Good morning. My name is Tanya, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Third Quarter 2008 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]. Please limit to your questions to one and one follow-up. Thank you. Mr. Chaka Patterson,. you may begin.

Thank you, operator. Good morning. Welcome to Exelon's third 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 contain 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 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, who will be available to answer your questions. We have scheduled one hour minutes for this call. I will now turn the call over to John Rowe, Exelon's Chief Executive Officer

Thank you, Chaka. We talked with many of you earlier in the week regarding our proposal to acquire NRG. We are diligent, we're pursuing this because we believe that can create substantial value for both Exelon and NRG shareholders. At the same time we remain as focused as ever on running this business and delivering results to you. Today we reported our third quarter report... results. I will limit my prepared remarks this morning to Exelon's third quarter earnings and some parts about navigating through these turbulent times. As you saw from our press release this morning, GAAP earnings were $1.06 a share and operating earnings were $1.07 a share. Our third quarter earnings was reduced by several items relating to the nation's financial terms and the weakening economy reduced our third quarter earnings. We now expect our full year 2008 operating earnings to be well within our original range of $4 to $4.40 per share, but very close to the bottom of our more recent guidance of $4.15 to $4.30 per share that we announced at the beginning of September. While the changing times are not pleasant and September and early October have been very unpleasant for us all, our operations continue to improve across the board, our nuclear fleet continues to excel, our balance sheet remains strong, our liquidity is unimpaired and our cash flows are running substantially as anticipated. You will see on slide 3, of the slide accompanies today's earnings call, how we're going to dividend overtime. Today we announced an increase in our annual dividend by 5%, from $2 to $2.10 per share. This reflects a 12% annual growth rate in our cash dividend since 2001. When you run utilities for 25 years as I have, you are given the opportunity as they call it…

Thank you, John. Good morning everyone. Starting with slide 4, I've highlighted my key messages for this morning. We've compiled a significant amount of detail regarding our results and our earnings release in the accompanying tables. Therefore I've spend my time this morning discussing our results for the quarter, our full year outlook and Exelon's strong liquidity position. Starting with our current quarter results on slide 5, we reported operating earnings of $1.07 per share in the third quarter of 2008 compared to $1.21 per share in the third quarter of 2007. Our third quarter results reflect strong operations at the Generation company, while both ComEd and PECO reported lower earnings than the prior year. Turning to slide 6, you will see the key drivers for Exelon Generation's quarter-over-quarter higher operating earnings. First, portfolio and market conditions were $0.08 per share favorable in the third quarter of 2008 compared to the third quarter of 2007. The average margins realized by Exelon Generation were approximately $4 per megawatt hour higher on average in the third quarter of 2008 as compared to the third quarter of 2007, reflecting higher average realized hedge and market prices during the quarter. These were partially offset by higher fuel cost. Second, our Nuclear group continued their exceptional operating performance this quarter with higher nuclear volumes benefiting quarter-over-quarter results by $0.02 per share. Exelon operated plants achieved a capacity factor of 97.2% in the third quarter of 2008, which is slightly higher than the 97% achieved in the third quarter of 2007. In terms of plant refueling outage days, Exelon Generation had 17 refueling days in the third quarter of 2008, compared to nine in the third quarter of 2007. With respect to non-refueling outage days, Exelon Generation had five fewer days quarter-over-quarter with eight in the…

Thank you Matt. Operator we are ready for questions. Question And Answer

[Operator Instructions]. Also I would like to remind everyone to please limit questions to one and one follow-up. Your first question comes from the Jonathan Arnold with Merrill Lynch.

Good morning.

Good morning Jonathan.

I would like to ask question on pensions and on decommissioning funds and specifically, if you have any kind of early sense of whether you might trigger funding requirements in 2009? And may be just some kind of reminder of how that works on the decommissioning side. I notice the balance sheet number, looks like it was... it's down by about just under a $1 billion since the beginning of the year on asset side. So, just if we could get some clarity around that would be very helpful. Thank you.

