- -------------------------------------------------------------------------------
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FORM 10-K

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington, D.C. 20549

(MARK
ONE)(Mark
one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBERFor the Fiscal Year Ended December 31, 19971999
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION REGISTRANT; STATE OF INCORPORATION;Commission Registrant; State of Incorporation; IRS EMPLOYER
FILE NUMBER ADDRESS; AND TELEPHONE NUMBER IDENTIFICATION NO.Employer
File Number Address; and Telephone Number Identification No.
----------- ----------------------------------- ------------------

1-11375 UNICOM CORPORATION 36-3961038
(an Illinois corporation)
37th Floor, 10 South Dearborn Street
Post Office Box A-3005
Chicago, Illinois 60690-3005
312/394-7399
1-1839 COMMONWEALTH EDISON COMPANY 36-0938600
(an Illinois corporation)
37th Floor, 10 South Dearborn Street
Post Office Box 767
Chicago, Illinois 60690-0767
312/394-4321

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

TITLE OF EACH CLASS NAME OF EACH EXCHANGESecurities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class Name of Each Exchange
- --------------------------- ON WHICH REGISTEREDon Which Registered
-------------------------
UNICOM CORPORATION
- ------------------Unicom Corporation

Common Stock, without par value New York, Chicago and Pacific

COMMONWEALTH EDISON COMPANY
- ---------------------------Commonwealth Edison Company

(Listed on inside cover)

INDICATE BY CHECK MARK WHETHER THE REGISTRANTSIndicate by check mark whether the registrants (1) HAVE FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTIONhave filed all reports
required to be filed by Section 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OFor 15(d) of the Securities Exchange Act of
1934 DURING THE PRECEDINGduring the preceding 12 MONTHS, ANDmonths, and (2) HAVE BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PASThave been subject to such filing
requirements for the past 90 DAYS.
YESdays.
Yes X . No .
----- ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrants' knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

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COMMONWEALTH EDISON COMPANYCommonwealth Edison Company Securities Registered Pursuant to Section 12(b) of
the Act:

NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTEREDName of Each Exchange
Title of Each Class on Which Registered
- --------------------------------------- ---------------------------
First Mortgage Bonds:
7 5/8% Series 25, due June 1, 2003 )
8% Series 26, due October 15, 2003 ) New York
8 1/8% Series 35, due January 15, 2007 )

Sinking Fund Debentures:
3%, due April 1, 1999 )
2 7/8%, due April 1, 2001 ) New York
7 5/8% Series 1, due February 15, 2003 )
2 3/4%, due April 1, 1999 New York and Chicago

Cumulative Preference Stock, without par
value:
$1.90; $2.00; $7.24; $8.40; $8.38; and
$8.40 Series B New York, Chicago and Pacific
$2.425 New York

Company-Obligated Mandatorily
Redeemable Preferred Securities of
Subsidiary Trust Holding Solely the
Company's 8.48% Subordinated Debt
Securities
New York

THE ESTIMATED AGGREGATE MARKET VALUE OF UNICOM CORPORATION'S 216,683,743The estimated aggregate market value of Unicom Corporation's 184,283,802
shares of outstanding Common Stock, without par value, was approximately
$6,948$6,968 million as of February 28, 1998. In excess of29, 2000. Approximately 99.9% of Unicom
Corporation's voting stock was owned by non-affiliates as of that date.

THE ESTIMATED AGGREGATE MARKET VALUE OF COMMONWEALTH EDISON COMPANY'SThe estimated aggregate market value of Commonwealth Edison Company's
outstanding $1.425 Convertible Preferred Stock, Cumulative Preference Stock
and Company-Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trusts Holding Solely the Company's Subordinated Debt Securities
was approximately $1,107$411 million as of February 28, 1998.29, 2000. Unicom Corporation
held in excess of 99.99% of the 214,231,528180,854,004 shares of outstanding Common
Stock, $12.50 par value, of Commonwealth Edison Company as of that date.

DOCUMENTS INCORPORATED BY REFERENCE:Documents Incorporated by Reference:

Portions of Unicom Corporation's Current Report on Form 8-K dated January
30, 1998 are incorporated by reference into Parts I, II and IV of the Unicom
Corporation Annual Report on Form 10-K and portions of its definitive Proxy Statement to be filed
prior to April 30, 1998,2000, relating to its Annual Meeting of shareholders, to be held on May 28, 1998, are
incorporated by reference into Part III of the Unicom Corporation Annual
Report on Form 10-K.

Portions of Commonwealth Edison Company's Current Report on Form 8-K dated
JanuaryMarch 30, 19982000 are incorporated by reference into Parts I, II and IV of the
Commonwealth Edison Company Annual Report on Form 10-K and portions of
itsCommonwealth Edison Company's definitive Information Statement to be filed
prior to April 30, 1998,2000, relating to its Annual Meeting of shareholders, to be held on May 28, 1998, are
incorporated by reference into Part III of the Commonwealth Edison Company
Annual Report on Form 10-K.

UNICOM CORPORATION
ANDand
COMMONWEALTH EDISON COMPANY
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBERFor the Fiscal Year Ended December 31, 19971999

This document contains the Annual Reports on Form 10-K for the fiscal year
ended December 31, 19971999 for each of Unicom Corporation and Commonwealth Edison
Company. Information contained herein relating to an individual registrant is
filed by such registrant on its own behalf. Accordingly, except for its
subsidiaries, Commonwealth Edison Company makes no representation as to
information relating to Unicom Corporation or to any other companies affiliated
with Unicom Corporation.

TABLE OF CONTENTS

PAGEPage
----

Definitions............................................................... 1
ANNUAL REPORT ON FORMAnnual Report on Form 10-K FOR UNICOM CORPORATION:for Unicom Corporation:
Part I
Item 1. Business........................................................ 2
General.........................................................General............................................................ 2
Changes in the Electric Utility Industry........................Industry........................... 3
Net Electric Generating Capability.............................. 6
Construction Program............................................ 6
Rate Matters....................................................Program............................................... 8
Fuel Supply..................................................... 8
Regulation......................................................Supply........................................................ 10
Employees....................................................... 16
Interconnections................................................ 16
Franchises...................................................... 16Regulation......................................................... 10
Employees.......................................................... 14
Interconnections................................................... 15
Franchises......................................................... 15
Executive Officers of the Registrant............................ 18
Operating Statistics............................................ 19Registrant............................... 16
Year 2000 Conversion............................................ 20
Market Risks.................................................... 20Conversion............................................... 17
Forward-Looking Information..................................... 20Information........................................ 17
Item 2. Properties...................................................... 2018
Item 3. Legal Proceedings............................................... 2219
Item 4. Submission of Matters to a Vote of Security Holders............. 2322
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.........................................................Matters................................................................ 23
Item 6. Selected Financial Data......................................... 2524
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of
Operations........................................... 25Operations...................................................... 24
Item 7A Quantitative and Qualitative Disclosures About Market Risks.....
Item 8. Financial Statements and Supplementary Data..................... 2524
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure............................................ 2524
Part III
Item 10. Directors and Executive Officers of the Registrant............. 2524
Item 11. Executive Compensation......................................... 25
Item 12. Security Ownership of Certain Beneficial Owners and Management.....................................................Manage-
ment................................................................... 25
Item 13. Certain Relationships and Related Transactions................. 25

UNICOM CORPORATION
ANDand
COMMONWEALTH EDISON COMPANY
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBERFor the Fiscal Year Ended December 31, 19971999
TABLE OF CONTENTS (CONCLUDED)(Concluded)

PAGEPage
----

ANNUAL REPORT ON FORMAnnual Report on Form 10-K FOR COMMONWEALTH EDISON COMPANY:for Commonwealth Edison Company:
Part I
Item 1. Business........................................................1.Business......................................................... 26
Executive Officers of the Registrant...............................Registrant................................ 26
Item 2. Properties......................................................2.Properties....................................................... 28
Item 3. Legal Proceedings...............................................3.Legal Proceedings................................................ 28
Item 4. Submission4.Submission of Matters to a Vote of Security Holders.............Holders.............. 28
Part II
Item 5. Market5.Market for Registrant's Common Equity and Related Stockholder
Matters................................................................ 28
Item 6. Selected6.Selected Financial Data.........................................Data.......................................... 28
Item 7. Management's7.Management's Discussion and Analysis of Financial Condition and
Results of
Operations......................................................Operations..................................................... 28
Item 8. Financial7A. Quantitative and Qualitative Disclosures About Market Risks.... 28
Item 8.Financial Statements and Supplementary Data.....................Data...................... 28
Item 9. Changes9.Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure............................................Disclosure........................................... 28
Part III
Item 10. Directors and Executive Officers of the Registrant............. 28Registrant............ 29
Item 11. Executive Compensation.........................................Compensation........................................ 29
Item 12. Security Ownership of Certain Beneficial Owners and
Management.Management............................................................. 29
Item 13. Certain Relationships and Related Transactions.................Transactions................ 29
ANNUAL REPORTS ON FORMAnnual Reports on Form 10-K FOR UNICOM CORPORATION AND COMMONWEALTH EDISON
COMPANY:for Unicom Corporation and Commonwealth Edison
Company:
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-
K...................................................................... 30
(a) Financial Statements, Financial Statement Schedules and Exhib-
its...............................................................its.............................................................. 30
(b) Reports on Form 8-K............................................ 37
Report of Independent Public Accountants on Supplemental Schedule to
Unicom
Corporation............................................................ 388-K........................................... 36
Report of Independent Public Accountants on Supplemental Schedule to
Commonwealth Edison Company............................................ 39
Schedule II--Valuation and Qualifying Accounts.......................... 4037
Signature Page to Unicom Corporation Annual Report on Form 10-K......... 4138
Signature Page to Commonwealth Edison Company Annual Report on Form 10-
K...................................................................... 4239

DEFINITIONS

The following terms are used in this document with the following meanings:

TERM MEANINGTerm Meaning
---------------------- -------------------------------------------------------

1997 Act The Illinois Electric Service Customer Choice and Rate
Relief Law of 1997
BWR Boiling water reactorAPX Automated Power Exchange Inc., a California company
CERCLA Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended
CFC Chlorofluorocarbon
CHA Chicago Housing Authority
Clean Air Amendments Clean Air Act Amendments of 1990
ComEd Commonwealth Edison Company
ComEd Funding ComEd Funding, LLC, a ComEd subsidiary
ComEd Funding Trust ComEd Transitional Funding Trust, a ComEd Funding
subsidiary
Congress U.S. Congress
Cotter Cotter Corporation, a ComEd subsidiary
CTC Non-bypassable "competitive transition charge"
DOE U.S. Department of Energy
EMFs Electric and magnetic fields
FAC Fuel adjustment clauseEME Edison Mission Energy, an Edison International
subsidiary
FERC Federal Energy Regulatory Commission
FERC Order FERC Open Access Order No. 888 issued in April 1996
IBEW International Brotherhood of Electrical Workers (AFL-
CIO)
ICC Illinois Commerce Commission
IDNS Illinois Department of Nuclear Safety
IDR Illinois Department of Revenue
Illinois EPA Illinois Environmental Protection Agency
Indiana Company Commonwealth Edison Company of Indiana, Inc., a ComEd
subsidiary
INPO Institute of Nuclear Power Operations
IPCB Illinois Pollution Control Board
ISO Independent System Operator
January 30, 1998 Unicom's Current Report on Form 8-K including auditor's
Form 8-K Reports opinion dated January 30, 1998 and ComEd's Current
Report on Form 8-K including auditor's opinion dated
January 30, 1998
MAIN Mid-America Interconnected Network
MGP Manufactured gas plant
NERC North American Electric Reliability Council
NPDES National Pollutant Discharge Elimination System
NPL National Priorities List
NRC Nuclear Regulatory Commission
O&M Operation and maintenance
Rate Order ICC rate order issued in January 1995, as subsequently
modifiedPECO PECO Energy Company, a Pennsylvania company
RES Retail Electric Supplier
SEC Securities and Exchange Commission
SPEs Special purpose entities
S&P Standard & Poor's
Trust Securities ComEd-obligated mandatorily redeemable preferred
securities of subsidiary trusts holding solely ComEd's
subordinated debt securities
Unicom Unicom Corporation
Unicom Energy Services Unicom Energy Services Inc., a Unicom Enterprises
subsidiary
Unicom Enterprises Unicom Enterprises Inc., a Unicom subsidiary
Unicom Investment Unicom Investment, Inc., a Unicom Enterprises
subsidiary
Unicom Thermal Unicom Thermal Technologies Inc., a UT Holdings
subsidiary
U.S. EPA U.S. Environmental Protection Agency
UT Holdings UT Holdings Inc., a Unicom Enterprises subsidiary
U.S. EPA U.S. Environmental Protection Agency

ANNUAL REPORT ON FORM 10-K FOR UNICOM CORPORATION

PART I

ITEMItem 1. BUSINESS.

GENERALBusiness.

General

Unicom was incorporated in January 1994. ComEd, a regulated electric
utility, is the principal subsidiary of Unicom. Unicom Enterprises is an
unregulated subsidiary of Unicom and is engaged, through its subsidiaries, in
energy service activities. Unicom's principal executive offices are located at
10Ten South Dearborn Street, Post Office Box A-3005, Chicago, Illinois 60690-
3005, and its telephone number is 312/394-7399.

ComEd represents substantially all of the assets, revenues and net income
(loss)results of operations of Unicom;
and Unicom's resources and results of operations are largely dependent on, and
reflect, those of ComEd. Consequently, the following discussion generally
focuses, in more detail, on ComEd's utility operations although information is
also provided about Unicom's unregulated operations.

Utility OperationsOperations. ComEd is engaged principally in the production,
purchase, transmission, distribution and sale of electricity to a diverse base
of residential, commercial, industrial and wholesale customers. ComEd was
organized in the state of Illinois on October 17, 1913 as a result of the
merger of Cosmopolitan Electric Company into the original corporation named
Commonwealth Edison Company. The latter had been incorporated on September 17,
1907. ComEd's electric service territory has an area of approximately 11,300 square
miles and an estimated population of approximately 8eight million as of
December 31, 1997.1999. It includes the city of Chicago, an area of about 225
square miles with an estimated population of approximately 3three million from
which ComEd derived approximately one-third30 percent of its ultimate consumer revenues
in 1997.1999. ComEd had 3.4approximately 3.5 million electric customers at December 31, 1997.1999.
ComEd's principal executive offices are located at 10Ten South Dearborn Street,
Post Office Box 767, Chicago, Illinois 60690-0767, and its telephone number is
312/394-4321.

Unregulated OperationsOperations. Unicom Enterprises is engaged, through subsidiaries,
in energy service activities which are not subject to utility regulation by
statefederal or federalstate agencies. One of these subsidiaries, UT Holdings, provides
district cooling
heating and related services to offices and other buildings in the
central business district of the city of Chicago under a non-exclusive use agreementand in other cities in North America,
generally working with the city of Chicago for an initial term expiring in 2014.local utilities. District cooling involves, in essence,
the production of chilled water at one or more central locations and its
circulation to customers' buildings through a closed circuit of supply and
return piping. Such water is circulated through customers' premises primarily
for air conditioning. This process is used by customers in lieu of self-generatedself-
generated cooling. As a result of the Clean Air
Amendments, the manufacture of CFCs has been curtailed since January 1996,
thereby creating a marketing opportunity for non-CFC based systems, such as UT
Holdings' district cooling. UT Holdings is involved in energy projects in
other cities, generally working with the local utilities in those cities.

Unicom Energy Services, another subsidiary of Unicom Enterprises, is engaged
in providing energy services, including gas services, performance contracting,
distributed energy and active energy management systems. In 1997, Unicom
Energy Services entered into a joint venture with Sonat Marketing Company L.P.
to market natural gas and related services to large gas purchasers within
ComEd's service area in Northern Illinois and other Midwestern areas. As an
entry into the

distributed energy market, Unicom Energy Services also entered intoThrough an alliance with
AlliedSignal Power Systems, Inc., a subsidiary of AlliedSignal Inc., to market, install and serviceUnicom
Energy Services is an electric energy generatorexclusive distributor for the Parallon 75(TM)
TurboGenerator system, which was developed by AlliedSignal knownto provide
customers with on-site electricity production. Unicom Energy Services'
exclusive distribution territory encompasses 12 Midwest states, Ontario,
Canada and Puerto Rico.

Unicom Power Holdings, another subsidiary of Unicom Enterprises, is
developing certain generation and cogeneration projects.

Unicom Energy Inc., also a subsidiary of Unicom Enterprises, is currently
engaged in providing retail gas services to commercial and industrial
customers in the Midwest region. Unicom Energy Inc. also provides retail
electric services as an unregulated retail energy supplier.

Unicom Mechanical Services Inc., a subsidiary of Unicom Enterprises, engages
in the design, installation and servicing of heating, ventilation and air
conditioning facilities for commercial and industrial customers in Chicago and
surrounding area through subsidiaries conducting business as Midwest
Mechanical and V.A. Smith Company.

Merger Agreement. In September 1999, the Boards of Directors of Unicom and
PECO approved a merger of equals that will create a new holding company,
Exelon. The merger is conditioned, among other things, upon the approvals of
the shareholders of both companies and by various regulatory bodies. The
merger is currently expected to be completed in the latter half of 2000.

Under the merger agreement, as amended and restated January 7, 2000, PECO
and ComEd will become the principal utility subsidiaries of Exelon. This
result will be achieved by a mandatory exchange of the outstanding common
stock of PECO for common stock of Exelon, and a merger of Unicom with and into
Exelon wherein holders of Unicom common stock will receive 0.875 shares of
Exelon common stock plus $3.00 in cash for each of their shares of Unicom
common stock. The merger transaction will be accounted for as a TurboGenerator,purchase of
Unicom by PECO.

Prior to the consummation of the merger, Unicom expects to repurchase
approximately $1.0 billion of its outstanding common shares. These share
repurchases are in addition to 26.3 million shares of Unicom common stock that
Unicom repurchased in January 2000 upon settlement of certain forward purchase
contracts. The $1.0 billion additional share repurchases will be funded from
available funds, including funds resulting from the fossil plant sale.

