Good morning. My name is Ray and I will be your conference operator today. At this time I would like to welcome everyone to the Exelon Corporation First Quarter 2008 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 period. [Operator Instructions]. Thank you. It is now my pleasure to turn the floor over to your host, Chaka Patterson. Sir, you may begin your process.

Thank you. Good morning. Welcome to Exelon's first quarter 2008 earnings review and conference call update. Thank you for joining us today. We issued our earnings release this morning, if you haven't received it, the release is available on the Exelon website at www.exeloncorp.com. Or you can call Dolaras Modia [ph] at 312-394-5222 as 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 in today's call contains forward-looking statements and estimates that are subject to various risks and uncertainties, as well as adjusted non-GAAP operating earnings. Please refer to today's 8-K and our other SEC filings for discussions of factors that may cause results to differ from management's projections forecast and expectations and for a reconciliation of operating earnings to GAAP earnings. Leading the call today are John Rowe, Exelon's Chairman, President and CEO; and Matt Hilzinger, Exelon's Senior Vice President and Chief Financial Officer. They are joined by other members of Exelon's senior management team, who will be available to answer your questions. We have scheduled 50 minutes for this call and will reserve 30 minutes for Q&A. Please limit yourself to one question. I will now turn the call over to John Rowe Exelon CEO.

Thank you Chaka, good morning everyone. This morning I will do a quick review of the first quarter, comment on our earnings expectations for the remainder of 2008 and give you an update on our views on merger and acquisitions activity in the context of our current value proposition. We have received comments from a number of you that detail in the earnings release and press statements that we put out is more useful than a long parade of adjectives in this call. So Matt Hilzinger and I are shortening our presentation a bit compared to the norm. We circulated some slides with the press release and Matt and I will be referring to them during our comments. As we told you to expect our first quarter operating earnings of $0.93 per share were down from the first quarter of 2007. Matt Hilzinger will provide details on some of the year-over-year differences. I want to focus on the most important one. Decreased nuclear power plant output due to a larger number of plant refueling outages. This is something that we've had in the works for something and we signaled that months ago to you. In the first quarter we started five refueling outages and completed four as planned that compares to starting two and completing one in the first quarter of last year. These numbers exclude sale and want to emphasize three points. First we told you to expect them in December and we reflected them in our earnings per share guidance for the first quarter and for all of 2008. Second we maintained our industry leading performance by completing the outages on average in 24 days compared to the industry average of 41 days. Chris Crane, Chip Pardee and their team continue to do an absolutely extraordinary job with…

Thank you John, good morning everyone. As john said, we have provided a significant amount of detail regarding our results in the earnings release and the accompanying tables. Therefore I'll spend my time this morning providing some additional color around a few selected items included in the release and then discuss our view for the remainder of 2008 and Exelon's overall financial condition. Starting with slide 4, Exelon's first quarter of 2008 results are within the suggested earnings guidance range we provided for the first quarter and reflect the decrease in earnings at Exelon's Generation and PECO partially offset by an increase in ComEd's earnings. Turning to slide 5, you will see the key drivers for generations expected quarter-over-quarter slower operating earnings. As John mentioned we had more planned, nuclear outages in the first quarter of 2008 as compared to the first quarter of 2007. I'll remind you that our full year 2008 earnings guidance contemplates 12 planned refueling outages as compared to 9 in 2007. Four of those outages planned for 2008 were completed by the end of the first quarter. In addition to the planned outages, generation had 25 more unplanned outage days in the first quarter of 2008 as compared to 2007. The first quarter of 2007 was fully exceptional reflecting Exelon's best nuclear production in any quarter. Our first quarter this year however was challenged due to increased force and maintenance outages at our nuclear plants. Yet despite that we are still on target for the full year. Nuclear plant outages whether planned or unplanned impact generation's results through lower rev net fuel due to reduced nuclear volumes and higher operating and maintenance cost associated with the outage forecast [ph]. Lower energy margins due to reduced nuclear volumes by itself resulted in $0.11 per share decrease…

Thank you Matt. Operator we are ready to open for Q&A now. Question And Answer

Thank you as a reminder if you like to post a question [Operator Instructions]. Our first question comes from Jonathan Arnold of Merrill Lynch, please go ahead.

Good morning guys.

Good morning.

My question relates to tax and when I look at the face of the operating income statement it seems like the effective rate for the quarter was around 31% normally seems to be kind of more like 37. And any was that effectively baked into guidance for the year or could you just I know you called out $0.03 of tax differential, I think that difference in the rate would put the number more like $0.08, any color on that would be helpful.