Jonathan, this is Mathew on the line. I'll take a crack at that. As you know, we have done a lot of work on this. We have talked to our investors about this earlier in the year. Our assets are down... significantly... were down in the pension plan by about 30%, which is just a little bit over $3 billion. When we look at the unfunded position of the pension plan at yearend 2007, it was about $750 million. Our best estimate right now and this is a bit rough because obviously we need to get through the fourth quarter but we are looking at an unfunded pension liability of somewhere around $2.5 billion. And as far as it will depend on happens with the rest of... what happens in the market through the rest of fourth quarter at hand with discount rates all through we did apply [ph]. I want to remind you as well that about 40% of that is attributable to the two utilities at about 60% is attributable to the Generation company. When looking at 2009, we expect the cash contribution to be somewhere around $225 million which is roughly what our contribution was in 2008. Obviously we can't predict what's going to happen in 2010 and 2011. We need to go through and see what happens ultimately with the market and that 2010, 2011 may be what we predicted about by that. So, overall I think we are... can't resist what happens but there is not a big impact from a cash flow basis for 2009. I have talked in the past about the cost side of the expense side and we've said in the past that we've contemplated an increase in the expense as GAAP requires and that's reflected in our flat earnings from…

Can I just, are you at a point where you would need to put cash or come up with some other arrangement... and where those maybe kind of evaluate on the non-accounting basis with contributions now or are you not there.

In terms of the NRC?

Yes.

I don't think we are there yet I think there is still... we have not gone through that dialogue with the NRC, and we need to go to that dialogue. But as I said, I think there are reasonable remedies for us to go through before we put in cash.

Right, okay. Thanks for all detailed analysis. It's very helpful.

Okay. The next question operator.

Your next question is from John Kiani with Deutsche Bank Securities.

Hi John.

Hello, can you hear me?

Yes John.

Can you provide an update on the backstop financing for the proposed NRG acquisition and where that stands?

Well, we continue to do as we suggested, we would do on our Monday call and that is to pursue bank financing. We make very serious progress with these three major financial institutions. It is not yet at the commitment letter stage, but I think we're getting there. Obviously the chaos in the world financial market is slowing isn't making anyone happier, but I think we're getting there. We also intend to response to this suggestions that one of the bond holders made on the Monday call that we talked to the bond holders. So I think we will have two or three possible ways to deal with that issue.

Okay and then as far as the credit rating down rate that Matt Hilzinger brought up in his prepared remarks. It sounds like S&P down rated you all sort of right out of the box one notch that perhaps that may have been sooner than you all had anticipated and understanding that you only have one more notch at Exelon Generation from BBB flat to BBB minus with a credit watch negative on your outlook on the company right now from SNP. I mean what you're level of comfort that you'll be able to remain investment grade at Exelon Generation, which to me seems like it's a critical sort of a binary point and whether you could even pursue this transaction or not?

We agree it's a critical point. We'll have full scale presentations for S&P in the other rating agencies next week. We're confident that the numbers show that we should remain investment grade and as Matt said in several different ways that perhaps I can get thing accent on the goal [ph] even stronger. We are absolutely committed to remaining investment grade. You described the scenario exactly. We anticipated these results that only upon closing we had not been led to anticipate them at this time. And I think this just suggests how the general turmoil in the market and the criticism, the rating agencies have received over the financial institutions are breathing again a new wave of conservatism and hurried to act. But we will cope with that by making our cases strongly as we can and I believe it will succeed.

And then one last question on that same line, do you have a sense for what natural gas price the rating agencies may want to assume or you want to assume in running those scenarios for them and that obviously would make a big difference in what the credit metrics look like versus a standalone and combined companies?

I mean I believe at least one of them is planning to put out its assumptions in the near future, but we haven't seen those assumptions yet. So I don't know what they're going to assume. We have... we are preparing for part of the analysis we intend to take on the road show, some sort of bounding assumptions that illustrates how this transaction adds value under a fairly wide degree of natural gas price assumptions.

Okay thanks, John.

Good to be able to see you. Thank you.

Next question please.

Your next question is from Hugh Wynne with Sanford Bernstein.