The merger agreement, as amended and restated, was filed on January 13, 2000
by Unicom with the SEC as an exhibit to a 12-state regionForm 8-K, and reference to that
filing is made for more detailed information.

Changes in the province
of Ontario, Canada. Unicom Energy Services entered into an exclusive national
distributorship agreement with Engage Networks, Inc. to market active energy
management software and related hardware and services.

CHANGES IN THE ELECTRIC UTILITY INDUSTRYElectric Utility Industry

Unicom and its predominant business, electric energy generation,
transmission and distribution, are in a period of fundamental change in the
manner in which customers obtain, and energy suppliers provide, energy
services.change. These
changes are attributable to changes in technology the
relaxation of regulatory barriers to utilities' respective service territories
as well as to efforts to change the manner in which electric utilities are
regulated.and regulation. Federal law
and regulations have been amended to provide for open transmission system
access, and various states, including Illinois, are considering, or have
adopted, new regulatory structures to allow access by some or all customers to
energy suppliers in addition to the local utility.

Electric Utility Industry. The electric utility industry historically has historically
consisted of vertically integrated companies which combine generation,
transmission and distribution assets; serve customers within relatively
defined service territories; and operate under extensive regulation with
respect to rates, operations and other matters. Utilities have operated under
a regulatory compact with the state, with a statutory obligation to serve all
of the electricity needs within their service territory in a nondiscriminatory
manner. Historically, investment and operating decisions have been made based
upon the utilities' respective assessment of the current and projected needs
of their customers. In view of this obligation, regulation has focused on
investment and operating costs, and rates have been based on a recovery of
some or all of such prudently incurred costs plus a return on invested
capital. Such rate regulation, and the ability of utilities to recover
investment and other costs through rates, have provided the basis for
recording certain costs as regulatory assets. These assets represent costs
which are allocated over future periods reflecting related regulatory
treatment, rather than expensed in the current period.

Federal Regulation. The Federal Energy Policy Act of 1992, among other
things, empowered FERC to introduce a greater level of competition into the
wholesale marketplace for electric energy. Under FERC Order No. 888, utilities
are required to file open access tariffs with regard to their transmission
systems. These tariffs set forth the terms, including prices, under which
other parties and the utility's wholesale marketing function may use the
utility's transmission system. ComEd has an approved open access tariff with
the FERC. A companion FERC rule, Order No. 889, requires the separation of the
transmission operations and wholesale marketing functions so as to ensure that
unaffiliated third parties have access to the same information as to system
availability and other requirements. The FERC Order further requires utilities
to operate an electronic bulletin board to make transmission price and access
data available to all potential users. A key feature of FERC Order No. 888 is
that it contemplates full recovery of a utility's costs "stranded" by
competition. These costs are "stranded" or "strandable" to the extent market-
based rates would be insufficient to allow for their full recovery. To recover
stranded costs, the utility must show that it had a reasonable expectation
that it would continue to serve the customer in question under its regulatory
compact. In addition, some government entities, such as cities, may elect to
"municipalize" a utility's distribution facilities through condemnation
proceedings. Such municipalities would then be able to purchase electric power
on a wholesale basis and resell it to customers over the newly acquired
facilities. The FERC Order provides for the recovery of a utility's investment
stranded by municipalization.

The 1997 Act. OnIn December 16, 1997, the Governor of Illinois signed into law the
1997 Act, which established a phased-processphased process to introduce competition into the
electric industry in Illinois under a less regulated structure. The 1997 Act
as it applieswas amended in June 1999.

As a result of the 1997 Act and FERC rules, prices for the supply of
electric energy are expected to ComEd,change from cost-based, regulated rates to
rates determined by competitive market forces. Accordingly, the 1997 Act
provides for, among other things, a 15%
residential base rate reduction commencing on August 1, 1998, an additional 5%
residential base rate reduction commencing on May 1, 2002, andgradual customer access to other electric
suppliers inor a phased-in process. Access for commercialpower purchase option which allows the purchase of electric
energy from ComEd at market based prices, and
industrial customers will occur over a period from October 1999 to December
2000, and access for residential customers will occur after May 1, 2002. The
15% residential base rate reduction, commencing on August 1, 1998, is expected
to reduce ComEd's operating revenues by approximately $160 million and $375
million in 1998 and 1999, respectively, compared to 1997 rate levels. ComEd is
engaged in certain pricing experiments contemplated by the 1997 Act, which are
expected to reduce ComEd's operating revenues by approximately $30 million and
$60 million in 1998 and 1999, respectively, compared to 1997 rate levels,
notwithstanding the effects of customer growth.

The 1997 Act also provides for the collection of a CTC from
customers who choose anotherto purchase electric service providerenergy from a RES or elect the power
purchase option during a transition period that extends through 2006, and can be extended through 2008 with ICC approval if
certain factors are met. The2006.
Effective October 1, 1999, the CTC will bewas established in accordance with a
formula defined in the 1997 Act. The CTC, which will beis applied on a cents per
kilowatthour basis, considers the revenue which would have been collected from
a customer under tariffed rates, reduced by the revenue the utility will
receive for providing delivery services to the customer, the market price for
electricity and a defined mitigation factor, which represents the utility's
opportunity to develop new revenue sources and achieve cost savings. 3The CTC
allows ComEd to recover some of its costs which might otherwise be
unrecoverable under market-based rates. Nonetheless, ComEd will need to take
steps to address the portion of such costs which are not recoverable through
the CTC. Such steps may include cost control efforts, developing new sources
of revenue and asset dispositions.

On October 1, 1999, more than 41,000 non-residential customers became
eligible to choose a new electric supplier or elect the purchase power option.
The remainder of the non-residential customers will become eligible to choose
an electric supplier or the purchase power option between June 1 and
December 31, 2000. As of December 31, 1999, over 4,700 non-residential
customers, representing approximately ten percent of ComEd's 1998 retail
kilowatthour sales, elected to receive their electric energy from a RES or
chose the purchase power option. As a result of the collection of CTC's from
such customers, ComEd does not expect these elections to have a material
effect on its results of operations in the near term.

offered under cost-based, regulated rates. The ICC issued orders in August and
September 1999 approving, with modifications, ComEd's delivery service
tariffs.

The 1997 Act committed ComEd to spend at least $2 billion during the period
1999 through 2004 on transmission and distribution facilities outside of
Chicago and to contribute $250 million to an environmental trust, as a result
of closing of the fossil plant sale. See "Fossil Plant Sale" below for
additional information.

The 1997 Act also provides for a 15% residential base rate reduction which
became effective August 1, 1998 and an additional 5% residential base rate
reduction in October 2001. ComEd's operating revenues were reduced by
approximately $170 million in 1998 due to the 15% residential base rate
reduction. The 15% rate reduction further reduced ComEd's operating revenues
by approximately $226 million in 1999, compared to 1998 rate levels.

Notwithstanding these rate reductions, and subject to certain earnings
tests, a rate freeze will generally be in effect until at least January 1,
2005. During this period, utilities may reorganize, sell or assign assets,
retire or remove plants from service, and accelerate depreciation or
amortization of assets with limited ICC regulatory review. A utility may
request a rate increase during the rate freeze period only when necessary to
ensure the utility's financial viability, but not before January 1, 2000.
Under the earnings provision of the 1997 Act, if the earned return on common
equity of a utility during this period exceeds an established threshold, a portionone-
half of the excess earnings must be refunded to customers. A utility may requestThe threshold rate
of return on common equity is based on the 30-Year Treasury Bond rate, plus
5.5% in the years 1998 through 1999 and plus 8.5% in the years 2000 through
2004. The utility's earned return on common equity and the threshold return on
common equity are each calculated on a rate increase
duringtwo-year average basis. The earnings
sharing provision is applicable only to ComEd's earnings. In accordance with
the rate freeze period when necessary to ensure the utility's financial
viability, but not before January 1, 2000.

Under theprovisions of 1997 Act, utilities are required to continue to offer delivery
services, includingincreased amortization of regulatory assets may be
recorded, thereby reducing the transmission and distributionearned return on common equity, if earnings
otherwise would have exceeded the maximum allowable rate of electric energy, such
that customers who select an alternative energy supplier can receive electric
energy from that supplier using existing transmission and distribution
facilities. Such services will continuereturn. The
potential for earnings sharing or increased amortization of regulatory assets
could limit earnings in future periods.

The 1997 Act also allows a portion of ComEd's future revenues to be
offered under cost-based
regulated rates.segregated and used to support the issuance of securities by ComEd or a SPE.
The proceeds, net of transaction costs, from such securities issuances must be
used to refinance outstanding debt or equity or for certain other limited
purposes. The total amount of such securities that may be issued is
approximately $6.8 billion. In December 1998, ComEd initiated the issuance of
$3.4 billion of transitional trust notes through its SPEs, ComEd Funding and
ComEd Funding Trust. See "Liquidity and Capital Resources," subcaption
"UTILITY OPERATIONS--Capital Resources" on page F-10, and Notes 3 and 7 of
Notes to Financial Statements on page F-39 and F-43, respectively, for
additional information regarding the redemptions and repurchase of debt and
equity.

The 1997 Act also requires utilities to establish or join an ISO that will
independently manage and control utility transmission systems. Additionally,
the 1997 Act includes the option to eliminate the FAC, the leveling of certain regulatory requirements to
permit operational flexibility, the leveling of certain regulatory and tax
provisions as applied to various electric suppliers and a new, more stringent,
liability standardreliability requirement applicable to ComEd in the event of a major outage.
The 1997 Act also allows ComEdSee "Response to unbundle a portion of its future revenues,
including tariffed ratesRegulatory Changes" below for additional information.

See Note 1, under "Regulatory Assets and CTC revenues, and issue securities backed by
these revenues. The proceeds from such security issuances must generally be
used to refinance outstanding debt or equity or for certain other limited
purposes. The total amount of such securities that ComEd may issue is
approximately $6.8 billion; approximately one-half of that amount can be
issued in the twelve-month period commencing on August 1, 1998.

As a result of the 1997 Act, prices for the supply of electric generation
are expected to transition from cost-based, regulated rates to rates
determined by competitive market forces. The CTC allows ComEd to recover a
portion of any of its costs which might otherwise be unrecoverable under
market-based rates. Nonetheless, ComEd will need to take steps to address the
portion of such costs which are not recoverable through the CTC. Such steps
include cost control efforts and developing new sources of revenue.

See "Management's Discussion and Analysis of Financial Condition and Results
of Operations,Liabilities," subcaption "Changes in the Electric Utility Industry--
Accounting Effects Related to the 1997 Act" and Note 23 of Notes
to Financial Statements in the January 30, 1998 Form 8-K Reports, which are incorporated
herein by reference,on page F-33 and F-39, respectively, for the
accounting effects related to the 1997 Act.

Federal Regulation. The Federal Energy Policy Act of 1992, among other
things, empowered the FERC to introduce a greater level of competition into
the wholesale marketplace for electric energy. In April 1996, the FERC Order
was issued requiring utilities to file open access tariffs with regard to
their transmission systems. These tariffs set forth the terms, including
prices, under which other parties and the utility's wholesale marketing
function may use the utility's transmission system. ComEd has an approved open
access tariff with the FERC. The FERC Order requires the separation of the
transmission operations and wholesale marketing functions so as to ensure that
unaffiliated third parties have access to the same information as to system
availability and other requirements. The FERC Order further requires utilities
to operate an electronic bulletin board to make transmission price and access
data available to all potential users. A key feature of the FERC Order is that
it contemplates full recovery of a utility's costs "stranded" by competition.
These costs are "stranded" or "strandable" to the extent market-based rates
would be insufficient to allow for their full recovery. To recover stranded
costs, the utility must show that it had a reasonable expectation that it
would continue to serve the customer in question under its regulatory compact.
In addition, some governmental entities, such as cities, may elect to
"municipalize" a utility's distribution facilities

through condemnation proceedings. Such municipalities would then be able to
purchase electric power on a wholesale basis and resell it to customers over
the newly acquired facilities. The FERC Order provides for the recovery of a
utility's investment stranded by municipalization.

ComEd's Response to Regulatory Changes. ComEd isUnicom has announced several business and
operational objectives designed to focus efforts in responding and is
undertaking significant strategic planning efforts to respond further, to the developments withinenergy
market changes that are expected to

develop from the utility industry1997 Act. Among other things, these strategic objectives call
for a focus on operations to: (1) provide a reliable supply of electricity as
the competitive marketplace evolves, (2) become a top quartile operator of
competitive nuclear plants, (3) deliver competitive earnings while
restructuring the balance sheet to reflect the realities of the marketplace,
(4) expand the offering of energy-related products and services, and (5)
transform the corporate culture of Unicom.

Under the 1997 Act, the role of electric utilities in the supply and
delivery of energy is expected to change. Utilities, such as ComEd,
traditionally have been responsible for providing both adequate supply and
reliable delivery of electricity to customers within their service areas. In
the future, ComEd will continue to be obligated to provide a reliable delivery
system. However, ComEd will be obligated to supply electricity only to those
customers that it continues to serve under tariffs for electricity, but not to
those customers who choose to rely on the marketplace. Nonetheless, during the
transition period to a competitive supply marketplace, ComEd must provide both
an adequate supply and reliable delivery of electricity. Given the tight
capacity situation in ComEd's market, ComEd will continue working to maintain
its potentialavailable capacity, as well as working to assist in the development of a
competitive supply marketplace in Illinois.

ComEd has a significant commitment to, and investment in, nuclear generating
capacity. ComEd has installed a management team responsible for strandable investment. During the past several years, such efforts have
focused on cost reductions, including personnel reductions, efficienciesimproving
nuclear operations. Such improvements are aimed at increasing levels of energy
generation, or capacity factors, at ComEd's nuclear generating units while
simultaneously improving ComEd's record of meeting NRC requirements and INPO
performance standards. Increased capacity factors generally result in purchasing and inventory management,lower
unit production costs and an incentive compensation system
keyedimproved opportunity to costgenerate and sell
electricity in a competitive marketplace. Efforts are also being made to
control capital and improvement in shareholder value.operating costs through increased efficiencies, such as
the reduction of downtime and expenses associated with generating unit
maintenance and refueling outages.

ComEd also evaluated the recoverability of its generating plant investment
as a result of the 1997 Act. See Note 1 of Notes to Financial Statements,
under "Regulatory Assets and Liabilities," on page F-33 for additional
information. Notwithstanding these efforts, there continues to be an ongoing
analysis of the ability of ComEd's costs remain high in comparisonvarious nuclear plants to its neighboring
utilities. Although ComEd's operating resultsgenerate and
financial condition have
historically been affected by various rate proceedings, ComEd expects that the
changesdeliver electric energy safely at competitive prices in the nationalcompetitive market
for energy. Although short-term system reliability and Illinois electric energy marketplace,capacity constraints
are likely to support the continued operation of ComEd's nuclear units in the
near term, expected longer term developments are likely to make decision-
making a function of economic considerations. In the absence of short-term
reliability and ComEd's
activities anticipatingcapacity constraints, if a generating plant cannot produce
power safely at a cost below the competitive market price, it will be disposed
of or responding to them,closed. Plant impairment adjustments have reduced the carrying value of
nuclear plants, and depreciation rates reflecting shortened estimated useful
lives for certain stations will directly impact its
operating results and financial condition overreduce the carrying value further during the
next several years. ComEd anticipates thatHowever, closure of a plant could involve additional
charges associated with the 1997 Act, and the resultant increasing
competition to supply energy in Illinois and elsewhere, will have significant
effects uponwrite-off of its revenues and assets as it takes steps to adjust its
operations and services to meet the changing market for electric energy. Boththen-current carrying value. In
January 1998, Unicom and ComEd have been examining methods of positioning themselves and
their affiliatesannounced its decision to deal with those effects and to address the developing
opportunities and challenges. ComEd has been engaged in a broad-based
examination of its assets andpermanently cease
nuclear generating operations particularly nuclear and fossil
generation and generation-related (i.e., fuel and inventory) assets, with a
view toward rationalizing their investment and operating costs against their
ability to contribute to the revenues of ComEd under various market scenarios.
Such an assessment involves the consideration of numerous factors, including
revenue contribution, operating costs, impacts onat ComEd's service obligations,
purchase commitments and the impact of various options. Such options include
continued operation with accelerated depreciation, indefinite suspension from
operation, sale to a third party and retirement or closure. As discussed
below, ComEd recently ceased nuclear generation operations and retired
facilities at its Zion Station. If ComEd retired or closed one or more
additional generating plants, particularly a nuclear plant, such retirement
would have a material impact on Unicom and ComEd's financial position and
results of operations. See "General--Unregulated Operations" above regarding
Unicom Energy Services' energy services activities.

On January 14, 1998, the Boards of Directors of Unicom and ComEd authorized
the permanent cessation of nuclear generation operations and retirement of
facilities at ComEd's 2,080 megawatt Zion nuclear generating station. SuchThe related retirement
resulted in a charge forin 1997 of $523 million (after-tax), or $2.42 per common
share. The decision to close Zion Station wasshare (diluted), reflecting both a result of an
ongoing analysis, which ComEd performed regarding the economic value of its
generating assets in lightwrite down of the expected changes in the manner in which
electric energy is marketedplant's carrying value
and sold. The passage of the 1997 Act provided a clearer basisliability for evaluating the costs and benefits of alternative courses of
action. In reaching the decision to cease nuclear generation operations at
Zion Station, the Boards also considered the significant uncertainty
associated with continued operation of the station due to the degradation of
the steam generators, and the expected operating costs associated with
continued station operation.

Notwithstanding the closurefuture closing costs. A portion of Zion Station as a nuclear generating
facility, a portion of the station will continue to becurrently
is used to provide voltage support in the transmission system that serves
ComEd's northern region. Such
support will require capital expenditures at the station as well as upgrades
to the transmission system at various points, in order to improve the ability
to import and transport power through the system. See Note 5 of Notes to Financial Statements in the January 30, 1998 Form 8-K Reports, which are
incorporated herein by reference,on page
F-41, for additional information.

