Good morning. My name is Shauvana, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Exelon Corporation Second Quarter 2008 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's 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, Mr. Chaka Patterson. Sir you may begin your conference.

Thank you. Good morning. Welcome to Exelon second 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 receive it, 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 discussed 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, forecasts and expectations, and for reconciliation of operating earnings to GAAP earnings. Leading the call today are John Rowe, Exelon's Chairman, President and CEO, and Matthew 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. Please limit yourself to one question. With that, I will now turn the call over to John Rowe, Exelon's CEO.

Thank you, Chaka. As you saw from our earnings release this morning, we had a very strong second quarter with both operating and GAAP earnings at $1.13 a share, compared to $1.03 for the second quarter of 2007. Our earnings in the second quarter make up, for the higher level of planned and unplanned nuclear outage days that we experienced in the first quarter, and we discussed those outages at that time. The second quarter puts us squarely on track with respect to our earnings for the year. We are comfortably reaffirming our operating earnings guidance for 2008 of $4 to $4.40 a share, and our GAAP earnings guidance range of $3.70 to $4.10 a share. Second quarter makes us very confident of where we are in that range. Turning to Slide 3 on your deck. We achieved these second quarter results precisely because we are sticking on plan and implementing our, protect and growth strategy. This is not a strategy for a quarter or even for a year. It's what we were doing last year and it's what we will be doing next year. We are aimed at long-term value, as we have been since our formation. Starting on the left hand side of this page, the first and foremost thing that we do is to deliver superior operating performance. In the second quarter, Chris Crane and his team achieved a nuclear capacity factor out 95.8% and that performance drives the profits we have delivered to you. We achieved a commercial availability of 92.8% at our fossil fleet and nuclear availability factor of 94.4%, at our hydro fleet. We kept the lights on under difficult conditions. With seven storms June 2008, marks the busiest storm month in a decade. Frank Clark, Barry Mitchell and the ComEd team, should be…

Thank you, John. Good morning everyone. We have provided a significant amount of detail regarding our results in our earnings release in the accompanying tables. Therefore, I'll spend my time this morning discussing the results for the quarter, in addition to providing updates on power markets, our hedging strategy and Exelon's financial strength. Starting with our current quarter results on Slide 4, we reported operating earnings of a $1.13 per share in the second quarter of 2008, compared to $1.03 in the second quarter of 2007. The quarter-over-quarter increase reflects in increase in earnings at Exelon Generation partially offset by decrease in PECO earnings. ComEd results were also down slightly quarter-over-quarter. Let me cover these in more detail. Turning to Slide 5, you'll see that the key drivers for Exelon Generation's quarter-over-quarter higher operating earnings. As John mentioned, Generation had a greater, had a great quarter from an operational perspective. In terms of plant refueling outage days, Generation had 40 days in the second quarter of 2008 as compared to 55 days in the second quarter of 2007. Non-refueling outages days were down by 15 days quarter-over-quarter, as we had only three in the second quarter of this year as compared to 18 in the second quarter of last year. In addition, the average margins realized by our Generation output were close to $5 per megawatt hour higher on average in the second quarter of 2008, as compared to the second quarter of 2007. Generation's second quarter 2008 also reflects income from proprietary trading activities of $0.07 per share compared to $0.03 last year. These trading results were driven by certain long option positions within our trading portfolio that were acquired years ago. During the quarter we realized income from some of these options as current market conditions allowed us…

Thank you, Matt. Operator we're ready for questions. QUESTION AND ANSWER

At this time the floor is now opened for questions. [Operator Instructions]. Our first question is coming from John Kiani with Deutsche Bank. Please go ahead.

Good morning.

Good morning, John.

I'm trying to understand a little bit more about the value return policy and the timing of it. I appreciate the fact that you obviously give that a very diligent and thorough review on an annual basis…I'm kind of wondering with the stock down here where it is effectively lower than it was 7 or 8 months ago, but with natural gas prices even despite the recent pullback still up 20% to 25% from that timeframe and coal prices up still a 100% from that timeframe. Why the company wouldn't think about being more opportunistic especially with the balance sheet that Exelon has and looking at a buyback today based on…the advantages of the current market conditions affords that?

Well, I think when look but the adjustment in price you talked about is something it's about a week old. And one doesn't want to change one plan too dramatically just because of what a nervous stock market does in a week, but we are already in the second half and we will keep looking both at when and how much. I mean there is the buyback issue which you all know is in our plans. There is a dividend increase issue and we want to do those in an orderly way being opportunistic is a good thing, but moving billions…billion dollars or moreover, overnight is something you take a little carefully. So, I think we added 0.5 billion last year I think that proves we are prepared to be flexible and obviously we are paying attention to what happened to the market. We are not very happy with this, basically $10 shift at all and it has our attention.