Good morning and a regarding the disclosure on page 13 of your release, the one that tiled Exelon generation statistics. You ...you make the... you disclosed there that the average purchase power and fuel cost per megawatt hour apparently rose by about almost $7 from the average in the second quarter. And looking at your fuel cost for the third quarter, it appears that it's up by about 40% from the like quarter of last year, and especially up about 100% from the second quarter. So, I was wondering if you could maybe explain to me the variation in fuel cost over this relatively short period of time.

Ken Cornew has the response to that. Ken, are you on? Kenneth W. Cornew - Senior Vice President, Exelon Corporation; President, Exelon Power Team: Yes, I am John, thanks. And thanks for the question. Let me first say that Exelon Generation is very comfortable with our margin performance in the third quarter. As you probably know, the two components, the revenue line and the cross line act very differently for Exelon Generation. On the revenue line, our revenues are very heavily influenced by annual sales, and that have consistent prices across the year. An example being our contractors to supply energy to PECO, another example would be block product sales we make on a calendar basis. So our revenue line remains more constant across the year because of our sale of power across the year at fixed prices. When we get to the cost line, the story is a little different. The cost line is much more driven by seasonal generation operation and seasonal purchased power to optimize the cost of the portfolio and optimize the cost of the products we sell. So in the summer, we are running higher price generation. You know fuel prices ran up pretty aggressively in the second quarter and that the cost of generation essentially ran up at the same time. We're serving load following products so we need to run higher price generation, so that cost line from that perspective is going to move up seasonally with how demand responds. We also are more likely to buy monthly power and buy monthly purchase power to again optimize the cost of the product. It may very well be that, it's cheaper to buy monthly power products than actually run higher cost generation to serve low volume products. So, this margin change between the second and third quarter, the cost change and the revenue line are very expected for us and make sense given our sales line is influenced by calendar sales, our cost line is much more influenced by seasonal purchased power, and seasonal generation operations.

All right.Thank you. Just a quick follow on question then on your other income line, under other net, you're showing a negative number of $256 million for the first nine months of 2008, other net in the first nine months of 2007 was $224 million positive. So you got a swing there of something like I guess 480 million, what are the key drivers of that?

I think you are referring to the decommissioning for AmerGen, Hugh and there are...it's basically the unrealized losses that we have for the AmerGen. As you recall we carved out from our operating earnings, unrealized gains and unrealized losses. The AmerGen trust and the AmerGen plans we bear there all the funding requirements should be there all of the downside risk and we also get all the upside risk in the market. What we have done is we've just reflected the fair value of the assets related to those trucks for AmerGen and so we have carved about $200 million unrealized losses to the extent over time through the normal churn, those unrealized losses become realized because they sell the securities. Those would find their way to our operating earnings. But there is also the opportunity that those will recover overtime and we won't bear those costs through our operating earnings.

Great. Thank you very much.

Next question please.

Your next question is from Greg Gordon with Citi.

Good morning Greg.

While we have some more clarity in Pennsylvania vis-à-vis the legislation that was passed, but the issue of rate mitigation is still out there. Was there an opportunity to resolve that in this legislative session? What were the impediments that have been... in hindsight to that getting resolved and what's your best guess as to when we'll finally get closer on those uncertainties in Pennsylvania?

I am not able to make an educated guess as to when that will be. Governor Randall made a very statesman like effort to pull all this together at the end of the session. I...since the major impediments to do it were partially party politics in the legislature and partially that different utilities had different perspectives as to what their interest required. My own sense is that this issue will continue to come up in every session of the legislature until some solution has been made. And again, while I don't know where all of the elements of the solution will be. My best guess continues to be a statewide cost...something on the level of the statewide cost in Illinois. But that is a guess and it's not a commitment on the part of anyone.

Thank you John.

Thank you.

Next question is from Paul Peterson with Glenrock associates.

Good morning, Paul.

Good morning. I wanted to follow-up on the stock buyback. Has any of these stock buyback been done at all?

It has not.

Okay. And from listening to the Monday's call and from reading the release, its sounds me like the buyback, what has happened even if the NRG VO didn't take place and...

The main I think is that the suspension of the buyback would have happened anyway. Correct, Matt.