In April 1996, ComEd announced that it had finalized agreements to sell two
of its coal-fired generating stations, representing 1,598 megawatts of
generating capacity, and to enter into exclusive 15-year purchased power
agreements for the output of the stations. The sale of State Line Station was
completed in December 1997 and the sale of Kincaid Station was completed in
February 1998. The net proceeds of the sales, after income tax effects and
closing costs, were approximately $190 million. The proceeds will be used to
retire or redeem existing debt.

ComEd joined with eightother Midwestern utilities to form a regionaldesign the Midwest ISO in
January 1998. These utilities have agreed to place their transmission systems under
the control of the Midwest ISO as soon as it achieves operational status in
2001. The Midwest ISO, is a key element in accommodating the FERC-directed
restructuring of the electric industry, and willis expected to promote enhanced
reliability of the transmission system, equal access to the transmission
system, and foster increased competition. The Midwest ISO will establish an independent body that
will ultimately direct the management ofcontrol the
transmission system forand will have authority to require modification in

the operation of generators connected to that system during system
emergencies. ComEd, like other utilities, involved. ComEd will retain ownership of its
transmission lines. The formation of the Midwest ISO iswas approved by the FERC
in September 1998, subject to certain conditions. In December 1999, ComEd and
other Midwestern utilities filed a request with the FERC approval.

NET ELECTRIC GENERATING CAPABILITY

As describedfor a Declaratory
Order approving a different organizational template for the regional
transmission grid. The request seeks approval for the creation of for-profit
transmission companies, operating under "Item 2. Properties,"the general oversight of the Midwest
ISO, but separated from their previous vertically integrated utilities. The
request was approved, in part, on February 24, 2000, subject to further
development of its elements.

In the absence of an ISO-related power exchange, ComEd considershas also agreed to
cooperate with APX in the creation of the first electronic energy exchange in
Illinois. Initial products may include hourly, daily and weekly electricity
delivered to and from interconnection points on ComEd's transmission system,
and a standard system of credit and trading interfaces. Unicom has made a $3
million venture capital investment in APX in order to help finance its
non-summer netexpansion in the Midwest. Neither ComEd nor Unicom will receive any voting
rights. The power exchange will be independently owned and managed by APX and
will allow wholesale and retail market participants to trade electricity
anonymously through an internet-based computerized system. ComEd will be
treated like any other market participant and will be an active participant in
the power exchange which opened in Illinois in the fourth quarter of 1999.

Fossil Plant Sale. In December 1999, ComEd completed the sale of its fossil
generating capabilityassets to EME for a cash purchase price of $4.8 billion. The fossil
plant assets represent an aggregate generating capacity of approximately 9,772
megawatts.

Just prior to the consummation of the fossil plant sale, ComEd transferred
these assets to an affiliate, Unicom Investment. In consideration for the
transferred assets, Unicom Investment paid ComEd consideration totalling
approximately $4.8 billion in the form of a demand note in the amount of
approximately $2.4 billion and an interest-bearing Note with a maturity of
twelve years. Unicom Investment immediately sold the fossil plant assets to
EME, in consideration of which Unicom Investment received approximately $4.8
billion in cash from EME. Immediately after its receipt of the cash payment
from EME, Unicom Investment paid the $2.4 billion aggregate principal due to
ComEd under the demand note. Unicom Investment will use the remainder of the
cash received from EME to fund other business opportunities, including the
share repurchases. Of the cash received by ComEd, $1.8 billion is expected to
be 20,736,000 kilowatts (includingused to pay the recently sold
Kincaidcosts and State Line generating stations, whose capability is committedtaxes associated with the fossil plant sale
including ComEd's contribution of $250 million of the proceeds to an
environmental trust as required by the 1997 Act. The remainder of the demand
note proceeds will be available to ComEd pursuant to exclusive 15-yearfund, among other things,
transmission and distribution projects, nuclear generation station projects,
and environmental and other initiatives.

The sale produced an after-tax gain of approximately $1.6 billion, after
recognizing commitments associated with certain coal contracts ($350 million),
recognizing employee-related costs ($112 million) and contributing to the
environmental trust. The coal contract costs include the amortization of the
remaining balance of ComEd's regulatory asset for unrecovered coal reserves of
$178 million and the recognition of $172 million of settlement payments
related to the above-market portion of coal purchase commitments ComEd
assigned to EME at market value upon completion of the fossil plant sale. The
severance costs included pension and post-retirement welfare benefit
curtailment and special termination benefit costs of $51 million and
transition, separation and retention payments of $61 million. A total of 1,730
fossil station employee positions were eliminated upon completion of the
fossil plant sale on December 15, 1999. As of December 31, 1999, 1,590 of the
employees whose positions were eliminated had been terminated and 140 affected
employees were in a transition program which generally extends 60 days from
the date of the fossil plant sale. Consistent with the provisions of the 1997
Act, the (pre-tax) gain on the sale of $2.587 billion resulted in a regulatory
liability, which was used to recover regulatory assets. Therefore, the gain on
the sale, excluding $43 million of amortization

of investment tax credits, was recorded as a regulatory liability in the
amount of $2.544 billion and amortized in the fourth quarter of 1999. The
amortization of the regulatory liability and additional regulatory asset
amortization of $2.456 billion are reflected in depreciation and amortization
expense on Unicom's Statement of Consolidated Operations and resulted in a net
reduction to depreciation and amortization expense of $88 million.

As part of the sale transaction, ComEd entered into transitional, limited
term power purchase agreements with the buyer. Such purchase power agreements
and after
giving effect to the closure of Zion Station and certain plant re-ratings).
After deducting summer limitations of 538,000 kilowatts, ComEd considers its
net summer generating capability to be 20,198,000 kilowatts. The net
generating capability available for operation at any time may be less due to
regulatory restrictions, fuel restrictions, efficiency of cooling facilities
and generating units being temporarily out of service for inspection,
maintenance, refueling, repairs or modifications required by regulatory
authorities. See "Regulation--Nuclear" below for information concerning
outages at certain ofwill increase ComEd's nuclear generating stations.

ComEd's highest peak load experienced to date occurred on August 14, 1995
and was 19,212,000 kilowatts; and the highest peak load experienced to date
during a winter season occurred on January 18, 1994 and was 14,179,000
kilowatts. ComEd's kilowatthour sales and generation are generally higher,
primarily during the summer periods but also during the winter periods, when
temperature extremes create demand for either summer cooling or winter
heating.

CONSTRUCTION PROGRAMpurchased power costs.

Construction Program

Utility OperationsOperations. ComEd has a construction program for the year 1998,2000,
which consists principally of improvements to its existing nuclear and other electric
production,
transmission and distribution facilities. It does not include
funds to add new generating capacity to ComEd's system. The program, as currently approved
by ComEd, includes the following estimated expenditures (excluding nuclear
fuel expenditures of approximately $160$260 million).

19982000
----
(MILLIONS
OF DOLLARS)(Millions
of Dollars)

Production................................................ $425Nuclear................................................... $215
Transmission and Distribution............................. 415536
General................................................... 90146
----
$930
----
----$897
====

Such estimated expenditures include $130 million towardIn response to several outages in the replacementsummer of 1999, ComEd conducted an
extensive evaluation of the steam generatorsreliability of its transmission and distribution
systems. The construction program above reflects a preliminary evaluation of
improvements necessary to improve reliability of ComEd's transmission and
distribution systems. ComEd is currently evaluating its construction program
for the years 2000, 2001 and 2002. The final results of this planning process
cannot be determined at this time.

ComEd's Braidwood Unit 1 and Byron Unit 1net nuclear generating units by year-end 1998. The total replacement costplant, including construction work in
progress and nuclear fuel, and excluding the decommissioning costs included in
the accumulated provison for depreciation, is estimated to
be $455 million, of which approximately $295 million has been incurred through
December 31, 1997 and $30 million will be incurred in 1999.

ComEd and the Indiana Company's construction expenditures during 1997 were
$970 million.

ComEd's gross investment in nuclear generating capacity (excluding nuclear
fuel) is $13.4$7.8 billion at December 31,
1997 (after reflecting the closure of
Zion Station), and ComEd expects that investment to be approximately $13.9
billion by the end of 1998 as a result of improvements.1999. Gross additions to and retirements from utility property, excluding
nuclear fuel, of ComEd and the Indiana Company for the five years ended
December 31, 19971999 were $4,352$4,801 million and $1,686$1,622 million, respectively
(after reflecting(excluding the effects of the closure of Zion Station, and the salesales of State Line
Station)and Kincaid Stations and the fossil plant sale).

ComEd periodically reviews its projection of probable future demand for
electricity in its traditional service territory. It currently projects long-
term average annual growth of 1.75% in annual peak load and 1.5% in total
annual electricity requirements, excluding sales to other utilities. ComEd's
forecasts of peak load indicate a need for additional resources to meet
demand, either through generating capacity, equivalent purchased power and/or
the development of additional demand-side management resources, in 19982000 and
each year thereafter.
However,thereafter for the foreseeable future. ComEd believes that adequate
resources including cost-effective
demand-side management resources, non-utility generation resources and other-
utility power purchases, couldcan be obtained in sufficient quantities to meet such forecasted
needs. The 1998 construction program includes approximately $2 million for
environmental control facilities. ExpendituresCurrently, ComEd does not know the ultimate impact on such facilities were $18
million in 1997 and $16 million for each of the years 1996 and 1995.these projections
resulting from open access which began on a phased basis on October 1, 1999.

Purchase commitments for ComEd, principally related to construction, and
nuclear
fuel and coal in support of certain power purchase agreements approximated
$286$670 million at December 31, 1997.1999. In addition, ComEd's estimated commitments
for theexpected capacity payments and fixed charges related to power purchase
of coal areagreements were as follows:

CONTRACT PERIOD COMMITMENT(1)
-------- --------- -------------Commitments(1)
Period ($Millions)
------ --------------

Black Butte Coal Co............................... 1998-20002000......................... $ 679
Decker Coal Co. .................................. 1998-2014783
2001......................... 698
2002......................... 427
Other commitments ................................ 1998 252003-2004.................... 540
2005-2012.................... 1,039
------
$1,131$3,487
======

--------
(1) In millions of dollars, excluding transportation costs.Capacity payments may be adjusted based on certain conditions. No
estimate of future costescalationcost escalation has been made.

For additional information concerning these coal contracts and ComEd's fuel
supply, see "Fuel Supply" below and Notes 1 and 23 of Notes to Financial
StatementsSee "Changes in the January 30, 1998 Form 8-K Reports, which are incorporated
herein by reference.Electric Utility Industry," subcaptions "The 1997 Act"
and "Fossil Plant Sale" above, for additional information.

See "Management's Discussion and Analysis of Financial Condition and Results
of Operations"Operations," subcaption "Liquidity and Capital Resources--Utility
Operations--Capital Resources" in the January 30, 1998 Form 8-K Reports, which
are incorporated herein by reference,Resources--UTILITY
OPERATIONS--Capital Resources," on page F-10 for information regarding the
capital resources of ComEd.

Unregulated OperationsOperations. Unicom has approved capital expenditures for 19982000 of
approximately $92$85 million for UT Holdings, primarily related to an expansion
of two of its four Chicago district cooling facilities and the related distribution piping
and plants in other cities. As of December 31, 1997,1999, UT Holdings' purchase
commitments, principally related to construction, were approximately $11$27
million.

Unicom has approved capital expenditures for 2000 of approximately $15
million andfor Unicom Energy Services'Services. As of December 31, 1999, Unicom Energy
Services had purchase commitments wereof approximately $8$24 million.

Unicom has approved capital expenditures for 2000 of approximately $221
million for Unicom Power Holdings. As of December 31, 1999, Unicom Power
Holdings had purchase commitments of approximately $78 million.

Unicom Power Holdings intends to purchase approximately 440 MW of combustion
turbine generators and auxiliary equipment. Such generators will either be
sold or placed into cogeneration or other peaking applications. Unicom Power
Holdings is evaluating the costs and economics of such alternatives. Unicom
Power Holdings anticipates that the equipment purchases will cost
approximately $165 million, of which approximately $90 million has been
incurred as of December 31, 1999. Unicom Power Holdings may incur significant
additional costs to site and install such power generation equipment.

Unicom expects to obtain funds to invest in its unregulated subsidiaries
principally from the fossil plant sale proceeds received by Unicom Investment,
although it may also obtain funds from dividends received on its ComEd common
stock and from bank borrowings. The availability of ComEd's dividends to Unicom is
dependent on ComEd's financial performance and cash position.position, as well as legal
restrictions on the payment of dividends by public utilities. Other forms of
financing by ComEd to Unicom or the unregulated subsidiaries of Unicom, such
as additional loans or additional equity investments, none of which isare not expected,
would be subject to prior approval by the ICC.

7The fossil plant sale proceeds received by Unicom Investment, after the
payment of the demand note to ComEd, will be used to fund share repurchases
and to invest in new business opportunities. See "Changes in the Electric
Utility Industry" subcaption "Fossil Plant Sale" above, for additional
information.

Unicom Enterprises has a $200an unused $400 million credit facility which will
expire in
November 1999, of which $40 million was unused as ofon December 31, 1997.15, 2000. The credit facility can be used by Unicom
Enterprises to finance investments in unregulated businesses and projects, including UT Holdings and Unicom Energy
Services, and
for general corporate purposes. The credit facility is guaranteed by Unicom
and includes certain covenants with respect to Unicom and Unicom Enterprises'
operations. Interest rates for borrowings under the credit facility are set at
the time of a borrowing and are based on either a prime interest rate or a
floating rate bank index plus a spread which varies with the credit rating of
ComEd's outstanding first mortgage bonds.

In July 1998, Unicom Thermal issued $120 million of 7.38% unsecured
guaranteed senior Notes due May 2012, the proceeds of which were used to
refinance existing debt. The Notes are guaranteed by Unicom and include
certain covenants with respect to Unicom and Unicom Thermal's operations.

See NoteNotes 12 and 13 of Notes to Financial Statements in Unicom's January 30, 1998 Form 8-K Report,
which is incorporated herein by reference,on pages F-47 and F-49
for additional information regarding certain covenants with respect to Unicom,
Unicom Enterprises and Unicom Enterprises'Thermals' operations.

RATE MATTERS

In January 1995, the ICC issued its Rate Order in the proceedings relating
to ComEd's February 1994 rate increase request. The Rate Order provided, among
other things, for an increase in ComEd's total revenues of approximately $302
million (excluding add-on revenue taxes) on an annual basis. The rates
provided in the Rate Order became effective on January 14, 1995; however, they
are being collected subject to refund as a result of subsequent judicial
action. As a result of a May 30, 1997 decision of the Illinois Appellate
Court, the Rate Order has been remanded to the ICC for the purpose of
providing further analysis on two issues: (i) the manner in which certain
costs are recovered and which customers should pay those costs, and (ii) the
proper rate of return on common equity for ComEd. ComEd believes that the ICC
can satisfy the Appellate Court's remand directions on the basis of the
existing record from the ICC proceedings which led to the Rate Order. An ICC
Hearing Examiner issued a proposed order in January 1998 which, if adopted by
the ICC, would uphold the Rate Order and the associated $302 million revenue
increase on an annual basis. A decision is expected early in the second
quarter of 1998. See Note 4 of Notes to Financial Statements in the January
30, 1998 Form 8-K Reports, which are incorporated herein by reference, for
additional information.

See "Changes in the Electric Utility Industry--The 1997 Act" above for
information regarding the 1997 Act.

FUEL SUPPLYFuel Supply

The kilowatthour generation of ComEd and the Indiana Company for 19971999 was provided from the
following fuel sources: nuclear 57%74%, coal 39%23% and natural gas 4%3%. The
lower nuclearincreases in net generation as a percentage of total generationelectricity for 1997, as1999, compared to recentthe prior
years, isare primarily due to outages at
certainsignificant improvement in the performance of
ComEd's nuclear fleet. In December 1999, ComEd sold its fossil generating
stations.assets. As part of the sale transaction, ComEd entered into transitional,
limited term power purchase agreements with the buyer. See "Regulation--Nuclear"
below"Changes in the
Electric Utility Industry," subcaption "Fossil Plant Sale" above, and page F-
20 for information regarding outages at certain of ComEd's nuclear
generating stations.additional information.

Nuclear FuelFuel. ComEd has uranium concentrate inventory and supply contracts
sufficient to meet all of its uranium concentrate requirements through 19992000
and portions of its uranium concentrate requirements for periods beyond 1999.2000.
ComEd's contracted conversion services are sufficient to meet all of its
uranium conversion requirements through 19982000 and portions of 1999.beyond 2000. All of
ComEd's enrichment requirements have been contracted through 2003 and portions
of its enrichment requirements for periods beyond 2003. Commitments for fuel
fabrication have been obtained for ComEd's nuclear units at least through
2005. ComEd does not anticipate that it will have any difficulty in
negotiating contracts for uranium concentrates, conversion, enrichment and
fuel fabrication services for its remaining requirements.

Under the Energy Policy Act of 1992, investor-owned electric utilities that
have purchased enrichment services from the DOE are being assessed amounts to
fund a portion of the cost for the decontamination and decommissioning of
uranium enrichment facilities owned and previously operated by the DOE.
ComEd's portion of such assessments is estimated to be approximately $16$17
million per

8
year (to be adjusted annually for inflation) to 2007. The Act
provides that such assessments are to be treated as a cost of fuel.

See Note 1 of Notes to
Financial Statements under "Nuclear Fuel" in the January 30, 1998 Form 8-K
Reports, which are incorporated herein by reference, for information related
to the accounting for such costs.

See "Regulation--Nuclear" below for information concerning the disposal of
radioactive waste.

Coal

ComEd burns low sulfur western coal at all of its coal-fired stations.
ComEd's present policy is to maintain a coal inventory of 30 to 45 days of
high utilization. As of February 28, 1998, coal inventories approximated 45
days. The average cost per ton of coal consumed by ComEd and the Indiana
Company for the years 1997, 1996 and 1995, including transportation charges,
was $38.47, $41.16 and $41.72, respectively.