Okay. Thanks, John.

Next question, please.

Thank you. Our next question is coming from Greg Gordon with Citi. Please go ahead.

Thanks. Good morning. First…

Hi, Greg.

You guys said your 96% financially hedge for '08 and 90% for '09. You said largely un-hedged in '11, but I didn't hear a number for 2010. Did you give a range for 2010?

We've given a range in the past, I think its 50 to 70% and we are working our way through that, Greg.

Okay. So, it would be fair to presume that you are moving towards the high end of the range and as you…

Yeah, I think that's very fair. We're moving towards the high end of the range. We have already stated that we are above that range of 50 to 70. I think we have actually told you that several times.

Right because of the PECO contract being in place.

That's right. And also because of the swap we did with Commonwealth Edison.

Right. So, in some of your analyst presentations over the course of the year, you have given a rough projection of where you thought the PECO load serving contract would price, just given a read through of where some of the other entities in the market had been pricing their hedges. I think, EPL the one that you have referenced. Obviously prices are down about 5 or $6 per megawatt hour in my measure since you gave that presentation. So, it begs the question, do you guys have a point of view on where these markets are to trade, is this a technical phenomenon that we are seeing as you see, sort of an unwind of a broader commodity trade in the financial markets, or do you think these pull-backs we have seen represents some fundamental shift in outlook.

I would like Ian, mostly to answer that. We think the fundamentals particularly in PJM East are still largely in the upward direction. That said I doubt we think there is great long-term virtue in any one particular number either today's number or a $5 higher number couple of months ago, but Ian, why don't you do your best to help with that.

Yeah, I think I answered it John. I think the market, the global markets are extremely nervous and everyone is looking always now for negative information and with the economy being weak, people are nervous about load growth and it all feeds in to this sort of sensing you hear news be at correct or not correct. There is going to be more gas than people thought available. Today's price is as good as last week's price, as far as I am concerned I don't have a strong view on it, I just don't. It will be what it will be. We will hedge, than we think within two years it's going to settle down and get back to business as normal and everything will move on from there.

Thank you, Ian.

Next question please.

Thank you. Our next question is coming from Hugh Wynne with Sanford Bernstein. Please go ahead.

Morning, Hugh.

Good morning and congratulations on a good quarter. Just wanted to ask about the direction of revenues over the 2008 2010 timeframe? You guys have I think emphasized on several of your comments that this is a period where you're hedged, where earnings are likely to be relatively flat, and that the major impact of higher market prices will not be felt until perhaps 2011. Nonetheless in this quarter, you all realized average revenue per megawatt hour of about $62 on your marketed retail sales, which is up by approximately $7 per megawatt hour from similar calculation last year which was 54 bucks per megawatt hour. So the fact that your hedge is not precluding you from realizing higher revenues on your market sales of power and I was wondering if you could help me to understand how that works, what's driving that? Is this simply the gradual roll off of existing hedges and the impact of higher wholesale prices flowing through gradually to your top line overtime? And if so, should we expect more of that in subsequent quarters through 2010 or should I be thinking about this in a totally different way?

I'll take a shot at that, Hugh. I mean I think there's two things; one is just nuclear output is always a factor. So you have to take the volume piece into that. And secondly is, I think when you look at the power prices its…we aren't a 100% hedge. We are at the high-90s. So there is always some amount that we leave open and power prices go up, we can take advantage of that. So I think there is always a little bit that provides some opportunity for us.

It seems to me you a piece of this is that 95.8% figure that Chris delivered in the second quarter. We can't budget in poverty and can't plan on having it quite that good. So when Chris delivered it, Ian can sell it.

I don't see how with respect… I don't see how movements and output can affect your realized revenue per megawatt hour, and I certainly don't see how the 4% un-hedged position in 2008 could produce a $7 increase in realized revenues per megawatt hours. So there must be something else, no?

We've got a breakdown, let's give it you. Kenneth Cornew - Senior Vice President; President, Power Team: Hugh, Ken Cornew. Couple of things first you're right, as our hedging program old hedges roll out, and new hedges roll in and prices are increasing. We are going to see an increase on the revenue line. But I think the important thing for you to focus on is the margin line. And to the extent we keep our costs from our nuclear fleet particularly as stable level and the revenue line increases, we're going to see some increase in margin. We also have a fossil fleet and to the extent our fossil units have higher fuel cost. Now they are going to make their way into the cost line. We're going to see a higher revenue line and at somewhat muted marginal line. So I think one thing, one thing to take away from this discussion from your perspective would be look at the margin line. The revenue line is important. Spot prices have gone up substantially year-over-year. Fuel costs have gone up substantially year-over-year. Older hedges that were at lower prices have rolled off year-over-year. All those will contribute to probably some increase in margin, but not quite to the extent you're looking at it from a revenue line perspective.