I believe that is true, Paul.

Okay, what I was sort of wondering is since the NRG deal seems to be credit negative more than stock buyback is if the NRG deal was to go away, why wouldn't the buyback particularly if stock prices were at that, not take place?

Well, the answer is the one we gave officially on Monday because of the general state of the credit markets, because of the general state of the economy, so on and so forth. I mean the distinction here is the distinction between financial engineering and the acquisition of real assets. We think our proposal for NRG brings more real assets into Exelon at a price that allows us to achieve both some short terms earnings accretion and substantial long term value add. It's the difference between what we think is only a short term earnings improvement and what we think is a long term fundamental improvement in the value of the corporation.

Okay, Thanks for the color.

Thank you.

Next question please.

Your next question is from Leslie Rich from Columbia Management.

Good morning Leslie.

Good morning. As you look at your bad debt expense at both PECO and ComEd, do you have any regulatory mechanisms to recover that either in sort of some sort of true up mechanism or can you lump it into next rate case or is that money that's just non-recoverable?

I think basically non-recoverable but let me ask first Denis O'Brien from PECO and then Bob McDonald from ComEd to give you a detailed answer to that. Denis P. O'Brien - Executive Vice President, Exelon Corporation; President and CEO, PECO Energy: This is Denis O'Brien. In Pennsylvania the only way to recover it is through a filed rate case and so until that time we are eating the expense. Robert K. McDonald - Subsidiary Senior Vice President/Chief Financial Officer, Subsidiary/Other Executive Officer: The same answer would be to true in ComEd in that we have to file a rate case. You'd have to see the bad debt expense in the future period.

Okay.

Not a happy answer but a clear one.

Thank you.

Next question please.

Your next question comes from Michael Lapides with Goldman Sachs.

Hi Michael.

Good morning. Question on your hedging really two fold, one wasn't on the major change in your hedging for kind of 2010 or anything beyond. How do you think about your hedging strategy given a little bit of the uncertainty in Pennsylvania because you usually rolled forward hedges kind of every three years and like how do plan on doing that over the next six to nine months and do you have any in Pennsylvania?

Ken Cornew?. Kenneth W. Cornew - Senior Vice President, Exelon Corporation; President, Exelon Power Team: Yes, sure. Thanks Mike for the question. Yes as you are aware we roll our hedging program, we continue to hedge in forward months primarily focusing on getting to 90% or better figure in the upcoming year. Our target has been 50% to 70% in the year following and getting to 50% level in the year following that... I am sorry, 70% to 90% a year following and 50% to 70% in the year following that. So, we continue with that program. Obviously when we look at PECO's contract rolling off, that makes the amount of activity that we are interested in looking at for hedging larger in 2011, we are still sitting in 2008 and have a good amount of time to get to where we want to be on our planning and we are very comfortable again with the position we are in from a hedging perspective in 2009, 10 and 11. Not a real change in how we are thinking about it, the change really is the volume and the amount of hedging we will have to do here in the east, as Pennsylvania develops its plans for procurement and PECO does the same.

Okay. And just kind of real follow up... real quick follow up. How does the kind of the timeline of the NRG potential transaction impact the timeline for when you might implement hedging? Kenneth W. Cornew - Senior Vice President, Exelon Corporation; President, Exelon Power Team: Right now Michael, it's not an impact. We were looking at our hedging program based on Exelon assets and should something more significant happen on the NRG side, we'll consider it.

Got it, thank you guys, much appreciated.

Thank you. Next question.

Your next question is from Paul Fremont with Jefferies. Paul Fremont - Jefferies & Co: Thanks, I guess I heard Matt that, you sort of reiterated the expectations for a flat earnings profile next year. And I guess I'm wondering, you've already indicated the loss of the share repurchase program, which is roughly I guess in the range of a dime. You are looking at the potential for lower usage on the part of utility customers, a fairly weak commodity pricing environment. Can you give us some of the... and those have seemed to be more recent in terms of the third quarter call, what are some of the positive that would offset that?