Compared to other utilities, ComEd has relatively low average fuel costs as
a result of its reliance predominantly on lower cost nuclear generation.
ComEd's coal costs, however, are high compared to those of other utilities.
ComEd's western coal contracts and its rail contracts for delivery of the
western coal provide for the purchase of certain coal at prices substantially
above currently prevailing market prices, and ComEd has significant purchase
commitments under its contracts. In addition, as of December 31, 1997, ComEd
had coal reserves of $282 million. In prior years, ComEd's commitments for the
purchase of coal exceeded its requirements. Rather than take all the coal it
was required to take, ComEd agreed to purchase the coal in place in the form
of coal reserves. For additional information concerning ComEd's coal purchase
commitments, see "Construction Program--Utility Operations" above. For
additional information regarding coal reserves, see Note 1 of Notes to
Financial Statements in the January 30, 1998 Form 8-K Reports, which are
incorporated herein by reference.

Oil and Gas

ComEd's fast-start peaking units use middle distillate oils. Approximately
half of this capacity can also be fueled with natural gas. ComEd's 2,698,000
kilowatt Collins Station is fueled with natural gas and residual oil. ComEd
purchases oil and gas in the spot market as needed. The conversion of four of
the five units at Collins Station to dual fuel capability (residual oil and
natural gas) was completed during 1994 and 1996 and conversion of the fifth
unit was completed in 1997. ComEd has a contract for the delivery and storage
of natural gas from gas pipelines to Collins Station, which expires in 2003.

Fuel Adjustment Clause

The FAC provided for the recovery of changes in fossil and nuclear fuel
costs and the energy portion of purchased power costs as compared to the fuel
and purchased energy costs included in ComEd's base rates. As authorized by
the ICC, ComEd had recorded under or overrecoveries of allowable fuel and
energy costs which, under the FAC, were recoverable or refundable in
subsequent months. Pursuant to an option contained in the 1997 Act, ComEd
filed a tariff on December 16, 1997 to eliminate its FAC as of January 1,
1997. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations," subcaption "Changes in the Electric Utility Industry--
Accounting Effects Related to the 1997 Act" in the January 30, 1998 Form 8-K
Reports, which are incorporated herein by reference, for additional
information regarding the effects of eliminating the FAC. Also see
"Regulation--Nuclear" below concerning FAC reconcililation proceedings for the
years 1994 and 1996.

REGULATIONRegulation

ComEd and the Indiana Company are subject to statefederal and federalstate regulation in
the conduct of their respective businesses, including the operations of
Cotter.its business. Such regulation includes rates, securities
issuance, nuclear operations, environmental and

other matters. Particularly in the cases of nuclear operations and
environmental matters, such regulation can and does affect operational and
capital expenditures. ComEd is subject to regulation by the ICC as to rates
and charges, issuance of most of its securities, service and facilities,
classification of accounts, transactions with affiliated interests, as defined
in the Illinois Public Utilities Act, and other matters. In addition, the ICC
in certain of its rate orders has exercised jurisdiction over ComEd's
environmental control program. See "Changes in the Electric Utility Industry--TheIndustry--
The 1997 Act" above for information regarding the 1997 Act.

ComEd is subject to the jurisdiction of the FERC with respect to the
issuance of certain of its securities. ComEd is also subject to the
jurisdiction of the FERC and the DOE under the Federal Power Act with respect
to certain other matters, including the sale for resale of electric energy and
the transmission of electric energy in interstate commerce, and to the
jurisdiction of the DOE with respect to the disposal of spent nuclear fuel and
other radioactive wastes. See "Changes in the Electric Utility Industry--
Federal Regulation" above for information regarding the FERC Order Nos. 888 and
889 and the
Federal Energy Policy Act of 1992.

Unicom is a public utility holding company, as defined by the Public Utility
Holding Company Act of 1935, because of its majority ownership of ComEd's
common stock, and ComEd is a public utility holding company as defined in such
Act because of its ownership of the Indiana Company. However, both Unicom and
ComEd are exempt from most provisions of such Act.

The Indiana Company, an "affiliated interest" of ComEd within the meaning of
the Illinois Public Utilities Act, is subject to regulation by the Indiana
Utility Regulatory Commission and to the jurisdiction of the FERC, the DOE and
federal and state of Indiana pollution control and other agencies.

NuclearNuclear. Under the Nuclear Waste Policy Act of 1982, the DOE is responsible
for the selection and development of repositories for, and the disposal of,
spent nuclear fuel and high-level radioactive waste. The costs incurred by the
DOE for disposal activities will be paid out of fees charged to owners and
generators of spent nuclear fuel and high-level radioactive waste. ComEd, as
required by that Act, has signed a contract with the DOE to provide for the
disposal of spent nuclear fuel and high-level radioactive waste from ComEd's
nuclear generating stations. That contract provided for acceptance by the DOE
of such materials to begin in January 1998; however, that date was not met by
the DOE and is expected to be delayed significantly. The DOE's current
estimate for opening a facility to accept such waste is 2010. Extended delaysThis extended
delay in spent nuclear fuel acceptance by the DOE would leadhas led to ComEd's
consideration of costlyadditional dry storage alternatives. On July 30, 1998, ComEd
filed a complaint against the United States in the United States Court of
Federal Claims, seeking to recover damages caused by the DOE's failure to
honor its contractual obligation to begin disposing of spent nuclear fuel in
January 1998.

The contract with the DOE requires ComEd to pay the DOE a one-
timeone-time fee
applicable to nuclear generation through April 6, 1983 of
approximately $277 million, with
interest to date of payment, and a fee payable quarterly equal to one mill per
kilowatthour of nuclear-generated and sold electricity after April 6, 1983.
As provided for underPursuant to the contract, ComEd has elected to pay the one-time fee, with
interest, just prior to the first delivery of spent nuclear fuel to the DOE.
The costs incurred byliability for the DOE
for disposal activities will be paid out of fees charged to ownersone-time fee and generators of spent nuclear fuel and high-level radioactive waste.related interest is reflected on the
Consolidated Balance Sheets on page F-28.

ComEd has primary responsibility for the interim storage of its spent nuclear fuel.fuel until it
is accepted by the DOE. Dresden Station has spent fuel capacity throughinto the year
2001, Zion Station has capacity for all of its spent fuel, Byron and Braidwood
Stations have spent fuel capacity into approximately 2011 and 2014,
respectively, Quad Cities Station has spent fuel capacity throughinto 2006 and
all of the other stations haveLaSalle Station has spent fuel capacity through at least 2008.2012. ComEd is developing on
site dry cask spent fuel storage for Dresden Unit 1, which is expected to be
funded by the external
decommissioning trusts. See "Depreciation and Decommissioning" under Note 1 of
Notes to Financial

Statements in the January 30, 1998 Form 8-K Reports, which are incorporated
herein by reference, for information regarding the external decommissioning trusts. The Dresden Unit 1 dry storage
canisters will meet the federal requirements for both storage and
transportation of spent nuclear fuel. The storage canisters could be usedin use by
1999.the year 2000. Meeting spent fuel storage requirements beyond the years stated
above could require new and separate storage facilities. See "Depreciation,
Amortization of Regulatory Assets and Liabilities and Decommissioning" under

Note 1 of Notes to Financial Statements on page F-34 for information regarding
the external decommissioning trusts.

The federal Low-Level Radioactive Waste Policy Act of 1980 provides that
states may enter into compacts to provide for regional disposal facilities for
low-level radioactive waste and restrict use of such facilities to waste
generated within the region. Illinois has entered into a compact with the
state of Kentucky, which has been approved by Congress as required by the
Waste Policy Act. Neither Illinois nor Kentucky currently has an operational
site, and none is currently expected to be operational until after the year
2011. ComEd has temporary on-site storage capacity at its nuclear generating
stations for a limited amount of low-level radioactive waste and has been
shipping such waste to a low-level radioactive waste site in Barnwell, South Carolina.Carolina
and Utah. ComEd anticipates the possibility of continuing difficulties in
disposing of low-level radioactive waste. ComEd continues to evaluate its
options relating to the disposal of low-level radioactive waste.

ComEd is subject to the jurisdiction of the NRC with respect to its nuclear
generating stations. The NRC regulations control the granting of permits and
licenses for the construction and operation of nuclear generating stations and
subject such stations to continuing review and regulation. The NRC review and
regulatory process covers, among other things, the operations, maintenance,
and environmental and radiological aspects of such stations. The NRC may
modify, suspend or revoke licenses and impose civil penalties for failure to
comply with the Atomic Energy Act, the regulations under such Act or the terms
of such licenses.

Nuclear operations have been, and remain, an important focus of ComEd--given
the impact of such operations on overall O&M expenditures and the ability of
nuclear power plants to produce electric energy at a relatively low marginal
cost.ComEd. ComEd
operates a large number offive nuclear plants, ranging from the olderplants--Braidwood, Byron, Dresden, LaSalle and Quad
Cities Stations, to the more recently completed LaSalle, Byron
and Braidwood Stations, and is intent uponcommitted to safe, reliable and efficient operation.
These plants were constructed over a period of time in which
technology, construction procedures and regulatory initiatives and oversight
have evolved, with the result that older plants generally require greater
attention and resources to meet regulatory requirements and expectations, as
well as to maintain operational reliability. As discussed inSee "Changes in the Electric Utility Industry--ComEd's ResponseIndustry," subcaption "Response to
Regulatory Changes" above, ComEd has ceasedfor information regarding ComEd's permanent
cessation of nuclear generation operations at its Zion Station.

On May 6, 1999, ComEd's Dresden, Zion and LaSalle nuclear generating stations are currently
onStation was officially removed from the
NRC's listlisting of plants that require increased regulatory scrutiny byscrutiny. LaSalle
Station had been on this list since January 1997. Concurrent with the NRC. DresdenLaSalle
Station hasaction, the NRC announced the formal removal of the Quad Cities
Station from its list of plants with declining performance trends. Quad Cities
Station had been on the declining trend list since 1992 and LaSalle and Zion
Stations were added in January 1997. On January 21, 1998, the NRC stated in a
public meeting that although Dresden Station has demonstrated sustained
improved performance that would warrant removal from the list, continued
evidence of cyclical and inconsistent performance at ComEd's other nuclear
generating stations indicated removal of Dresden Station from the list would
not be appropriate at that time. The NRC also acknowledged improvements at
LaSalle Station but concluded that a substantial amount of work remains and
the plant should remain on the list. The NRC also stated that, based on a
determination made prior to the announcement of the cessation of power
operations at the station, Zion should remain on the list. The listing of the
plants does not prevent ComEd from operating the generating units; however, it
does mean that the NRC will devote additional resources to monitoring ComEd's
operating performance and that ComEd will need to work to demonstrate to the
NRC the sustainability of improvements which it believes it has undertaken and
is continuing to implement. Also at the meeting, the NRC noted a declining
performance trend at Quad Cities Station. In a meeting on March 3, 1998, the
NRC stated that weaknesses were observed with respect to certain operations,
maintenance and engineering activities

at Quad Cities Station. The NRC has indicated that it is monitoring ComEd's
ability to manage its nuclear operations in their entirety and that the
performance at any one facility will be viewed by the NRC in context with the
performance1998. With these
actions, all of ComEd's nuclear generating group as a whole.

In January 1997,plants are now placed in the NRC took the unusual step of requiring ComEd to submit
information to allow the NRC to determine what actions, if any, should be
taken to assure that ComEd can safely operate its six nuclear generating
stations (prior to the permanent cessation of nuclear generation operations at
Zion Station) while sustaining performance improvement at each site. The
request also required ComEd to submit information regarding the criteria that
it has established, or planned to establish, to measure performance and to
explain ComEd's proposed actions if the criteria were not met. The request
stated the NRC staff's concerns with the "cyclical safety performance of ComEd
nuclear stations," noting the presence on the list of plants that require
increased regulatory scrutiny by the NRC of Dresden, LaSalle and Zion Stations
at various times during the past 10 years. It also noted concerns regarding
"ComEd's ability to establish lasting and effective programs that result in
sustained performance improvement." The problems identified by the NRC are
consistent with weaknesses that had been identified in station self-
assessments initiated by ComEd, and management had already undertaken to
develop and implement programs designed to address these issues. ComEd
submitted a response to the NRC on March 28, 1997 and the NRC indicated in an
April 25, 1997 public meeting with representatives of ComEd management that
ComEd's response was generally adequate to demonstrate ComEd's ability to
operate its nuclear generating stations while sustaining performance
improvements. In a November 4, 1997 meeting with the NRC staff, the NRC
indicated that it believes ComEd's nuclear performance has shown improvement,
but that it is too early to conclude that lasting improvement has been
achieved. The NRC noted, as an exception to ComEd's general improving and
sustained performance in its nuclear operations, concerns regarding ComEd's
engineering efforts to resolve longstanding fire protection issues at the Quad
Cities Station.NRC's "routine
oversight" category.

The NRC and representatives of ComEd's management have met, and will
continue to meet periodically inas part of the future,NRC's normal oversight process,
to follow-up on these
matters.

INPO, a nuclear power industry funded organization, also has been critical
of ComEd's nuclear operations anddiscuss the progress made by ComEd at correcting
problems INPO previously identified. In the past, INPO has raised concerns
with respect to management andoverall performance of ComEd'sthe ComEd nuclear operations,
including accountability and the effectiveness of efforts aimed at engaging
the workforce in the improvement process. ComEd continues to address INPO's
concerns.

ComEd has devoted, and intends to continue to devote, significant resources
to the management and operations of its nuclear generating stations. Over the
past several years, it has increased and reinforced management with managers
drawn from other utilities which have resolved similar operational and
performance issues, including the appointment of a new Chief Nuclear Officer
in late 1997. It also has sought to identify, anticipate and address operating
and performance issues in a safe, cost-effective manner, while seeking to
improve the availability and capacity factors of its nuclear generating units.

ComEd's activities, with respect to its nuclear generating stations, have
included improvements in operating and personnel procedures and repair and
replacement of equipment and can result in longer unit outages. LaSalle Units
1 and 2 and Quad Cities Units 1 and 2 are currently not operating. It
currently is expected that LaSalle Unit 1 will restart by the end of the third
quarter of 1998 and LaSalle Unit 2 is expected to restart by the end of the
first quarter of 1999. Both units at Quad Cities Station are expected to
return to service by approximately the end of the second quarter of 1998. In
each case the restart of these units requires the resolution of issues with
the NRC.

The LaSalle Station outage and an outage at Zion Station were part of
several outages of nuclear and fossil generating stations that several
utilities operating in the Midwestern power grid (including ComEd) were
expecting and experienced during 1997. Although ComEd met its customers'
electricity

demands, the expectation of the NERC, prior to the beginning of the summer,
had been that there could have been electric energy shortages during summer
peak demand periods due to generating station outages in the Midwestern power
grid and transmission limitations on delivering power from neighboring
systems. In response to these regional circumstances and expectations, ComEd
increased the availability of its remaining nuclear and fossil generating
capacity, reinforced transmission capacity, negotiated the purchase of power
and related transmission service from third parties, and worked with a number
of customers to manage the use and demand for power. ComEd is evaluating and
the NERC will be analyzing electric reliability and the potential for electric
energy shortages for the summer of 1998 in light of the potential for
continued outages of nuclear plants operated by ComEd and other utilities in
the Midwestern power grid.

Generating station availability and performance during a year may be issues
in fuel reconciliation proceedings in assessing the prudence of fuel and
purchased power costs during such year. Final ICC orders have been issued in
fuel reconciliation proceedings for years prior to 1994 and for the year 1995.
In 1996, an intervenor filed testimony in the fuel reconciliation proceeding
for 1994 seeking a refund of approximately $90 million relating to nuclear
station performance. In March 1998, the ICC Staff also filed testimony in the
fuel reconciliation proceeding for 1994 proposing a refund of $36 million. The
1997 Act provides that the fuel reconciliation proceedings for 1994 and 1996
must be concluded by the end of 1998. If refunds are required in these
proceedings, the refunds could have a material adverse effect on results of
operations. The 1997 Act also provides that, because ComEd eliminated its FAC
effective January 1, 1997, the ICC shall not conduct a fuel reconciliation
proceeding for the year 1997 or any subsequent years. See "Changes in the
Electric Utility Industry" and "Fuel Supply--Fuel Adjustment Clause" above for
information regarding the elimination of ComEd's FAC.

ComEd has completed replacement of the steam generators at Byron Unit 1 and
is replacing the steam generators at Braidwood Unit 1. See "Construction
Program--Utility Operations" above for additional information.program.

Based on ComEd's most recent study, approved by the ICC, decommissioning costs including the cost of decontamination and dismantling, are estimated to
aggregate $4.4be $5.7 billion in current-year (1998)(2000) dollars, including a contingency
allowance. ComEd estimates it will expendThis estimate includes $617 million of non-radiological costs,
which are included in ComEd's proposed rider for recovery, as discussed below.
ComEd's decommissioning cost expenditures at the end of the units' operating
lives are estimated to total approximately $11.6 billion,
including a contingency allowance, for decommissioning costs$13.8 billion. These expenditures
are expected to occur primarily during the period from 2007 through 2032. Such2034. All
such costs are expected to be funded by external decommissioning trusts, which
ComEd established in compliance with Illinois law and into which ComEd has
been making annual contributions. Future decommissioning cost estimates may be
significantly affected by the adoption of or changes to NRC regulations, as
well as changes in the assumptions used in making such estimates, including
changes in technology, available alternatives for the disposal of nuclear
waste and inflation.

Under an annual rider, filed with the ICC on February 26, 1999, ComEd has
proposed to increase its estimated annual decommissioning cost accrual from
$84 million to $130 million. The proposed

increase primarily reflects an increase in low-level waste disposal cost
escalation, the inclusion of $219 million in current-year (2000) dollars for
safety-related costs of maintaining Zion Station in a mothballed condition
until dismantlement begins, and the inclusion of non-radiological costs in the
decommissioning cost estimates for recovery under the rider. The ICC is
expected to issue an order in this proceeding in the second quarter of 2000.