Great. Thank you very much.

Next question, please?

Thank you. Our next question is coming from Jonathan Arnold with Merrill Lynch. Please go ahead.

Hi, Jonathan.

Good morning guys. I wanted to ask about Texas and just how you... how the fleet did in the very sort of volatile markets we have there in the second quarter. And also as Ian, you've said in the past that you've given the uncertainty around things like wind generation coming into that market that is not some way you'd be looking to deploy capital. But now we will have a decision at least from the commission on where they are headed with wind transmission. Does that change anything in terms of your outlook of going forward there?

Ian, why don't you answer that right on the details?

Jonathan, first on the quarter in the spot markets, we have machines in Texas that are dispatchable machines, intermediate and peaking kind of equipment. And we've seen some volatility down there in the quarter. And we've gotten some good dispatch and good results from the spot market with our position in Texas.

So, you are clearly recognizing that on Wind Generation, it is a big difference to think about whether it's 10,000 megawatts of Wind Generation or 18,000 megawatts of Wind Generation and it looks like a very different generation stack and supply model and we have to consider that in any investment we are looking at or contemplating making in the future down there regarding generation. So, clearly it is an issue, clearly it's something we need to look at. We think 18,000 is a big number and may have some real impacts on the type of generation stack it's going to make an economic and reliable operation exist.

Okay. Thank you. Could I go to the quick follow-up on related subject, please?

Go ahead, John.

You are talking about for the year, the strong Generation performance you're offsetting some of the load issues, an uncollectibles of the utilities. To what extent is that statement reliant on the two one-time type items you had in the second quarter, and to what extent is it reliant on sustained above average performance through the second half of the year? I guess I am kind of curious as to whether that's where you are now; do you have to continue doing well at Generation to make that statement?

John, I'll take a crack at that. I think based on that the plan that we have for the nuclear plants in terms of output, if they meet their plan that's what… that's we are expecting for the second half of the year. Obviously we need to get through the summer. That will have a big impact. But if you look back at really the first half of the year, we've had a very, very strong operationally sound year. I mean in terms of what's happened in the market fundamentals and then in terms of the operations to the plants and the outputs. So, when we look at the year, we really do look at it as a very strong and solid operational year. That the one timers, you can, when we sit back we kind of look at him whether it's on a quarterly basis or a six-month basis. And for the most part, they really do wash out. When you look at a range between 400, 440 at the end of year you end up with a few pennies here and there on kind of a net basis on the dispute items. It really is not impactful in terms of how we look at the business. And so, stepping back our profitability is really driven by the nuclear assets and their performance to market pressures. So, does that answer your question, Jonathan?

Yes, it does. I just have one other. You have this…

Hey, Jonathon we got to move on. So, give us a call later on and we'll get you an answer to your question, okay?

Thank you, guys.

Next caller, please.

Thank you. Our next question is coming from Dan Eggers with Credit Suisse. Please go ahead.

Hi, good morning.

Good morning.

On the Exelon 20-20 plan, can you just give a little more insight into kind of the timing of when you expect to start making more meaningful capital expenditures as part of that $12 billion program? How much of that plan is already in CapEx that you guys were looking for; and then maybe other insights as far as what kind of return you expect to earn on that capital at what this going into, or it should pretty attractive hard assets?

Let me take a shot at it and Matt will help me here. Much of this plan was in our capital plans already. We look at the nuclear operates we divide them in to branches. First one I think is around 250-300 megawatts that sound right Matt?

Yes.

And that is in the next several years and there's a high degree of certainty around are doing that and big payback on doing that. Then there is another chunk, it's down there few years further out that there is a much larger band of uncertainty around is to, whether we could actually do it, make it pay and I'll let Chris to amplify that if you want. Now, one of the biggest pieces of this is whether we do gas combined cycle plants in either PJM East or in Texas. And I think sometime yes this year, we will probably make a firm decision on the PJM East plant. The Texas situation is a little more confusing because of things that have already been discussed in this call. These are the biggest single chunks. As you know, we've only authorized $100 million for the nuclear project in Texas. We think that will cover us well into '09 and we are genuinely open minded as to whether we go forward with that project or not. We really mean the conditions we put at it. Matt, can you…better Chris can you flush this out a little more beyond what I said.

We're going to be as we always our capital investments very disciplined in how we look at whether we're going to make those in terms of deferral rates and IIRs and that this program I don't think it's going to be any different. We're going to look at things and that's particularly around the capital investments around nuclear operates or natural gas plants or renewals that we're going to look at. So, we're going to be very disciplined. We've always been that way and I think we're going to continue that down the path. There is a portion of this that we're going to look at in terms of offsetting our own greenhouse gases and those of our customers. And we work for look for if when it's appropriate, appropriate recovery at the utilities if it's associated with that. So, we're going to be very, very disciplined about how we go forward on this. In terms of what's been built into our capital plans. We have not given to the Street capital investments plans for the next four or five years. But we're going to continue to take a look it at again, if it makes sense, we'll adjust our value return policy that way. But I think John's reiterated these have to make economic sense for us to do it.