I assumeall of the risk factors that you named are relevant and bring with... Matt calls pressure and I call stress. But Chris is putting together our budget efforts as we speak. I think by the time you see us at the EEI Financial Conference, we'll have a real numerical range to give you. I continue to believe that by squeezing in a number of places on cost, both on the capital and the O&M side that we will find a way to keep these earnings flat. But we'll give you a better numerical range as soon as we can. This is why we announced a few weeks ago that we have asked Chris and Matt to lead a new cost reduction effort. We have been absolutely committed in these companies to putting the best money into our nuclear fleet we can, rebuilding the reliability of both deliveries systems. And I think those efforts have to leave us with some room for further cost reductions when customer demand growth is slumping and so we're out hunting and I think we can finally not to at least offset some of the risk factors you've mentioned. At the same time I would say that the hedging program is obviously terribly important here. Ken has a significant portion of Genco's revenues for next year relatively fixed. Putting all this into a slightly different language, we know there is more pressure than opportunity in '09 in the kind of the economy we are looking at. I leave it to you to decide we are resilient to deal with that pressure is, but I think its here. Paul Fremont - Jefferies & Co: So if I heard you correctly the company plans on giving '09 guidance at the EEI conference.

That's it, that's correct. You heard that correctly.

Thank you.

Next question please.

Your next question is from Annie Saul [ph] with Alliance Bernstein.

Good morning.

Good morning everyone. My question is the follow-up after Leslie. Bad debt expense question is, you did indicate that you see in the fourth quarter that the expense should be ... would be higher. If both PECO and ComEd. And if we go through the recession for next year what kind of trend then we should be forecasting in our model then for the bad debt?

This is Matt Hilzinger. In the fourth quarter we're looking at somewhere around I would say $0.02 to $0.04 in terms of kind of bad debt, which is really kind of in line with our expectation that we had in the third quarter for what we thought would happen in the fourth quarter. Clearly there is some pressure that we're seeing from the economy and as John alluded to we're looking at a relation to our guidance and I think I'll let you guys take a stab at least initially in terms of what you think may happen in terms of bad debt. But clearly I think its going to be a bit higher than it has been on a historical level, albeit you have to normalize PECO, because I think PECO's had a normally high bad debt expense in relation to some of the issue from their cut-offs. And, their systems conversion.

Denis do you want to add anything to what Matt just said. Denis P. O'Brien - Executive Vice President, Exelon Corporation; President and CEO, PECO Energy: The only thing I would add is, I think we've got a good program here in terms of both guarding the front door... the new system allows us a much more capability than our old system. We think we have the reserve in about the right place and we don't see our uncollectible expenses are very much different in the fourth quarter of this year from the fourth quarter of last year.

Thank you Denis.

Thank you.

Last question operator.

Your last question comes from the line of Rick Hayden [ph] with Deutsche Assets.

Yes, thank you.

Good morning, Dick.

Good morning, well, John, thank you very much for highlighting the strength of the company and also the dividend. That always kind of reinsures the strength of the company. Have you heard from NRG at all on their response?

We have not.

Oh I see. And this question about bad debt, when you said it is unrecoverable, did you say that you're not going to try to recover it in the next rate case or you just forego it or you will still have a--?

Let me state what I believe the right answer is Rick. Anne Pramaggiore or Bob McDonald who are watching over me here can correct me if I misstate, but I think I have data. There is no revolving procedure for this bad debt expense of either retail company. So, all you can do is basically put it in a test year in a future rate case and try to get it going forward. But that's not the same as recovering what you lost this year. Did I state that correctly Anne?

Yes, I think. What Leslie was probably alluding to is do we have a rider that allows us to capture some of these cost between rate cases and we do not. So, what that means is we go in for the next rate case and we lay out our bad debt and our senses will gravitate towards a future rate case the next time around what our estimates will be on bad debt and put that in front of the Commission.

So does mean that this not like a fuel cost recovery that you recover later on you have still have to make a case for it.

That's right.

You've exactly right Rick.

Okay, thank you.

Rick, Thank you.

All right. Thank you, operator. That concludes our call.

Thank you. This concludes today's conference call. You may now disconnect. .