See Note 1 of Notes to Financial Statements, under "Depreciation,
Amortization of Regulatory Assets and Decommissioning" in the
January 30, 1998 Form 8-K Reports, which are incorporated herein by reference,Liabilities, and Decommissioning," on
page F-34 for additional information regarding decommissioning costs.

During the year 1997,1999, one civil penalties were imposed onpenalty was proposed for ComEd on ten occasions
for violationsa
violation of NRC regulations in amounts aggregating $1,390,000. Since
January 1, 1998, civil penalties were imposed on ComEd on three occasions for
violationsthe amount of NRC regulations in amounts aggregating $495,000.$110,000. To ComEd's knowledge,
there are two currentno enforcement issues outstanding andor under review by the NRC.

The IDNS has jurisdiction over certain activities in Illinois relating to
nuclear power and safety, and radioactive materials. Effective June 1, 1987,
the IDNS replaced the NRC as the regulator and licensor of certain source, by-
product and special nuclear material in quantities not sufficient to form a
critical mass, including such material contained in various measuring devices
used at fossil-fuel power plants. The IDNS does not regulate ComEd's nuclear
generating stations. The IDNS has promulgated 13
regulations which are
substantially similar to the corresponding federal regulations. The IDNS also
has authority to license a low-level radioactive waste disposal facility and
to regulate alternative methods for disposing of materials which contain only
trace amounts of radioactivity.

The uranium mining and milling operations of Cotter are subject to
regulation by the state of Colorado and the NRC.

EnvironmentalEnvironmental. ComEd is subject to regulation regarding environmental
matters by the United States and by the states of Illinois, Iowa and, in the case of Cotter,
Colorado, and by local
jurisdictions where ComEd operates its facilities. The IPCB has jurisdiction
over environmental control in the state of Illinois, which includes authority
to regulate air, water and noise emissions and solid waste disposal, together
with the Illinois EPA, which enforces regulations of the IPCB and issues
permits in connection with environmental control. The U.S. EPA administers
certain federal statutes relating to such matters. The IPCB has published a
proposed rule under which it would have the power to regulate radioactive air
pollutants under the Illinois Environmental Protection Act and the Federal
Clean Air Act Amendments of 1977.

Air quality regulations, promulgated by the IPCB in accordance with federal
standards, impose restrictions on the emission of particulates, sulfur
dioxide, nitrogen oxides and other air pollutants and require permits from the
respective state and local environmental protection agencies for the operation
of emission sources. Permits authorizing operation of ComEd's fossil fuel
generating facilities subject to this requirement have been obtained and,
where such permits are due to expire, ComEd has, in a timely manner, filed
applications for renewal or requested extensions of the existing permits.

Under the Federal Clean Water Act, NPDES permits for discharges into
waterways are required to be obtained from the U.S. EPA or from the state
environmental agency to which the permit program has been delegated. Those
permits must be renewed periodically. ComEd either has NPDES permits for all
of its generating stations or has pending applications for such permits under
the current delegation of the program to the Illinois EPA. ComEd is also
subject to the jurisdiction of certain pollution control agencies of the state
of Iowa with respect to the discharge into the Mississippi River from Quad
Cities Station.

The Clean Air Amendments require reductions in nitrogen oxide emissions from
ComEd's fossil fuel generating units. In January 1996, the U.S. EPA issued a
final rule exempting existing sources inside the Chicago ozone non-attainment
area from further nitrogen oxide emission reductions; however, this exemption
is limited pending the finalization of the U.S. EPA Clean Air Act, Section
110. The U.S. EPA issued a proposed rule in late 1997 which would mandate
reductions in nitrogen oxide emissions to address ozone transport problems in
much of the eastern United States. In its current form, the proposed rule
would require electric utility sources in a 22-state region to meet a nitrogen
oxide emission limitation of 0.15 lbs/MBtu. Under the Acid Rain program, the
U.S. EPA prepared nitrogen oxide emission regulations that apply to all of
ComEd's boilers with a compliance date of January 1, 2000. These regulations
include limits for cyclone and tangentially fired boilers of 0.86 and 0.40
lbs/mm Btu, respectively.

CERCLA provides for immediate response and removal actions coordinated by
the U.S. EPA to releases of hazardous substances into the environment and
authorizes the U.S. Government either to clean up sites at which hazardous
substances have created actual or potential environmental hazards

14
or to order
persons responsible for the situation to do so. Under CERCLA, generators and
transporters of hazardous substances, as well as past and present owners and
operators of hazardous waste sites, are made strictly, jointly and severally
liable for the cleanup costs of waste at sites, most of which are listed by
the U.S. EPA on the NPL. These responsible parties can be ordered to perform a
cleanup, can be sued for costs associated with a U.S. EPA directed cleanup,
may voluntarily settle with the U.S. Government concerning their liability for
cleanup costs, or may voluntarily begin a site investigation and site
remediation prior to listing on the NPL under state oversight. Various states,
including Illinois, have enacted statutes which contain provisions
substantially similar to CERCLA. ComEd and its subsidiaries are or are likely
to become parties to proceedings initiated by the U.S. EPA, state agencies
and/or other responsible parties under CERCLA with respect to a number of

13
sites, including MGP sites, or may voluntarily undertake to investigate and
remediate sites for which they may be liable under CERCLA.

MGPs manufactured gas in Illinois from approximately 1850 to 1950. ComEd
generally did not operate MGPs as a corporate entity but did, however, acquire
MGP sites as part of the absorption of smaller utilities. Approximately half
of these sites were transferred to then Northern Illinois Gas Company (Nicor
Gas) as part of a general conveyance in 1954. ComEd also acquired former MGP
sites as vacant real estate on which ComEd facilities have been constructed.
To date, ComEd has identified 44 former MGP sites for which it may be liable
for remediation. In the fourth quarter of 1999, ComEd presently estimates thatre-evaluated its
costsenvironmental remediation strategies. As a result of this re-evaluation,
ComEd's current best estimate of its cost of former MGP site investigation and
remediation will aggregate from $25 million to $150is $93 million in current-year (1998) dollars.(2000) dollars (reflecting a
discount rate of 6.5%). Such estimate, reflecting an estimated inflation rate
of 3% and before the effects of discounting, is $182 million. It is expected
that the costs associated with investigation and remediation of former MGP
sites will be substantially incurred over a period notthrough 2012, however monitoring and
certain other costs are expected to exceed 30 years. Because ComEd is not able to determine the most probable
liability for suchbe incurred through 2042. ComEd's current
estimate of its costs of former MGP costs, in accordance with accounting standards, a
reservesite investigation and remediation of $25$93
million has been included in other noncurrent liabilities on the Consolidated
Balance Sheets in the January 30, 1998 Form 8-K Reports,
which are incorporated herein by reference,on page F-28, as of December 31, 1997 and 1996,
which reflects the low end1999. The increase in ComEd's
estimated costs of the range of ComEd's estimate of the liability
associated with former MGP sites.sites of $68 million in 1999 over 1998 was
included in operation and maintenance expenses on Unicom and ComEd's
Statements of Consolidated Operations on page F-26. In addition, as of
December 31, 19971999 and 1996,1998, a reserve of $8 million has been included in other
noncurrent liabilities on the Consolidated Balance Sheets in the January 30, 1998 Form 8-
K Reports, which are incorporated herein by reference,on page F-28,
representing ComEd's estimate of the liability associated with cleanup costs
of remediation sites other than former MGP sites. Approximately half of this reserve relates to
anticipated cleanup costs associated with a property formerly used as a
tannery which was purchased by ComEd in 1973. Unicom and ComEd presently
estimate that ComEd's costs of investigating and remediating the former MGP
and other remediation sites, pursuant to CERCLA and state environmental laws,
will not have a material impact on the financial position or results of
operations of Unicom or ComEd. These cost estimates are based on
currently available information regarding the responsible parties likely to
share in the costs of responding to site contamination, the extent of
contamination at sites for which the investigation has not yet been completed
and the cleanup levels to which sites are expected to have to be remediated.
While ComEd may have rights of reimbursement under insurance policies, amounts
that may be recoverable from other entities are not considered in establishing
the estimated liability for the environment remediation costs.

The outcome of many of the regulatory proceedings referred to above, if not
favorable, could have a material adverse effect on Unicom and ComEd's future
business and operating results.

An unresolved issue is whether exposure to EMFs may result in adverse health
effects or damage to the environment. EMFs are produced by virtually all
devices carrying or utilizing electricity, including transmission and
distribution lines, as well as home appliances. If regulations are adopted
related to EMFs, they could affect the construction and operation of
electrical equipment, including transmission and distribution lines and the
cost of such equipment. ComEd cannot predict the effect on the cost of such
equipment or operations if new regulations related to EMFs are adopted. In the
absence of such regulations, EMFs have nonetheless become an issue in siting
facilities and in other land use contexts. Litigation has been filed in a
variety of locations against a variety of defendants, including ComEd,
alleging that the presence or use of electrical equipment has had an adverse
effect on the health of persons or has caused a diminution in property values
of land adjacent to these facilities. If plaintiffs are successful in
litigation of this type and it becomes widespread, the impact on ComEd and on
the electric utility industry is not predictable, but could be severe.

From time to time, Unicom and its subsidiaries are, or are claimed to be, in
violation of or in default under orders, statutes, rules or regulations
relating to environmental controls and other matters, compliance plans imposed
upon or agreed to by them or permits issued by various state and federal
agencies for the construction or operation of their facilities. Unicom and
ComEd do not believe, so far as they now foresee, that such violations or
defaults will have a material adverse effect on their future business and
operating results, except for events otherwise described in these Annual
Reports on Form 10-K, which could have such an effect.

See "Item 3. Legal Proceedings" regarding Cotter.

EMPLOYEESEmployees

Unicom and its subsidiary companies had approximately 16,70414,435 and 15,962
employees as of December 31, 1997.1999 and 1998, respectively. The reduction from
1998 is substantially due to the sale of ComEd's fossil plant assets. See
"Fossil Plant Sale" above for additional information. ComEd had approximately
16,66314,308 employees as of December 31, 19971999 of which approximately 9,1407,671 ComEd
employees were represented by IBEW Local 15.

A newThe Collective Bargaining Agreement with Local 15 became effective August
25, 1997, and provides, among other things, for a term expiring on March 31,
2001. A previously negotiated general wage increase of 1.5% was effective
April 1, 1997, for all employees covered by the Collective Bargaining
Agreement. Additionally, a general wage increase of 1.5% was effective October
13, 1997, and was applied on a retroactive basis to March 31, 1997. For each
of the remaining three years, a 3%

14
general wage increase will be granted to employees covered by the Collective
Bargaining Agreement, effective the beginning of the pay period that includes
April 1st of each such year.

The supplemental agreements covering the life insurance, savings and
investment plan, and health care plans are effective through March 31, 2001.
TheComEd is currently in negotiations with IBEW Local 15 concerning the
supplemental agreement covering pension benefits is effective throughwhich expired on September
30, 1999.

INTERCONNECTIONSInterconnections

ComEd has interconnections for the transmission of electricity with Central
Illinois Light Company, Central Illinois Public Service Company (a subsidiary
of Ameren), Illinois Power Company, Indiana Michigan Power Company (a
subsidiary of American Electric Power Company), Interstate Power Company,Alliant West, MidAmerican
Energy Company, Northern Indiana Public Service Company, Wisconsin Electric
Power Company and Wisconsin Power and Light CompanyAlliant East for the purpose of exchanging energy and for
other forms of mutual assistance.

ComEd and 1440 other Midwest power systemsutilities are regular members of MAIN, which
also includes 23 associate members and 5 affiliate members.MAIN. The members have entered
into an agreement to work together to ensure the reliability of electric power
production and transmission throughout the area they serve.

ComEd joined with eightother Midwestern utilities to form a regional Midwest ISO
in January 1998. See "Changes in the Electric Utility Industry--ComEd's
ResponseIndustry--Response to
Regulatory Changes" above for additional information.

FRANCHISESFranchises

ComEd's franchises are, in general, deemed adequate to permit it to engage
in the business it now conducts.

In the city of Chicago, ComEd operates in Chicago under a nonexclusive electric franchise ordinance,
effective January 1, 1992, and continuing in force until December 31, 2020.
ComEd derives 16
approximately one-third of its ultimate consumer revenues from
customers located within the city of Chicago. See "Item 3. Legal Proceedings" regarding an arbitration proceeding initiated bya
settlement agreement reached with the City of Chicago under its franchise
agreement with ComEd.Chicago.

The electric business outside of the city of Chicago is conducted in municipalities
under nonexclusive franchises and, where required, under certificates of
convenience and necessity granted by the ICC. The following tabulation
summarizes, as of December 31, 1997,1999, the expiration dates of the electric
franchises held in the 396395 municipalities outside of the city of Chicago capable of
granting franchises and in which ComEd currently provides electric service.

ESTIMATED
NUMBER OF AGGREGATE
FRANCHISE EXPIRATION PERIODS MUNICIPALITIES POPULATIONEstimated
Number of Aggregate
Franchise Expiration Periods Municipalities Population
- ---------------------------- -------------- ----------

1998-2006............................................. 3 89,0002000-2006............................................. 2 82,000
2007-2017............................................. 10 95,00096,000
2018-2028............................................. 3 4,0003,537
2029-2039............................................. 1 *
2040 and subsequent years............................. 376 4,127,0004,033,000
No stated time limit.................................. 3 61,000

- --------
*Less than 1,000 people.

1715

EXECUTIVE OFFICERS OF THE REGISTRANTExecutive Officers of the Registrant

The effective year of election of the officers to their present positions and
the prior positions they have held with Unicom or other companies, since
January 1, 1993,1995, are described below.

NAME AND AGE POSITION
------------- -------------------------------------------------------------Name and Age Position
---------------------------- -----------------------------------------------

*John W. Rowe, 54 Chairman, President and Chief Executive Officer
of Unicom and Rowe, 52 ComEd since March 1998; previouslyprevi-
ously President and Chief Exec-
utiveExecutive Officer of
New England Electric System.

*Oliver D.*Paul A. Elbert, 50 Executive Vice President of Unicom and ComEd
and President Unicom Enterprises Inc. since
October 1999; previously President and Chief
Executive Officer--Gas for Consumers Energy
Company from August 1997 to September 1999;
previously Executive Vice President and Chief
Operating Officer--Gas at Consumers Energy
Company from December 1994 to August 1997.

*Oliver D. Kingsley, Jr., 57 Executive Vice President of Unicom and ComEd
and President and Chief Nuclear Of-
Kingsley, ficer--NuclearOfficer--Nu-
clear Generation Group of ComEd since October
1997;
Jr., 55 previously Chief Nuclear Officer at the
Tennessee Valley Au-
thority.
*Robert J. Executive Vice President of ComEd since January 1997 and
Manning, 55 President--Fossil Generation Group of ComEd since October
1997; previously Senior Vice President of ComEd.
*John C. Senior Vice President and Chief Financial Officer of Unicom
Bukovski, 55 and ComEd since October 1997; previously Vice President and
Chief Financial Officer of Unicom and ComEd.
*Paul D. Senior Vice President of ComEd since October 1997; previously
McCoy, 47 Vice President of ComEd.
Donald A. Senior Vice President of Unicom since 1995; President and
Petkus, 56 Chief Executive Officer of UT Holdings since 1997 and Unicom
Thermal Technologies Inc. since 1995, and Senior Vice Presi-
dent of ComEd.
*S. Gary Senior Vice President of Unicom and ComEd since October 1997;
Snodgrass, Vice President of Unicom and ComEd, September 1997 to Octo-
46 ber 1997; previously Vice President of USG Corporation.Authority.
*Pamela B. SeniorStrobel, 47 Executive Vice President and General Counsel of
Unicom and ComEd Strobel, 45 since January 1999; previ-
ously Senior Vice President and General Coun-
sel of Unicom and ComEd, October 1997;1997 to De-
cember 1998; previously Vice President and
General Counsel of ComEd.

*Michael J.*Frank M. Clark, 54 Senior Vice President of ComEd since 1993; previously Vice
Wallace, 50 President of ComEd.
John T. Vice President of Unicom and ComEd since
1996;January 1999; previously
Costello, 49 Manager of Corporate Relations of ComEd, 1995 to 1996 and
Manager of Public Affairs of ComEd.
*William H. Vice President of
ComEd.
Downey, 53
RuthComEd, January 1997 to December 1998; previ-
ously Governmental Affairs Vice President 1996
to January 1997 and Governmental Affairs Man-
ager.

*Carl J. Croskey, 48 Senior Vice President of Unicom and ComEd and
President of Distribution at ComEd since Au-
gust 1999; previously President of MichCon En-
terprises Inc., a subsidiary of Michigan Con-
solidated Gas Company from January 1998 to Au-
gust 1999; previously Senior Vice President of
Operations for Michigan Consolidated Gas Com-
pany from April 1995 to January 1998.

*Ruth Ann M. Gillis, 45 Senior Vice President and Chief Financial Offi-
cer of Unicom and ComEd since January 1999;
previously Vice President and Treasurer of
Unicom and ComEd, since Sep-
Gillis, 43 tember 1997;September 1997 to December
1998; previously Vice President, Chief Financial Of-
ficerFinan-
cial Officer and Treasurer of the University
of Chicago Hospitals and Health System from
1996 to 1997 and Senior Vice Presi-
dentPresident and
Chief Financial Officer of American National
Bank and Trust Company.

Thomas J.*Elizabeth A. Moler, 50 Senior Vice President of ComEd and Unicom since
January 2000; previously Director of Unicom
and ComEd from December 1998 to December 1999,
and partner at Vinson & Elkins, LLP, from De-
cember 1998 to December 1999; previously Dep-
uty Secretary of the U.S. Department of Ener-
gy, 1997 to 1998 and Chair of the Federal En-
ergy Regulatory Commission, 1993 to 1997.