Yeah, just to backup this, Chris Crane just to backup what Matt said, the first and John…the first group of projects that are underway that fall under not only our new 2020 program, but there are already plans in place to be during retrofits on steam paths…on the steam turbans. What we're doing is taking the advantage of replacing just because of degradation in age. It's just a normal asset management plan of doing a retrofit with larger and more efficient units that are going to gain us stationary to motoring units that are going to gain us this greater amount of the 350 megawatts we're going after first. So it's been in our plan, our long-term asset management plan, we get to take advantage of new technology and advancement to gain the efficiencies that will increase the megawatts. But first, two blocks of upgrades fall in that type of area that has been planed. The third is as John said we'll continue to evaluate.

I'll add also that some of these things are fairly small and we took a look just yesterday at the first slice of our building improvement plan. We've already got something like a 9% reduction in building energy consumption from work we've already done. We took a look at another 4% chunk yesterday. The total amount of money involved is between $5 and $10 million, and it has…the returns vary all the way from close to zero to up at 15% or 20%. But the average is over our cost of capital and it's not a small amount of money. So, it's a good way to make a point and to do it fairly cheaply. The next slice of buildings we look at, probably will involve a little more money, and raise questions like, are we in a building or two we shouldn't be in at all. And so, we're looking at those now, but the returns were pretty good on this first slice.

Great. Thank you very much.

Next question please.

Thank you. Our next question is from Anthony Cordell [ph] with Jefferies. Please go ahead.

Just a quick follow-up from Jonathan's question about in…Texas. Have you guys been able to quantify the benefit that you guys have received from your plants in Texas?

Ian and Ken.

I don't understand the question, the benefit of the...

How has the contribution from those plans this quarter versus the previous quarter?

Yeah, we don't disclose...

Regional.

Regional, this is one of the things we said at the trade-off. So obviously, it's been positive because the volatility is been there.

Okay, thank you.

Last question, operator.

Thank you. Our final question is from Zack Shriver with Ducan Capital [ph]. Please go ahead.

Hi, Zack.

Hey, John. Hi everyone, congratulations on a very good quarter. Just a couple of questions in terms of first NOx.

No, just one question, Zack.

Is that Matt, okay, then we'll do it on offline. Just on NOx and CAIR, just what you think the timetable is in order for the annual NOx to be reinstated, whether its going to be reinstated administratively through an EPA process or if its going to be reinstated through a legislative process with a remand to congress. My understanding of it, it has been remanded or will be shortly remanded back to congress or back to the EPA, where they will start working on it. But will that process be effectively intercepted by a congressional legislative process and. And when we look at your hedge position in the near-term, we look at the time it will take to reinstate that value in the curve, will that value get reinstated by the time your hedge is well off get with the nice and open in 2011 and under different kinds of administrations that value higher, equal or lower than where it was under a Bush CAIR? Thank you.

I'm sure that question proves you know, as much solid than we do. Zack this is not a great shot. Let me go back to 11 and 10 for a minute.

Yes, sir.

I think Ian's view, Ken's view, my view is that the pressures are upward in that period for reasons of capacity constrains, regardless of whether the care rules reinstated. Ian, you agree with that?

Yes, I think that's right, John. I don't see when you get out until that, those sort of years, what… there isn't a simple solution to the problems you facing…we get at the point in our way; you can't built stuff quickly enough to do anything about it. So, I think there will be upward pressure comes back on the market when the market settles down, but it's going to volatile for a while.

And Bill if you…either you or Betsy want to add anything on what your guesses as to what will happen, I mean.

Yeah, let me take a short at it. The EPA administrator has said that he intends to announce by the end of the month, whether he is going to go back to the court and ask the entire D.C. Circuit, so called on bond proceeding to reconsider the panel's decision. He has not made it clear what he intends to do. EPA is apparently shocked that their rule is over churned. If that does not work I'm sure that someone will try and take the case up to the Supreme Court. I don't have anyway of knowing whether they take the case, but it probably doesn't look good for them to do that. But in the meantime here is uncertainty because of what's going to happen with the pre-existing state implementation plans and everything. So, there is just a period of uncertainty here that's inevitable, but it doesn't really remove the price pressures that the John was talking about.

But from a proceeding perspective?

Is that correct, I want to follow with that later on.

I look forward to that. Thanks so much, guys.

You're welcome. Thank you, operator, and we'll conclude our call.

Operator?

Thank you. This does conclude today's Exelon Corporation conference call. You may all disconnect and have a great day.