John, I'll answer that. It's a very good question. It's really driven by two things, the recently effective tax rate down is in part due to the state tax settlements that we are in discussion with and that's bringing it down, and the second there is the walk that we took on the realized disposition of the assets in the New Jersey Commissioning Trust. That $0.03 actually gets juiced up a little bit more. You get a little bit more tax deduction for that, and those two things really brought the effective tax rate from about 37.5% down to 31%. So, was it based in the guidance? I think when you look at the quarter, if you are kind of nibbling on quality of earnings, if you look at kind of the tax benefit we got, compared to loss on the decommissioning trust and PPO from last year, I think they pretty much wash out. So I think from a quality of earnings standpoint, I think we feel pretty good about, in fact we feel very good about where the quarter is ending. So, we can get into it later on after this call if you want to get into a little bit more of how the decommissioning loss works from a tax basis, we can do that. I think Tom and Terry our tax guys will be happy to walk you through that. Is there any other question Jonathan?

Yeah, can I slide in one other?

Sure, go ahead Jon.

How much of the delta that you were baking into your annual guidance on nuclear refueling costs, effectively showed up in Q1 and how much of it is still to come in like in and out of the fourth quarter. It looked like a big portion of the annual guidance was in this quarter?

Yeah, there was no surprises here. Our expectations were that there was going to be a lowering of earnings. We did... in the annual guidance there is 12 unplanned outages compared to 9 last year so a delta of three, we did four in the first quarter this year compared to one affectively last year. So there were three additional ones in the first quarter that was expected and we aren't seeing anything affecting plan. I think I shared in my opening remarks, we expect to be on target in terms of capacity factor for the year and so we don't expect anything unusual in the back half of the year.

So the outage comes from much more similar for the rest of the year effectively?

That's absolutely right.

Thank you.

Thank you Jonathan. Next question please.

Thank you, our next question comes from Hugh Wynne of Sanford Bernstein. Please go ahead.

Good morning Hugh.

Good morning. I have a question regarding the improvement and average margin looking at page 12 of your release. The average margin on power sales was about $39 per megawatt hour in the first quarter, up about 9% from $36 per megawatt hour in the fourth quarter of last year. My question then is whether you might provide us with some color on that. specifically for example around the fact that your purchase power cost have gone down significantly despite the outages, your fuel costs have gone down which perhaps is more consistent with the outages, and also it would appear some of the around the clock prices have improved. So, I am trying to get a feel for as what's kind of the long term earnings power of the generation fleet whether that has changed in any material way as a result of these lower costs and higher prices?

Ben Cardouz [ph] will you pickup on that please.

Sure Hugh, average margins are up this year primarily given. Obviously market conditions are improved, market prices higher, so our market sales have gone up. Our peak load contract did increase also which helped our average margins and should continue to help our average margins year-over-year. Purchase power actually is a dynamic that's occurred in the market regarding purchase power is market conditions have dictated that we are running some of our purchase power plants less than we did year-over-year, and that's a combination of all kinds of market conditions whether heat rates, unit availability, things of that nature and that's also true with regard to our own fossil generation. We would expect to see margins increase with market fundamentals that we are looking at and the commodity prices that we are looking at overtime, and this trend should continue.

Great, thanks a lot.

Thank you. Next question please.

Thank you. Our next question comes from Michael Lapides of Goldman Sachs. Please go ahead.

Hey guys, Michael Lapides here. A real quick question, John, it sounds like you've done a lot of looking at various companies and various assets around the U.S. Can you talk about your views on valuations that you see in the markets for natural gas power plants, which regions you might find more attractive versus less attractive and versus kind of general pricing of assets that might be on the markets in this region?

Sure, I will start this and I will ask Ian McLean to pick up a little bit in addition. But we have looked at most of the major integrated and I have answered how we feel about those moments in my opening comments. We have also looked at gas wins, others things, first thing is we are green and we want to stay green. We think part of our value proposition to you is the positioning we have in what we perceive to be carving constraint world and we don't intend to yield that position. Second, most of what we see suggested existing gas capacity is fairly fully priced. I mean if we saw a big opportunity in gas in any region we will be announcing a transaction instead of just continuing to look in our red eyed way. Obviously we would like to expand preferably in other market competitive areas but we are also willing to do it in areas where you get PPAs. The problem we see is with the current prices any transaction would likely be earnings dilutive even if it seem to make sense in the long term value basis and I haven't been able to find the way yet to skin a cat that brings you one that wouldn't be significantly earnings dilutive. So, that's why we go very slow on all of this. We have an earnings proposition for you that we value a great deal and we are not of the view at the moment that we have something where the value add is sufficiently large to justify the concomitant earnings dilution, Ian would you like to pick up on that?