Name and Age Position
------------------------ -------------------------------------------------------------

*S. Gary Snodgrass, 48 Senior Vice President of Unicom and ComEd since 1996; previously
McCaffrey,October 1997;
Vice President of Mercer Management Consulting, 1995Unicom and ComEd, September 1997 to
1996
53 and Corporate SeniorOctober 1997; previously Vice President of First Chicago Corpo-
ration.USG Corporation.

*Robert E. Berdelle, 44 Vice President and Comptroller of Unicom and ComEd since
January 1999; previously Comptroller of Unicom and ComEd,
July 1997;1997 to December 1998; previously
Berdelle, 42 held various financialfinan-
cial reporting and analysis positions within ComEd.

DavidJohn T. Hooker, 51 Vice President of Unicom and ComEd since December 1999; pre-
viously Government Affairs Vice President of ComEd, 1998 to
December 1999 and Director of Governmental Services of
ComEd.

Arlene A. Juracek, 49 Vice President of Unicom and ComEd since December 1999; pre-
viously Assistant Vice President of ComEd, February 1994 to
December 1999.

Robert K. McDonald, 44 Vice President of Unicom and ComEd since December 1999; pre-
viously Strategic Planning Vice President and Director of
Strategic Planning of ComEd, September 1994 to December
1999.

Vito Stagliano, 57 Vice President of Unicom and ComEd since December 1999; pre-
viously Energy Policy and Planning Vice President of ComEd
since November 1998; previously Managing Director of Energy
Security Analysis Inc. during 1997 to 1998; previously vis-
iting scholar at Resources for the Future during 1994 to
1996.

Patricia L. Kampling, 40 Treasurer of Unicom and ComEd since February 1999; previously
Manager of Finance of Unicom and ComEd, May 1998 to February
1999; previously Assistant Treasurer of Unicom and ComEd.

John P. McGarrity, 38 Associate General Counsel and Secretary of Unicom and ComEd
since 1994January 1999; previously Associate General Counsel of
Unicom and 1989, respec-
Scholz, 56 tively.ComEd, December 1997 to January 1999; previously
a partner with Sidley & Austin.

--------
* Executive Officers for Section 16 reporting purposes.

The present term of office of each of the above executive officers extends
to the first meeting of Unicom's Board of Directors after the next annual
election of Directors scheduled to be held on May 28, 1998.Directors.

There are no family relationships among the executive officers, directors
and nominees for director of Unicom.

OPERATING STATISTICS

YEAR ENDED DECEMBER 31
----------------------------------
1997 1996 1995
---------- ---------- ----------

Operating Revenues (thousands of dol-
lars)(1):
Residential.............................. $2,552,742 $2,541,873 $2,621,038
Small commercial and industrial.......... 2,153,113 2,113,716 2,073,998
Large commercial and industrial.......... 1,467,574 1,445,708 1,425,784
Public authorities....................... 505,907 503,004 487,142
Electric railroads....................... 29,785 29,651 26,894
Provisions for revenue refunds--ultimate
consumers............................... (45,470) -- --
Sales for resale......................... 336,480 235,041 207,256
Other revenues........................... 82,891 68,031 67,933
---------- ---------- ----------
Total................................. $7,083,022 $6,937,024 $6,910,045
========== ========== ==========
Sales (millions of kilowatthours):
Residential.............................. 22,151 22,310 23,303
Small commercial and industrial.......... 25,860 25,131 25,313
Large commercial and industrial.......... 24,074 23,896 23,777
Public authorities....................... 7,322 7,336 7,158
Electric railroads....................... 418 424 390
Sales for resale......................... 15,679 12,178 11,412
---------- ---------- ----------
Total................................. 95,504 91,275 91,353
========== ========== ==========
Sources of Electric Energy (millions of
kilowatthours):
Generation--
Nuclear................................. 49,136 62,610 70,261
Fossil.................................. 36,604 30,315 26,231
Fast-start peaking units................ 121 123 116
---------- ---------- ----------
Net generation........................ 85,861 93,048 96,608
Purchased power.......................... 16,672 6,129 2,475
Company use and losses................... (7,029) (7,902) (7,730)
---------- ---------- ----------
Total................................. 95,504 91,275 91,353
========== ========== ==========
Cost of Fuel Consumed (per million Btu):
Nuclear.................................. $0.57 $0.53 $0.52
Coal..................................... $2.28 $2.41 $2.43
Oil...................................... $3.90 $3.41 $3.06
Natural gas.............................. $2.69 $2.75 $1.85
Average all fuels........................ $1.33 $1.17 $1.05
Peak Load (kilowatts)..................... 18,497,000 18,916,000 19,212,000
Number of Customers (at end of year):
Residential.............................. 3,123,364 3,102,101 3,079,381
Small commercial and industrial.......... 291,143 289,803 288,848
Large commercial and industrial.......... 1,566 1,550 1,539
Public authorities....................... 12,180 12,142 12,039
Electric railroads and resale............ 53 46 26
---------- ---------- ----------
Total................................. 3,428,306 3,405,642 3,381,833
========== ========== ==========
Average Annual Revenue Per Residential
Customer
(excluding light bulb service)........... $816.91 $819.52 $852.18
Average Use Per Residential Customer
(kilowatthours).......................... 7,108 7,213 7,598
Average Revenue Per Kilowatthour:
Residential (excluding light bulb serv-
ice).................................... 11.49c 11.36c 11.22c
Small commercial and industrial.......... 8.33c 8.41c 8.19c
Large commercial and industrial.......... 6.10c 6.05c 6.00c

- --------
(1) See "Rate Matters" above.

YEARYear 2000 CONVERSIONConversion

See "Management's Discussion and Analysis of Financial Condition and Results
of Operations," subcaption "Liquidity and Capital Resources--Year 2000
Conversion" in the January 30, 1998 Form 8-K Reports, which are incorporated
herein by reference,on page F-12 for information regarding Unicom and ComEd's Year
2000 conversion.

MARKET RISKS

ComEd is exposed to market risk due to changes in interest rates and changes
in the market price for electricity. Exposure for interest rate changes
relates to its long-term debt and preferred equity obligations. Exposure to
electricity market price risk relates to forward activities taken to
effectively manage the supply of, and demand for, the electric generation
capability of ComEd's generating plants. ComEd does not currently utilize
derivative commodity or financial instruments for trading or speculative
purposes. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations," subcaption "Liquidity and Capital Resources--Interest
Rate Exposure and Market Price Exposure" in the January 30, 1998 Form 8-K
Reports, which are incorporated herein by reference, for additional
information.

FORWARD-LOOKING INFORMATIONForward-Looking Information

Except for historical data, the information contained in these Annual
Reports constitutes forward-looking statements. Forward-looking statements are
inherently uncertain and subject to risks. Such statements should be viewed
with caution. Actual results or experience could differ materially from the
forward-looking statements as a result of many factors. Forward-looking
statements in this report include, but are not limited to: (1) statements
regarding expectations of revenue reductions and

collections of future CTC revenues as a result of the 1997 Act in "Item 1.
Business," subcaption "Changes in the Electric Utility Industry--The 1997
Act"Act," (2) statements regarding estimated capital expenditures in "Item 1.
Business," subcaption "Construction Program," (3) statements regarding the
estimated return to service of certain nuclear generating units and the costs
of purchased power in "Item 1. Business," subcaption "Regulation--Nuclear,"
(4) statements regarding the costs of decommissioning nuclear generating stations in "Item 1. Business,"
subcaption "Regulation--Nuclear,"Regulation-- Nuclear," (5)(4) statements regarding cleanupsite investigation
and remediation costs associated with MGPs and other remediation sites in
"Item 1. Business," subcaption "Regulation--Environmental""Regulation--Environmental," and (6)(5) "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Item 8. Financial Statements and Supplementary Data" which
in the case of Unicom, incorporate portions of Unicom's January
30, 1998 Form 8-K Report, which is incorporated herein by reference, which
contain forward-looking information as described therein, and in the case of
ComEd, incorporate portions of ComEd's JanuaryMarch 30, 19982000 Form
8-K Report, which is incorporated herein by reference, which contain forward-lookingforward-
looking information as described therein. Management cannot predict the course
of future events or anticipate the interaction of multiple factors beyond
management's control and their effect on revenues, project timing and costs.
The statements regarding revenue reductions and collections of future CTC
revenues are subject to unforeseen developments in the market for electricity
in Illinois resulting from regulatory changes. The statements regarding
estimated capital expenditures, estimated return to service of
nuclear generation units, decommissioning costs and cleanup costs are
subject to changes in the scope of work and manner in which the work is
performed and consequent changes in the timing and level of the projected
expenditure, and are also subject to changes in laws and regulations or their
interpretation or enforcement. The statements regarding the estimated return to service of
nuclear generating units are subject to the concurrence of the NRC with
proceeding to power operations. Unicom and ComEd make no commitment to disclose
any revisions to the forward-looking statements, or any facts, events or
circumstances after the date hereof that may bear upon forward-looking
statements.

ITEMItem 2. PROPERTIES.Properties.

ComEd's electric properties are located in Illinois and the Indiana
Company's electric facilities are located in Indiana. In management's
opinion, ComEd and the Indiana Company's operating properties 20
are adequately
maintained and are substantially in good operating condition. The electric
generating, transmission, distribution and general facilities of ComEd and the
Indiana Company represent approximately 64%54%, 10%9%, 22%31% and 4%6%, respectively, of
their grossnet investment in electric plant and equipment in service (after
reflecting the closure of Zion Station and the sale of State
Line Station)the fossil plant assets).

The electric generating stations, substations and a portion of the
transmission rights of way of ComEd and the Indiana Company are owned in fee.
A significant portion of the electric transmission and distribution facilities
is located over or under highways, streets, other public places or property
owned by others, for which permits, grants, easements or licenses, deemed
satisfactory by ComEd, but without examination of underlying land titles, have
been obtained. The principal plants and properties of ComEd are subject to
the lien of ComEd's Mortgage dated July 1, 1923, as amended and supplemented,
under which ComEd's first mortgage bonds are issued.

Promptly following the completion of the transactions leading to the
establishment of Exelon as the holding company for ComEd and PECO, it is
anticipated that both ComEd and PECO will transfer their generating assets and
wholesale power marketing operations to subsidiaries. Following those
transfers, these subsidiaries will be transferred to Exelon and ultimately
will be combined into a single power generation and marketing company
("Genco"), which will be a direct subsidiary of Exelon. In ComEd's case, the
transfer will include its Braidwood, Byron, Dresden, LaSalle and Quad Cities
generating stations (nuclear generating stations) representing an aggregate
generating capability of 9,566 megawatts, its Zion station, its rights and
obligations under various power purchase agreements, the assets constituting
its nuclear decommissioning trusts and its wholesale power marketing business.
Genco will assume responsibility for the decommissioning of the nuclear
generating stations and Zion Station, subject to an obligation of ComEd to
continue collecting decommissioning-related charges from its customers. Genco
will enter into a power purchase agreement with ComEd in which Genco will
undertake to supply ComEd's full requirements for electric energy through 2004
and all of ComEd's requirements up to the available capacity of the nuclear
generating stations in 2005 and 2006. The proposed transfer is subject to
various regulatory approvals.

18
The net generating capability of ComEd, as of March 1, 1998,December 31, 1999, is derived
from the following electric generating facilities:

NET GENERATING CAPABILITY
STATION LOCATION (KILOWATTS)Net Generating Capability
Station Location (kilowatts)(1)
------- -------------- -------------------------

Nuclear--
Zion Zion --(2)
Dresden Near Morris 1,588,0001,600,000
Quad Cities Near Cordova 1,183,000(3)1,176,000(2)
LaSalle County Near Seneca 2,156,0002,210,000
Byron Near Byron 2,240,0002,290,000
Braidwood Near Braidwood 2,240,000
Fossil--
Collins Near Morris 2,698,000
Powerton Near Pekin 1,538,000
Joliet 6 Near Joliet 314,000
Joliet 7 & 8 Near Joliet 1,025,000
Will County Near Lockport 1,092,000
Waukegan Waukegan 789,000
Crawford Chicago 542,000
Fisk Chicago 326,000
Fast-Start Peaking Units Various 1,407,000(4)2,290,000
----------
Company owned net non-summer
generating capability 19,138,0009,566,000
Deduct--Summer limitations 538,000231,000
----------
Company owned net summer
generating capability 18,600,0009,335,000
Add--Capability under long-term purchase
power agreements 1,598,000(5)11,008,000(3)(4)(5)
----------
Net summer generating capability 20,198,00020,343,000
==========

- --------
(1) Reflects a re-rating of certain generating stations as of FebruaryJanuary 1, 1998.2000.
(2) On January 14, 1998, the Boards of Directors of Unicom and ComEd
authorized the permanent cessation of nuclear generation operations at
Zion Station.
(3) Excludes the 25% undivided interest of MidAmerican Energy Company in the
Quad Cities Station.
(4) Such generating units are normally designed for use primarily during the
maximum load periods of the year or during system operating emergencies.
Such units are capable of starting and coming on-line quickly.
(5)(3) ComEd sold its Kincaid and State Line generating stations in February 1998
and December 1997, respectively. Under the terms of the sales, ComEd
entered into exclusive 15-year purchase power agreements for the output of
the plants.
(4) ComEd sold its remaining six coal-fired generating plants, an oil and gas
fired plant, and nine peaking units to EME in December 1999. ComEd entered
into transitional, limited term power purchase agreements with EME.
(5) The above table represents ComEd's net generating capability for the
summer of 2000.

The net generating capability available for operation at any time may be
less due to regulatory restrictions, fuel restrictions, efficiency of cooling
facilities and generating units being temporarily out of service for
inspection, maintenance, refueling, repairs or modifications required by
regulatory authorities. The above table excludes certain limited term power
purchase arrangements with independent power producers and other utilities.
ComEd's highest peak load experienced to date occurred on August 30, 1999 and
was 21,243,000 kilowatts; and the highest peak load experienced to date during
a winter season occurred on December 20, 1999 and was 14,484,000 kilowatts.
ComEd's kilowatthour sales and generation are generally higher, primarily
during the summer periods but also during the winter periods, when temperature
extremes create demand for either summer cooling or winter heating.

See "Changes in the Electric Utility Industry--Fossil Plant Sale" above for
additional information regarding ComEd's sale of fossil plants.

Major electric transmission lines owned and in service are as follows:

VOLTAGE CIRCUIT
(VOLTS) MILESVoltage Circuit
(Volts) Miles
------- -------

765,000........................................................... 90
345,000........................................................... 2,5452,500
138,000........................................................... 2,7372,097

ComEd's electric distribution system includes 38,63040,493 pole line miles of
overhead lines and 34,57938,037 cable miles of underground lines. A total of
approximately 1,334,9301,365,310 poles are included in ComEd's distribution system, of
which about 593,390592,672 poles are owned jointly with telephone companies.

ITEMOn February 18, 2000, ComEd sold its investment in Cotter Corporation to
General Atomics for $1 million. ComEd will record a loss of approximately $22
million (after-tax) in the first quarter of 2000 as a result of the sale.

Item 3. LEGAL PROCEEDINGS.Legal Proceedings.

During 1989 and 1991, actions were brought in federal and state courts in
Colorado against ComEd and Cotter seeking unspecified damages and injunctive
relief based on allegations that Cotter

has permitted radioactive and other hazardous material to be released from its
mill into areas owned or occupied by the plaintiffs resulting in property
damage and potential adverse health effects. InWith respect to Cotter, in 1994 a
federal jury returned nominal dollar verdicts against Cotter on eight
bellwether
plaintiffs' claims in the 1989 cases, which verdicts were upheld on appeal.
The remaining claims in the 1989 actions have been settled and dismissed. On
July 15, 1998, a jury verdict was rendered in Dodge v. Cotter (United States
District Court for the District of Colorado, Civil Action No. 91-Z-1861), a
case relating to 14 of the plaintiffs in the 1991 cases. The verdict against
Cotter and in favor of the plaintiff, after amended judgement issued in March
1999, totaled approximately $6 million, including compensatory and punitive
damages, interest, and medical monitoring. On February 11, 2000, the Tenth
Circuit Court of Appeals agreed with Cotter, found that the trial judge had
erred in critical rulings and reversed the jury verdict, remanding the case
for new trial. A case involving the next group of plaintiffs is set for trial
in federal district court in Denver on October 2, 2000. Although ComEd sold
its investment in Cotter in February 2000, ComEd will continue to be liable
for any court verdicts in favor of the plaintiffs. The other 1991 cases will
necessarily involve the resolution of numerous contested issues of factlaw and
law,fact. It is Unicom and ComEd's determination isassessment that these actions will not have a
material impact on their financial position or results of operations.

A case relating to 14 of the plaintiffs in the 1991
cases has been set for trial in June 1998.

In July 1995, the Chicago area experienced several consecutive days of
unusually high temperatures coupled with high humidity. Between July 12 and 14,August 1995, ComEd experienced record demand for electricity. On July 14, 1995, a
fire in a substation caused a power outage to approximately 40,000 customers.
Other equipment failures in the same general area caused certain of these
customers to be without power for up to 48 hours. In the wake of these power
outages, three class action lawsuits were filed against
ComEd seeking recoveryarising out of a series of service outages. All of the complaints seek
damages incurred for property loss by approximately 40,000 customers who were
without electrical service for up to 48 hours. These suits were subsequently
consolidated. A proposed settlement agreement was preliminarily approved by
the Court on November 23, 1999. Under this plan, eligible class members will
receive a credit if they were without power more than 12 consecutive hours. If
they submitted timely claim forms, some class members will receive additional
compensation for food spoilage, other perishable items and damage caused by
power surges. Total benefits available to the class are approximately $2.5
million. Class counsel fee petitions are currently under consideration by the
Court, but will not increase the maximum allowable payout by ComEd. The claims
administration will continue through the summer of 2000.

