residential class.

I would add just a couple points from the ComEd standpoint. Matt mentioned the structure of our large C&I rate, actually our C&I rates in general, being helpful to mitigate our exposure. We’ve got about 98% of our C&I rates either in the demand charge or a customer charge, so that’s very helpful to us. Frankly, our overall rate structure including residential is about 64% either in demand or a customer charge. So that’s helpful to us going forward. Looking into 2010, I think in 2009 we’ve seen the large C&I class in particular. I think bring the trend line down and we see a little bit of a class shift and 2010, where the large C&I starts to comeback middle of the year and residential is probably taking a little bit more of a hit than we’ve seen in 2009. We actually went out and surveyed our large C&I customers to try to get a sense of whether what we were seeing in the model was consistent with some anecdotal evidence and it seems to be fairly consistent in that some customers are indicating they’re bringing more load back next year. Some information and data sectors as well as some green energy sector. The green energy sector seems to be indicating that they’ll bring a little bit more load back on next year.

I think just a nutshell, what we’ve seen is that the PECO load has dropped less than the ComEd load, because they have less, really every industry, it also comeback a little more slowly. So that’s the best we can do, but what we’re seeing is very much what the general economic commentary you’ll see.

I just want to ask a few more questions on that hedging, please. If you look at the percentage of expected generation hedged in the Mid-Atlantic specifically, it hasn’t changed from the second quarter. Just considering that the PECO option happened, could you just comment if there is any change in strategy with regard to hedging in the Mid-Atlantic?

There has not been a basic change in strategy. We have reviewed very carefully our position on whether there should be a change in strategy. We think we can comply with our ratable hedging guidelines and still have plenty of upside left over for the future, but with that let me have Ken answer the more specific part of your question.

As you know, we’re modeling our portfolio and expected generation dispatch and expected volumes of sales coming from load following type contracts. In the Mid-Atlantic in particular, we’ve seen a couple things since the last hedge disclosure. We’ve seen higher generation expectations in the region and that would by itself tend to lower the percent hedged calculation. Also we’re looking at load growth or lack of load growth that Denis just talked about, and switching assumptions for the load following type contracts we have in the region and we’ve made adjustments based on best information we have available there. That also will put downward pressure on the hedge percentage. That being said, we have incrementally hedged in the region to negate those and we’re still within a percentage as we disclosed. No change in strategy, we continue to hedge as our strategy has dictated consistently. We did get somewhat ahead of ratable between the first and second disclosure and were afforded with downward price pressure the ability to take a little slower approach in the third quarter, which I think has been a very positive strategy for us, but largely we are staying on plan.

I have one question that Karie Anderson has received from a number of you on the phone over the last several days and just because it’s been asked one at a time I’d like to ask it so I’d like to her to ask it, so I can answer it and have it done. Karie?

John, the question I’ve received is, what are you thinking about M&A? There’s been some specific remarks in the press this week.

Well, the remarks in the press this week have been about Calpine. We have great respect for Calpine as a company, we think they have wonderful assets and we’ve looked at them many times in the past. We’ve never been able to put together a plan for a transaction that would make any sense, because it would violate our guidelines about dilution. Our position on M&A is very simple. Our eyes are always open, but we know that most of our shareholders are very reluctant to see us get into another transaction. We deeply believe in our commitments to you that we don’t do them if they’re not going to be value added. We know you don’t want a lot of dilution. We have significant earnings challenges with the lower commodity markets and we’re focusing our attention on what we can do internally, particularly things like our Nuclear uprates starting, Ian’s Transmission Company and that sort of thing. So we’re very much internally focused and you know us well enough to know that our eyes are always open and our pocketbooks are usually closed.

Your final question comes from Paul Ridzon - KeyBanc.

John, you just answered my big question, but a follow-up is, the repair expensing versus capitalizing. Is that really all one-time or does that flow into future periods? I know Matt said, some could hit ‘10, but is there just an ongoing impact and what does that imply about rate base?

Regarding rate base, right now we’ve only claimed a benefit at the Generation Company, that’s the only place, which we’ve had the change in method approved. The biggest bit of the benefit will be in 2009, which is the year of the method change, but there will be an annual incremental benefit as we incur cost that are deductible rather than being capitalized.

The thing I would add is that the method change is in connection with the way that we do our taxes, not the way that we do our books. So the policy that we have around capital and expense remains what it’s been.

I wish to make very clear, based on 25 years of hard knocks. We make investments in our delivery customers because our companies need the investments, not because we want to build rate base. I mean rate base gets built easily enough and the issue is trying to manage your investments, so you have a high confidence in getting a return on them and that’s what we’re focused on there.

Are you looking at potentially doing something on the regulated side along the same tax strategy?

Tom?

We’re continuing to evaluate that. The IRS is more directly open to considering the method change on the generation side. They’re clearer on the criteria for getting there, but we are continuing to look at the T&D side.

Then just on the biggest piece hitting ‘09 is that because we’re getting kind of a retroactive restatement of prior year tax positions?

Yes, it’s the catch up adjustment from the beginning of the Generation business in ‘01 through the end of ‘08.

Just to close. In the third quarter, we had a sick economy and rotten weather and we met our commitments to you. We’re hard at work doing that for the fourth quarter too. I believe we can do it. I’m terribly proud of what nuclear has done in the last quarter. Denis and Frank Clark are continuing to improve PECO and ComEd. They just get better all the time. The way that Ken Cornew and Ian McLean designed the hedging strategy three, four, five years ago has been paying off for you and for us. The commodity cycle is at a low, we all know it’s a low. We’re in a hunkering down period, but we’re doing our best to continue to deliver value to you and we think both the operations and the assets continue to do that. So we will see you all at the November EEI financial conference. By that time, we’ll be able to do our best to give you an estimate on next year’s earnings. As you all know, it’s going to be a little tougher, because we have had less hedged during that period when the times were better, but we’re hard at work on making our cost cuttings work and we’re continuing to look for internal ways to grow your earnings. So we are in the mine hard at work digging coal or uranium, or whatever it is that we dig and we’ll keep making money for you. Thanks a bunch.

Thank you, Beverly. That concludes our call.

Thank you. Ladies and gentlemen, this concludes today’s conference call. You may now disconnect.