I think obviously it is going to be difficult for us to build in the regions where we were pushing as market power issues now. So, the Midwest and PGM East and West would be tough for us although not impossible. I think that if you look in Texas it has attractions but before I would really give you, that's a good area to get involved with more safer example of gas which I think is what you asked about generation. I want to understand more about what is happening with wind and transmission down there and get a really clearer picture on that before I could honestly say yes, that's a real opportunity for our corporation. Really the area that's probably is most interesting to me the area is probably California. I mean it is high growth, very committed, but as John said they are just are, there is nothing that jumps off the plate because probably that's a really great asset to go buy at these values. So it is a tough one for us. Our view is that recessions are really good times to have money and if we don't let ourselves get impatient in these economic times there are going to be some good deals. And we are just -- I used the phrase pig headed before, I think that's what we intend to be. We want whenever we announced that we are buying something we want you to be pleased when you hear it not all nervous and worried and so we are being very careful. We are looking as Ian suggested whether a gas plant in Texas makes sense. We are also looking at some additional gas capacity in PJM. Given the RPM pricing that has been put into effect there, there are capacity needs in PJM East and if we can we are certain we can do it without raising market power issues, I think we might get both decent returns and help show the FERC in the state of Pennsylvania that PJMs/RPM regime really is getting capacity belt. And we noticed some other suppliers having that attitude also.

Okay, thank you. I appreciate the response to my question.

Next question please. Operator: Thank you. Our next question comes from John Kiani of Deutsche Bank. Please go ahead.

Good morning.

Good morning, John.

Can you talk a little bit about your outlook and expectations for Pennsylvania from a political and regulatory perspective and how it relates to the exploration of the Polar contract and PECO?

Sure.

Just relative thoughts would be great.

I probably won't say anything very different than I have said before. But each of the utilities in Pennsylvania goes off its existing contracts at a different time and each of them can be anticipated to have a very different level of rate increase. I think in each case given the current market conditions the increases are likely to be significant, but in the case of several of the utilities that were historically lower cost than PECO, the increases are likely to be large indeed and that causes us to say there is going to have to be some pain incurred as one works out these transitions. And we believe that if we can cause to come together an agreement between the Rendell [ph] Administration and particularly the republic and senate leadership, before that pain hits people, we can come to a more reasonable accommodation, then if it has to be done afterwards. So, we are constantly saying, look if the other utilities will bear their proportion and share, we will help to get something done here, so that this is all a reasonable and smooth transition. I'm not very sure as we sit here whether that will happen sometime in the quarter ahead or not. If it doesn't happen in the next quarter, it's likely not to happen I think for more than a year. So, our view is, be patient, be cooperative, do what's necessary to protect our fundamental value, but try to be part of the solution. And I think given what's happened in a variety of other states, and not just Illinois, but Maryland and most recently Ohio, that's the attitude that pays off for shareholders. So I'm reasonably confident we will find the window when it is open.

Okay. Thanks John, that's helpful.

Thank you. Next question please.

Thank you. Our next question comes from Paul Ridzon of KeyBanc. Please go ahead.

Good morning. You mentioned, you were talking about EPAC [ph] and rejiggering your NDT. It sounds like it was a wash this quarter, you saw $0.03 tax benefit offset by $0.03 of investment losses, is that correct and when does this $270 million of cash start flowing, over what period does it come in as earnings and how does it, in fact you are thinking about the August or are they about announcement of incremental share repurchase?

This is Matthew, let me take crack at that. Your thought about how it flows through the P&L is right. It's in essence a loss, we don't view it as a big issue with respect to our quality of earnings. The 270 is just cash, it has no future of P&L impact in the short-term here and other than you get some interest on when you get the cash, it's going to come in '08 and '09 and in terms of how we are going to look at that -- in fact let me just add to that, we are also looking at our cash position with respect to the impact to the economic stimulus package as well and we would expect somewhere between $250 million and may be $350 million of incremental cash come in this year as well. So between the economic stimulus package and the pull over as we call it for the decommissioning trust we are looking at somewhere probably around a net $600 million plus or minus and we are going to take a look at that in terms of as we always do with our value return policy. We always look at growth opportunities, we look at our balance sheet, we are going to assess where we are in terms of the weakening economy, and what's going on out there. And as part of our kind of planning process we always go through this and I think we are going to be prepared to talk to the Street or we expect to talk to the Street in the third quarter about what we are going to in terms of value return, share repurchase, but it will certainly be considered.

Were these two the stimulus package and the NDT, was it kind of in your thinking when you talked to us in December?

No, they were not.

I guess I have seen the stimulus package. Thank you very much.

Welcome.

I would just repeat though what Matt said is cash rather than earning and cash is nice though.

Thank you. Our next question comes from Paul Patterson of Glenrock Associates. Please go ahead.

Good morning Paul.

Good morning, can you hear me?

Yes.

Just a quick question on the heat rates you guys have on flight 11 what's causing the fall offs on those just, what's driving them?

Ken?