In August 1999, three class action lawsuits were filed against ComEd related
to a series of service interruptions during the summer of 1999. The combined
effect of these events resulted in over 100,000 customers losing service. On
August 12, 1999, service was interrupted to ComEd customers on the near north
and near west side of Chicago's central business district. While major
commercial customers were affected, all service was restored on the same date.
The class action complaints have been consolidated and seek to recover damages
for personal injuries and property losses allegedly suffered. One suit seeks at least $10
milliondamage, as well as economic loss for these
events. Further, ComEd initiated expedited claim settlements for those with
primarily food spoilage claims. Conditional class certification has been
approved by the Court for the sole purpose of exploring settlement talks. The
lawsuits are pending in damages; the others seek unspecified damages. One individual suit
was alsoCircuit Court of Cook County. ComEd has filed seeking damagesa
motion challenging the legal sufficiency of less than $100,000 for property losses.

On March 11, 1998 the Illinois Supreme Court approvedconsolidated complaints. The
plantiff's response is due April 14, 2000 and any reply by ComEd is due May
12, 2000. The motion to dismiss is currently scheduled to be argued on May 23,
2000. ComEd's management believes adequate reserves have been established in
connection with these cases.

Following the summer 1999 service interruptions, the ICC opened a settlementthree-
phase investigation of the design and reliability of ComEd's dispute regardingtransmission and
distribution system. At the conclusion of each phase of the investigation, the
ICC will issue a report that will include specific recommendations for ComEd
and a timetable for executing the recommendations. Hearings on Phase I of the
investigation were held the week of January 3, 2000, which focused on the
outages of July and August 1999. Reports on Phase II and Phase III, focusing
on the transmission and distribution system generally, are anticipated in the
second quarter of 2000. The final phase of the investigation is expected to
conclude in early 2001.

ComEd also has several matters pending before various local and state
agencies which pertain to the assessment of Company property for local tax
purposes. ComEd has instituted several proceedings in the courts challenging
adverse determinations by certain of these state and local agencies. All taxes
attributable to such determinations have been paid and reflected on the books
of ComEd. ComEd does not believe that a material adverse outcome is likely.
ComEd also has appeals pending in applicable counties concerning property tax
assessments for its ByronBraidwood nuclear generating station. Under the terms of the settlement agreement, the taxing
bodies in Ogle County have agreed that taxes in future years will not exceed
certain specified amounts. ComEd will receive $8.5 million in refunds and set
aside additional credits which will be available to enforce the provisions
regarding future levies. The settlement agreement continues in effect until
2004. Appeals are still pending for cases involving ComEd's Braidwood and
LaSalle Stations, as well as other properties. These proceedings
seek refunds and reduced valuations resulting in lower property taxes for the
challenged and subsequent years. On November 1, 1996,ComEd has reached an agreement in principle
with the cityWill County Board that will resolve these matters. The agreement is
subject to the approval of Chicago, Illinois filedthe taxing districts involved.

The Montana Department of Revenue has made additional tax assessments on
Decker Coal Company for severance taxes, gross proceeds taxes and resource
indemnity trust taxes covering the years 1993-1995. The amount of additional
taxes assessed, including interest through April 30, 1998, is approximately $5
million. Under the terms of a demandtax and royalty indemnity agreement, ComEd may
be responsible for some or all of these additional taxes and interest, to the
extent they are shown to be payable. ComEd has the right to direct the
challenge of these assessments and may be responsible for the appointmentcost of
an Adjustment Board beforeconducting the American Arbitration Associationdefense of Decker from these assessments. Decker is appealing
assessments unrelated to ComEd, but with issues common to the 1993-1995
assessment. Therefore, the appeal impacting ComEd has been held in abeyance
until April 10, 2000.

On March 22, 1999, ComEd reached a settlement agreement with the City to end
the arbitration proceeding between ComEd and the City regarding the January 1,
1992 franchise agreement and a supplemental agreement between them. Under the
terms of the settlement agreement, the pending arbitration is to be dismissed
with prejudice and the City is to release ComEd from all claims the City may
have under the provisionssupplemental agreement. The settlement agreement was approved
by the City Council.

As part of its franchisethe settlement agreement, with ComEd. In its demand,ComEd and the city alleges, among other items, that ComEd has failedCity have agreed to carry out certain
commitments related to system reliabilitya
revised combination of ongoing work under the franchise agreement which
requires ComEd to budget $1 billionand new
initiatives that will result in expenditures fordefined transmission and distribution
enhancements within or forexpenditures by ComEd to improve electric service in the benefitCity. The settlement
agreement provides that ComEd will be subject to liquidated damages if the
projects are not completed by various dates, unless it is prevented from doing
so by events beyond its reasonable control. ComEd's current construction
budget considers these projects. In addition, ComEd and the City established
an Energy Reliability and Capacity Account, into which ComEd deposited $25
million following the effectiveness of Chicago over a ten-year
period that commenced in January 1992. ComEd is disputing the city's
allegations. During the six years since January 1992,settlement agreement and ComEd has
expended
approximately $499conditionally agreed to deposit up to $25 million at the end of each of the
years 2000, 2001 and 2002, to enhancehelp ensure an adequate and reliable electric service reliability and energy
supply for the city, and it continues to review, and budget appropriately, for
needed projects.

On June 13, 1997, theCity.

The IDR has issued a NoticeNotices of Tax Liability to ComEd alleging deficiencies
in Illinois invested capital tax payments for the years 1988 through 19941997. The
alleged deficiencies including interest and penalties totaled approximately
$52 million as of $22 million, plus interest of $11 million and a penalty of $2 million. On
January 2, 1998, the IDR issued a second Notice of Tax Liability also alleging
deficiencies in Illinois invested capital tax for the years 1995 through 1996
of $7 million, plus interest of $1 million.December 31, 1999. ComEd has protested the notices, and the
matter is currently pending before the IDR's Office of Administrative
Hearings. Interest will continue to accrue on the alleged tax deficiencies at
9% per annum.

22
deficiencies.

In November and December of 1997, Unicom and its directors were served with
severalseven shareholder derivative lawsuits in statefederal and federalstate court. All of the
suits assertasserted identical claims that the directors breached fiduciary duties
to the shareholders by allegedly failing to properly supervise ComEd's nuclear
program. Each plaintiff allegesalleged that this caused ComEd to violate NRC rules,
which has cost ComEd millions of dollars. Plaintiffs seekThe plaintiffs sought to have the
directors reimburse ComEd for these costs,costs. The originally filed suits were
dismissed because no demand was made upon ComEd's board to pursue a derivative
action on behalf of ComEd, and they seek attorneys' fees.
Unicom anddemand was not excused. In September 1998, the
plaintiffs made such a demand on ComEd's preliminary assessmentboard. On October 22, 1998, the board
appointed a special committee to review the merits of these claims is that they are
without merit.

In October 1997, six ComEd employees who were formerly located at ComEd's
nuclear station in Zion, Illinois brought state and federal claims against
ComEd,the demand. On May 19,
1999, the plaintiffs refiled a

derivative action alleging that they were relocatedbecause the board of directors had not
responded to the plaintiffs, in effect the board had refused the demand. The
special committee, assisted by separate counsel, conducted a review of the
claims asserted in the plaintiffs demand letter. On October 27, 1999, the
special committee reported its findings to the full board and demoted asrecommended that
the result of raising
nuclear safety concerns. They claimed retaliatory demotion, retaliatory
constructive dischargedemand be rejected, and intentional infliction of emotional distress. They
requested reinstatement in their former positions, back pay, compensatory
damages, attorneys' fees and punitive damages. The aggregate amount of
punitive damages requested equals $18 million. They also filed a claim with
the U.S. Department of Labor under the Energy Reorganization Act.board decided that no legal action should be
brought by Unicom andor ComEd do not believe that their exposure with respect to thesethe claims is
material.asserted in the
plaintiffs demand letter. The plaintiffs reviewed the Special Committee's
report and determined not to contest the Special Committee's recommendation.
An order dismissing the derivative action was issued on February 9, 2000.

On April 28, 1997, Tower Leasing, Inc. ("Tower") and QST Energy, Inc.
("QST") filed a
complaint with the ICC alleging that ComEd violated Illinois law and its own
tariffs by preventing Tower Leasing and QST from installing a cogeneration
facility at Sears Tower in Chicago Illinois and interconnecting such facility with
ComEd's system in that building. Tower Leasing and QST have asked the ICC to enter
an order that would have essentially requirerequired ComEd to assist in the
implementation of the proposed facility. IfThe ICC issued an order dismissing
the complaint and denying the relief requested by Tower Leasing. Tower
Leasing's petition for rehearing was denied. In August 1998, Tower Leasing and
QST are allowedappealed the ICC's decision to pursue the installation and interconnection of their proposed facility, ComEd
could lose customer revenue. ComEd does not believe that it is obligated to
allow Tower and QST to implement their proposed facility. ComEd also believes
thatstate appellate court. The appellate
court issued an order upholding the proposed facility would be inconsistent with Illinois law.ICC's decision.

On November 14, 1997, the CHA filed an application with the FERC, seeking to
require ComEd to provide transmission service to some of CHA's buildings so
that those buildings may take electric service from an alternate electric
supplier. ComEd maintains that the CHA is a retail customer ineligible for
transmission service. ComEd and the CHA have asked the FERC to hold
proceedings in abeyance pending the outcome of settlement negotiations. Should
this proceedingthe CHA proceedings be resolved adversely to ComEd, ComEd could lose
customersubstantial revenue. This revenue loss may be offset, however, by a stranded
cost obligation the CHA would owe ComEd under FERC Order.Order No. 888.

On September 10, 1998, Prairieland Energy, Inc. filed an application with
the FERC, seeking to require ComEd to transmit power and energy on behalf of
Prairieland to the Chicago campus of its parent, the University of Illinois.
ComEd protested the filing because the application either seeks prohibited
retail wheeling or seeks approval of a sham wholesale transaction between
Prairieland and its parent. On December 28, 1998, the FERC issued an order
denying Prairieland's application. On April 19, 1999, the FERC denied
Prairieland's request for appeal. On July 28, 1999, the FERC denied a second
application, which Prairieland had submitted in May, determining that
documentation submitted by Prairieland did not demonstrate the basis for a
bona fide commercial transaction with the University of Illinois.
Prairieland's request for rehearing is pending.

In June 1997, Torco Energy Marketing, Inc. filed an action against ComEd in
the Circuit Court of Cook County, Illinois, alleging that ComEd tortiously
interfered with Torco's proposed arrangement between Torco and Sargent & Lundy
LLC. Torco claims that, but for actions by ComEd, Sargent & Lundy would have
paid Torco $20 million to purchase a portion of the equity in Torco, and that
the venture would have had revenues of $2.6 billion. ComEd was granted summary
judgement on October 28, 1999 and the complaint was dismissed. Torco has filed
a Notice of Appeal. ComEd is confident the dismissal will be upheld.

On April 18, 1996, a ComEd truck driver, driving a ComEd truck, struck a car
that had slowed or stopped to make a turn. The truck pushed this car into
oncoming traffic causing a head-on collision with a third vehicle. The driver
of this third vehicle suffered extensive injuries resulting in numerous
surgical procedures. The plaintiff, who is wheelchair bound, and the
plaintiff's spouse have made a combined demand of $55 million upon ComEd. On
May 28, 1999, judgement for $13,500,000 was entered for the plaintiff. The
matter is currently on appeal. Insurance coverage above ComEd's $5 million
self-insured retention should be available.

See "Item 1. Business," subcaptions "Rate Matters" andsubcaption "Regulation" above, for information
concerning other legal proceedings.

ITEMItem 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.Submission of Matters to a Vote of Security Holders.

None.

PART II

ITEMItem 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.Market for Registrant's Common Equity and Related Stockholder Matters.

ComEd's securities and other securities guaranteed by ComEd are currently
rated by three principal securities rating agencies as follows:

STANDARD DUFFStandard Duff &
MOODY'SMoody's & POOR'S PHELPSPoor's Phelps
------- -------- ------

First mortgage and secured pollution control bonds.. Baa2 BBB BBBBaa1 BBB+ A-
Publicly-held debentures and unsecured pollution
control obligations........................................ Baa3 BBB- BBB-obligations................................ Baa2 BBB BBB+
Convertible preferred stock......................... baa3 BBB- BBB-BBB
Preference stock.................................... baa3baa2 BBB- BBB-BBB
Trust Securities.................................... baa3 BBB- BBB-BBB
Commercial paper.................................... P-2 A-2 D-2D-1

23
ComEd Funding Trust's securities are currently rated by three principal
securities rating agencies as follows:

Standard Duff &
Moody's & Poor's Phelps
------- -------- ------

Transitional trust notes............................. Aaa AAA AAA

As of January 1998,February 2000, Moody's and Duff & Phelps' current rating outlookoutlooks on
ComEd's securities is
"negative" andare stable. S&P has ComEd on CreditWatch with positive
implications.

All three agencies raised their rating for ComEd in the course of 1999: Duff
& Phelps has classified ComEd's securities as "Rating
Watch-Down."in December, Moody's in September and S&P changedin June.

On December 17, 1999, Duff & Phelps raised its rating outlook on ComEd from "stable"Unicom's senior
debt obligations to "positive" in November 1997.BBB. On September 15, 1999, Moody's assigned Unicom a
first time issuer rating of Baa3. On June 29, 1999, S&P raised its rating on
Unicom's senior debt obligations to BBB.

The above ratings reflect only the views of such rating agencies and each
rating should be evaluated independently offrom any other rating. Generally,
rating agencies base their ratings on information furnished to them by the
issuing company and on investigations, studies and assumptions by the rating
agencies. There is no assurance that any particular rating will continue for
any given period of time or that it will not be changed or withdrawn entirely
if, in the judgment of the rating agency, circumstances so warrant. Such
ratings are not a recommendation to buy, sell or hold securities.

The following is a brief summary of the meanings of the above ratings and
the relative rank of the above ratings within each rating agency's
classification system.

Moody's top four long-term debt ratings (Aaa, Aa, A and Baa) are generally
considered "investment grade." Obligations rated Baa are considered as medium
grade obligations, neither highly protected nor poorly secured. Such
obligations lack outstanding investment characteristics and in fact have
speculative characteristics. A numerical modifier in Moody's system shows
relative standing within the principal rating category, with 1 indicating the
high end of that category, 2 the mid-range

23
and 3 the low end. S&P's top four bond ratings (AAA, AA, A and BBB) are
generally considered to describe obligations in which investment
characteristics predominate. Obligations rated BBB are regarded as having an
adequate capacity to pay interest and repay principal. Such obligations
normally exhibit adequate protection parameters, but adverse economic
conditions or changing circumstances are more likely to lead to weakened
capacity to pay. A plus or minus sign in S&P's system shows relative standing
within its rating categories.

Both Moody'sS&P and S&P'sMoody's preferred stock ratings represent relative security of
dividends. Moody's top four preferred stock ratings (aaa, aa, a and baa) are
generally considered "investment grade." Moody's baa rating describes a
medium grade preferred stock, neither highly protected nor poorly secured.
S&P's top four preferred stock ratings (AAA, AA, A and BBB) are generally
considered "investment grade." S&P's BBB rating applies to medium grade
preferred stock which is below A ("sound") and above BB ("lower grade").

Duff & Phelps' credit rating scale has 17 alphabetical categories, of which
ratings AAA (the highest rating) through BBB (with AAA being the highest rating) represent investment grade
securities. Ratings of BBB+, BBB and BBB- represent the lowest category of
"investment grade" rating. This category describes securities with below
average protection factors but which are considered sufficient for
institutional investment. Considerable variability in risk occurs during
economic cycles.

Moody's P-2 rating of commercial paper is the second highest of three
possible ratings. P-2 describes a strong capacity for repayment of short-term
promissory obligations. S&P rates commercial paper in four basic categories
with A-2 being the second highest category. Duff & Phelps rates commercial
paper in three basic categories, with D-2 indicating the middle category.

Further explanations of the significance of ratings may be obtained from the
rating agencies.

Additional information required by Item 5 is incorporated herein by
reference to the "Price Range and Cash Dividends Paid Perper Share of Common
Stock" on page 3F-4.

Item 6. Selected Financial Data.
Item 7. Management's Discussion and Analysis of Unicom's January 30, 1998 Form 8-K Report.

ITEM 6. SELECTED FINANCIAL DATA.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
ITEMFinancial Condition and
Results of Operations.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.Financial Statements and Supplementary Data.

The information required by Items 6, 7, 7A and 8 is incorporated herein by
reference to the "Summary of Selected Consolidated Financial Data" on page 3,F-
4, "Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 4F-5 through 20,F-24, Quantitative and Qualitative
Disclosures about Market Risk on page F-13, the audited consolidated financial
statements and notes thereto on pages 22F-26 through 54 of Unicom's January 30,
1998 Form 8-K Report.F-61, and Supplementary
Data on page F-4. Reference is also made to "Item 1. Business," subcaptions
"Changes in the Electric Utility Industry," "Construction Program" and
"Regulation""Regulation," for additional information.

ITEMItem 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

None.

PART III

ITEMItem 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.Directors and Executive Officers of the Registrant.

The information required by Item 10 relating to directors and nominees for
election as directors at Unicom's Annual Meeting of shareholders to be held on
May 28, 1998 is
incorporated herein by reference to the information

under the heading "Security Ownership of Certain Beneficial Owners and
Management" in Unicom's definitive Proxy Statement ("19982000 Proxy Statement") to
be filed with the SEC prior to April 30, 1998,2000, pursuant to Regulation 14A
under the Securities Exchange Act of 1934. The information required by Item 10
relating to executive officers is set forth in Part I of Unicom's Annual Report on Form
10-K under "Item 1. Business,"
subcaption "Executive Officers of the Registrant" and under the heading
"Security Ownership of Certain Beneficial Owners and Management" in Unicom's
19982000 Proxy Statement, which areis incorporated herein by reference.

ITEMItem 11. EXECUTIVE COMPENSATION.Executive Compensation.