Yes Paul, I will take that. Yes, we have been talking to you guys about heat rate for a long time now and specifically we started focusing on it in early '07. We thought back then that heat rates weren't reflective of what we thought the fundamentals in the market were. They did rise substantially in '07 two points where we thought they were more reasonable when we look at the fundamentals in the markets we are in and the heat rates at that time they look much more reasonable than they had earlier on. Again those heat rates very recently in the last couple of months have fallen. We think the problems in the financial markets have a role in that. Banks and hedge funds have liquidated longer term energy positions and there aren't a lot of buyers out there right now for power specifically either users or some trading counter parties. Spot market heat rates also probably have a role in that and we have seen spot market heat rates this first quarter down because of those typical short-term whether and unit availability and fuel price and generation stack issues that we typically see in the stock markets. So we have seen these heat rates come down. We again likely in early '07 think that there is some upside in these heat rates again and we will continue to analyze the fundamentals and reassure ourselves of that but we think given the things I said and the sharp increasing gas which helps to typically drive this phenomena too, we think there is some upside now.

Okay. When you talk about the credit crunch maybe having a substantial role in this, what else should we think about, because it seems that the credit crunch seems to shop in strange places at strange time? What other... do you have any other additional causes to what we might want to think about in terms of the credit crunch, in terms of trading and marketing, or the power markets, just any further thoughts on that?

We always think about liquidity Paul and we haven't really had any issues from Exelon's perspective.

What about from other people's perspective?

We haven't seen many problems with the trading categories we are dealing with. We just don't see a lot of activity in the long run rate now and I think a lot of the longer dated heat rate elements have been supported through longer-term position taking from a financial prospective. I think in the short run we are really talking about what spot heat rates are doing and what that means from a market perspective in the next two or three years with heat rates. So, other then that I think we are in good shape from the financial crisis situation that we seem to be having.

Thanks a lot.

Let me try to pick up on that, I mean Ian and Matt and I keep asking where... what haven't we thought about. The one place that occurs to me that has hit us so far is that both ComEd and PECO had some variable rate auction debt where the auction benchmark dried up and we had to refinance and we've done the PECO and expect no problem with the ComEd but that Mike Moskow [ph] would you like to add to that.

Well I think that's been the most tangible impact and it affects $500 million of our $13 billion debt and of course this was an industry widening because a lot of -- is taking advantage of that [indiscernible]. As John said we refinanced the PECO and in fact at the pre-sale we fixed it out 4% and we are looking at refinancing in ComEd and having it done in this quarter. In the other demands we have accelerated some debt financing as mentioned in the release and Matt mentioned just to take advantage of availability. We have really seen no lack of interest in the cash fund markets for our paper. I mean there's been Sunday is better than others but we've taken advantage of that by accelerating it. On a liquidity position, as Matt mentioned with over 7 billion credit lines its very strong and extended out through 2012, and our turnout party situation is monitored as we talk about and we don't have too concentration in any one counter party or any one set of category. So all in all we are watching it very closely, we realize there is a stiff wind out there and you don't want to stand too close to the cliff but we feel very good about our financial position. Operator we have time for one more question.

Thank you. Our final question comes from David Frank [ph] of Catapult. Please go ahead.

Yes, hi, good morning.

Good morning, David.

Just a quick question John, on Illinois, I know that you've been making a lot of headway there with the power authority, when could we expect to, what is the next phase in Illinois as far as the current power for the utilities, when will we have an update on that?

Let me ask Ann Marjorie [ph] who is here and give you that update right now.

Sure. The governor's office just to point it, a power authority administrator, Mark Pruitt is his name. He comes from the University of Illinois, Energy Resource Center, he has been there about 15 years and has actually procured power for many a state agencies and several municipalities. So he has a very strong background in the markets and understands procurement. The next step would be he would bringing outside experts to help him pull together a plan, a procurement plan that would be filed by August 15th with the Illinois Commerce Commission, parties would then comment on that plan and the Commerce Commission would issue an order approving that plan with whatever modifications it shows and a procurement would be run early in 2009, those are the basic steps.

Great. And do we know what, I guess its too early to judge what methods might be used for procuring whether it's an option or negotiations or?

The legislation that was passed last summer actually provides a fair amount of detail around the type of procurement and it will track the procurement that ComEd ran this year which is basically a fielded RFP process purchasing blocked products with ComEd sort of filling around the edges of the portfolio.

I saw that those... the results of that RFP was rather favorable, have there been any comments or ruffling of any feathers in Illinois, is everyone happy?

No, I think that the increase that customers will see on their bill come June is about 2.5% this year. I think that the things have been pretty quiet around that. We have seen some attention around it but nothing significant so I think people are pretty comfortable with the direction that things are heading in right now.

Thank you very much.

And that concludes our call operator.

Thank you. This closes today's Exelon Corporation first quarter 2008 earnings conference call. You may now disconnect and have a great day.