The information required by Item 11 is incorporated herein by reference to
the information labelled "Compensation of Directors""Board Compensation" and the paragraphs under the
heading "Executive Compensation" (other than the paragraphs under the heading
"Corporate Governance and Compensation Committee Report on Executive
Compensation") in Unicom's 19982000 Proxy Statement.

ITEMItem 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.Security Ownership of Certain Beneficial Owners and Management.

The information required by Item 12 is incorporated herein by reference to
the stock ownership information under the heading "Security Ownership of
Certain Beneficial Owners and Management" in Unicom's 19982000 Proxy Statement.

ITEMItem 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.Certain Relationships and Related Transactions.

None.

ANNUAL REPORT ON FORM 10-K FOR COMMONWEALTH EDISON COMPANY

PART I

ITEMItem 1. BUSINESS.Business.

See Unicom's "Item 1. Business" (other than the paragraphs under the
headings "General--Unregulated Operations," "Construction Program--Unregulated
Operations" and "Executive Officers of the Registrant"), which is incorporated
herein by this reference.

EXECUTIVE OFFICERS OF THE REGISTRANTExecutive Officers of the Registrant

The effective year of election of the officers to their present positions
and the prior positions they have held with ComEd or other companies, since
January 1, 1993,1995, are described below.

NAME AND AGE POSITIONName and Age Position
---------------------------- -----------------------------------------------

*John W. Rowe, 5254 Chairman, President and Chief Executive Officer
of ComEd and Unicom since March 1998; previ-
ously President and Chief Executive Officer of
New England Electric System.
*Paul A. Elbert, 50 Executive Vice President of ComEd and Unicom
and President Unicom Enterprises Inc. since
October 1999; previously President and Chief
Executive Officer--Gas for Consumers Energy
Company from August 1997 to September 1999;
previously Executive Vice President and Chief
Operating Officer--Gas at Consumers Energy
Company from December 1994 to August 1997.
*Oliver D. Kingsley, Jr., 5557 Executive Vice President of ComEd and Unicom
and President and Chief Nuclear Officer--NuclearOfficer--Nu-
clear Generation Group of ComEd since October
1997; previously Chief Nuclear Officer at the
Tennessee Valley Authority.
*Robert J. Manning, 55 Executive Vice President of ComEd since January
1997 and President--Fossil Generation Group of
ComEd since October 1997; previously Senior
Vice President of ComEd.
*John C. Bukovski, 55 Senior Vice President and Chief Financial Offi-
cer of ComEd and Unicom since October 1997;
previously Vice President and Chief Financial
Officer of ComEd and Unicom.
*Paul D. McCoy, 47 Senior Vice President of ComEd since October
1997; previously Vice President of ComEd.
Donald A. Petkus, 56 Senior Vice President of ComEd since 1992 and
of Unicom since 1995; President and Chief Ex-
ecutive Officer of UT Holdings since 1997 and
Unicom Thermal Technologies Inc. since 1995.
*S. Gary Snodgrass, 46 Senior Vice President of ComEd and Unicom since
October 1997; Vice President of ComEd and
Unicom, September 1997 to October 1997; previ-
ously Vice President of USG Corporation.
*Pamela B. Strobel, 45 Senior47 Executive Vice President and General Counsel of
ComEd and Unicom since October 1997;January 1999; previ-
ously Senior Vice President and General Coun-
sel of ComEd and Unicom, October 1997 to De-
cember 1998; previously Vice President and
General Counsel of ComEd.
*Michael J. Wallace, 50*Frank M. Clark, 54 Senior Vice President of ComEd and Unicom since
1993; pre-
viously Vice President of ComEd.
T. Oliver Butler, 46January 1999; previously Vice President of
ComEd, since July 1997; previ-
ously Purchasing Vice President of ComEd, 1994January 1997 to 1997 and European Acquisition Manager--Ge-
neva of Digital Corporation.

NAME AND AGE POSITION
----------------------- ----------------------------------------------------

Frank M. Clark, 52 Vice President of ComEd since January 1997;December 1998; previ-
ously Governmental Affairs Vice President 1996
to January 1997 and Governmental Affairs Manager.
John T. Costello, 49Man-
ager.
*Christopher M. Crane, 41 Senior Vice President of ComEd since July 1999;
previously Vice President of ComEd, October
1998 to July 1999 and Vice President Tennessee
Valley Authority
*Carl J. Croskey, 48 Senior Vice President of ComEd and Unicom and
President of Distribution at ComEd since 1996; pre-
viously ManagerAu-
gust 1999; previously President of Corporate RelationsMichCon En-
terprises Inc., a subsidiary of ComEd,
1995Michigan Con-
solidated Gas Company from January 1998 to 1996 and Manager of Public Affairs of
ComEd.
Louis O. DelGeorge, 50Au-
gust 1999; previously Senior Vice President of
ComEd.
*William H. Downey, 53 Vice President of ComEd.

RuthOperations for Michigan Consolidated Gas Com-
pany from April 1995 to January 1998.

Name and Age Position
----------------------- ----------------------------------------------------

*Ruth Ann M. Gillis, 4345 Senior Vice President and Chief Financial Officer of
ComEd and Unicom since January 1999; previously
Vice President and Treasurer of ComEd and Unicom,
since September 1997;1997 to December 1998; previously Vice
President, Chief Financial Officer and Treasurer of
the Uni-
versityUniversity of Chicago Hospitals and Health SystemSys-
tem from 1996 to 1997 and Senior Vice President and
Chief Financial Officer of American National Bank
and Trust Company.
David*David R. Helwig, 4749 Senior Vice President of ComEd since January 1999;
previously Vice President of ComEd, January 1998 to
December 1998; previ-
ouslypreviously General Manager of GeneralGen-
eral Electric Company's Nuclear Services Company,
1997 to January 1998 and Vice President at PECO Energy.
Emerson W. Lacey, 56PECO.
*Elizabeth A. Moler, 50 Senior Vice President of ComEd and Unicom since Jan-
uary 2000; previously Director of Unicom and ComEd
from December 1998 to December 1999, and partner at
Vinson & Elkins, LLP from
December 1998 to December 1999; previously Deputy
Secretary of the U.S. Department of Energy, 1997 to
1998 and chair of the Federal Energy Regulatory
Commission, 1993 to 1997
*S. Gary Snodgrass, 48 Senior Vice President of ComEd and Unicom since Oc-
tober 1997; Vice President of ComEd and Unicom,
September 1997 to October 1997; previously Vice
President of USG Corporation.
*Robert E. Berdelle, 44 Vice President and Comptroller of ComEd and Unicom
since January 1999; previously Comptroller of ComEd
and Unicom, July 1997 to December 1998; previously
held various financial reporting and analysis posi-
tions within ComEd.
Andrew J. Lynch, 51T. Oliver Butler, 48 Vice President of ComEd since AprilJuly 1997; previously
Purchasing Vice President of First Chicago Trust Company of New
York.
Thomas J. McCaffrey, 53ComEd, 1994 to 1997.
John T. Costello, 51 Vice President of ComEd and Unicom since 1996; pre-
viously Manager of Corporate Relations of ComEd,
1995 to 1996.
John T. Hooker, 51 Vice President of Mercer Management Con-
sulting, 1995ComEd and Unicom since December
1999; previously Governmental Affairs Vice Presi-
dent of ComEd, 1998 to 1996December 1999 and Corporate SeniorDirector
of Governmental Services of ComEd
Arlene A. Juracek, 49 Vice President of First Chicago Corporation.ComEd and Unicom since December
1999; previously Assistant Vice President of ComEd,
February 1994 to December 1999.
Emerson W. Lacey, 58 Vice President of ComEd.
Robert K. McDonald, 44 Vice President of ComEd and Unicom Since December
1999; previously Strategic Planning Vice President
and Director of Strategic Planning of ComEd, Sep-
tember 1994 to December 1999.
J. Stephen Perry, 61 Vice President of ComEd since 1994.
James A. Small, 56 Vice President of ComEd.
Vito Stagliano, 57 Vice President of ComEd and Unicom since December
1999; previously Energy Policy and Planning Vice
President of ComEd since November 1998; previously
Managing Director of Energy Security Analysis Inc.
during 1997 to 1998; previously visiting scholar at
Resources for the Future during 1994 to 1996.
Harold Gene Stanley, 59 Vice President of ComEd since 1994; previously Se-
niorSeptember 1997; Site
Vice President of Illinois Power Company.
James A. Small, 54 Vice President of ComEd since 1993;at Braidwood Station, 1996 to 1997;
previously Gen-
eral Manager of Fuel Services of Georgia Power Com-
pany.
Harold Gene Stanley, 57 Vice President of ComEd since September 1997; Site Vice President at Braidwood Station, 1996 to 1997;
previously Vice President at Pennsylvania Power and
Light Company.

Name and Light Company.
*Robert E. Berdelle, 42 ComptrollerAge Position
------------------------ ---------------------------------------------------

Patricia L. Kampling, 40 Treasurer of ComEd and Unicom since July 1997;February 1999;
previously held various financial reportingManager of Finance of ComEd and analysis positions within ComEd.

David A. Scholz, 56Unicom,
May 1998 to February 1999; previously Assistant
Treasurer of ComEd and Unicom.
John P. McGarrity, 38 Associate General Counsel and Secretary of ComEd
and Unicom since 1989January 1999; previously Associ-
ate General Counsel of ComEd and 1994,
respectively.Unicom, December
1997 to January 1999; previously a partner with
Sidley & Austin.

--------
* Executive Officers for Section 16 reporting purposes.

The present term of office of each of the above executive officers extends
to the first meeting of ComEd's Board of Directors after the next annual
election of Directors scheduled to be held on May 28, 1998.

27
Directors.

There are no family relationships among the executive officers, directors
and nominees for director of ComEd.

ITEMItem 2. PROPERTIES.Properties.

See Unicom's "Item 2. Properties," which is incorporated herein by this
reference.

ITEMItem 3. LEGAL PROCEEDINGS.Legal Proceedings.

See Unicom's "Item 3. Legal Proceedings," which is incorporated herein by
this reference.

ITEMItem 4. SUBMISSION OF MATTERS TO A VOTE BY SECURITY HOLDERS.Submission of Matters to a Vote by Security Holders.

None.

PART II

ITEMItem 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.Market for Registrant's Common Equity and Related Stockholder Matters.

See Unicom's "Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters" (other, other than the last paragraph thereof),thereof and any references
to Unicom's senior debt obligations rating, which is incorporated herein by
reference.

Additional information required by Item 5 is incorporated herein by
reference to the "Cash Dividends Paid Perper Share of Common Stock" on page 3F-4.

Item 6. Selected Financial Data.
Item 7. Management's Discussion and Analysis of ComEd's January 30, 1998 Form 8-K Report.

The information required by Items 6, 7, 7A and 8 is incorporated herein by
reference to the "Summary of Selected Consolidated Financial Data" on page 3,5,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 46 through 19,22, Quantitative and Qualitative Disclosures
about Market Risk on page 14, the audited consolidated financial statements
and notes thereto on pages 2124 through 5156, and Supplementary Data on page 56 of
ComEd's JanuaryMarch 30, 19982000 Form 8-K Report. Reference is also made to "Item 1.
Business," subcaptions "Changes in the Electric Utility Industry,"
"Construction Program" and "Regulation""Regulation," for additional information.

ITEMItem 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

None.

PART III

ITEMItem 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.Directors and Executive Officers of the Registrant.

The information required by Item 10 relating to directors and nominees for
election as directors at ComEd's Annual Meeting of shareholders to be held on
May 28, 1998 is
incorporated herein by reference to information under the headingsubheadings
"Nominees" "Security Ownership of Certain Beneficial Owners and Management"
under the heading "Item A: Election of Directors" in ComEd's definitive
Information Statement ("19982000 Information Statement") to be filed with the SEC
prior to April 30, 1998,2000, pursuant to Regulation 14C under the Securities
Exchange Act of 1934. The information required by Item 10 relating to
executive officers is set forth in Part I of ComEd's Annual Report
on Form 10-K under "Item 1. Business," subcaption
"Executive Officers of the Registrant" and under the headingsubheading "Security
Ownership of Certain Beneficial Owners and Management" under the heading "Item
A: Election of Directors" in ComEd's 19982000 Information Statement, which areis
incorporated herein by reference.

ITEMItem 11. EXECUTIVE COMPENSATION.Executive Compensation.

The information required by Item 11 is incorporated herein by reference to
the paragraph labelled "Compensation of Directors" under the subheading
"Additional Information Concerning Board of Directors" under the heading "Item
A: Election of Directors" and the paragraphs under the heading "Executive
Compensation" (other than the paragraphs under the heading "Corporate Governance and Compensationsubheading "Compensation
Committee Report on Executive Compensation") in ComEd's 19982000 Information
Statement.

ITEMItem 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.Security Ownership of Certain Beneficial Owners and Management.

The information required by Item 12 is incorporated herein by reference to
the stock ownership information under the headingsubheading "Security Ownership of
Certain Beneficial Owners and Management" under the heading "Item A: Election
of Directors" in ComEd's 19982000 Information Statement.

ITEMItem 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.Certain Relationships and Related Transactions.

None.

ANNUAL REPORTS ON FORM 10-K FOR UNICOM CORPORATION AND COMMONWEALTH EDISON
COMPANY

PART IV

ITEMItem 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(A)FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES AND EXHIBITS:

PAGE OF
JANUARY 30,
1998 FORM 8-
K REPORT
------------
UNICOM COMED
------ -----

The following financial statements are incorporated into the
Unicom Annual Report on Form 10-K by reference to the indi-
cated page or pages of Unicom's January 30, 1998 Form 8-K
Report,Exhibits, Financial Statement Schedules and into the ComEd Annual Report on Form 10-K by
reference to the indicated page or pages of ComEd's January
30, 1998 Form 8-K Report:
Report of Independent Public Accountants.................... 21 20
Statements of Consolidated Operations for the years 1997,
1996 and 1995.............................................. 22 21
Consolidated Balance Sheets--December 31, 1997 and 1996..... 23-24 22-23
Statements of Consolidated Capitalization--December 31, 1997
and 1996................................................... 25 24
Statements of Consolidated Retained Earnings (Deficit) for
the years 1997, 1996 and 1995.............................. 26 25
Statements of Consolidated Cash Flows for the years 1997,
1996 and 1995.............................................. 27 26
Notes to Financial Statements............................... 28-54 27-51

ANNUAL
REPORT ON
PAGE OF FORM 10-K
THIS ------------
DOCUMENT UNICOM COMED
-------- ------ -----

The following supplemental schedules are included in
the indicated Annual Report on Form 10-K:
Report of Independent Public Accountants on
Supplemental Schedule.............................. 38 x
Report of Independent Public Accountants on
Supplemental Schedule.............................. 39 x
Schedule II--Valuation and Qualifying Accounts for
each of the three years in the period
ended
December 31, 1997........................ 40 x x

The following schedules are omitted as not applicable or not required
under rules of Regulation S-X: I, III, IV and V.

(a)See page F-1 for references to Unicom's Financial Statements and
Unicom's and ComEd's financial position or results of
operations. As of December 31, 1997, the assets of the nonconsolidated
subsidiaries, in the aggregate, were less than 1% of ComEd's consolidated
assets. The 1997 revenues of the nonconsolidated subsidiaries, in the
aggregate, were less than 1% of ComEd's consolidated annual revenues.

The following exhibits are filed with the indicated Annual Report on Form
10-K or incorporated thereinFinancial Statement Schedules required by reference. Documents indicated by an
asterisk (*) are incorporated by reference to the File No. indicated.
Documents indicated by a plus sign (+) identify management contracts or
compensatory plans or arrangements.

EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- --------------------------------------------- ------ -----

*(3)-1 Articles of Incorporation of Unicom effective
January 28,
1994. (File No. 1-11375, Form 10-K for the
year ended
December 31, 1994, Exhibit (3)-1). x
*(3)-2 Restated Articles of Incorporation of ComEd
effective February 20, 1985, including
Statements of Resolution Establishing Se-
ries, relating to the establishment of three
new series of ComEd preference stock known
as the "$9.00 Cumulative Preference Stock,"
the "$6.875 Cumulative Preference Stock" and
the "$2.425 Cumulative Preference Stock."
(File No.
1-1839, Form 10-K for the year ended Decem-
ber 31, 1994, Exhibit (3)-2). x
(3)-3 By-Laws of Unicom Corporation, effective Jan-
uary 28, 1994 as amended through March 11,
1998. x
(3)-4 By-Laws of Commonwealth Edison Company, ef-
fective September 2, 1988 as amended through
March 11, 1998. x
*(4)-1 Mortgage of ComEd to Illinois Merchants Trust
Company, Trustee (Harris Trust and Savings
Bank, as current successor Trustee), dated
July 1, 1923, Supplemental Indenture thereto
dated August 1, 1944, and amendments and
supplements thereto dated, respectively, Au-
gust 1, 1946, April 1, 1953, March 31, 1967,
April 1, 1967, July 1, 1968, October 1,
1968, February 28, 1969, May 29, 1970, Janu-
ary 1, 1971, June 1, 1971, May 31, 1972,
June 1, 1973, June 15, 1973, October 15,
1973, May 31, 1974, June 13, 1975, May 28,
1976, January 15, 1977 and June 3, 1977
(File No. 2-60201, Form S-7, Exhibit
2-1). x
*(4)-2 Supplemental Indentures to Mortgage dated
July 1, 1923 dated, respectively, May 17,
1978, August 31, 1978, June 18, 1979, June
20, 1980, April 16, 1981, April 30, 1982,
April 15, 1983, April 13, 1984 and April 15,
1985 (File No. 2-99665, Form S-3, Exhibit
(4)-3). x
*(4)-3 Supplemental Indenture to Mortgage dated July
1, 1923 dated April 15, 1986 (File No. 33-
6879, Form S-3, Exhibit (4)-9). x

EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- --------------------------------------------- ------ -----

*(4)-4 Supplemental Indentures to Mortgage dated
July 1, 1923 dated, respectively, February
15, 1990 and June 15, 1990 (File No. 33-
38232, Form S-3, Exhibits (4)-11 and (4)-
12). x
*(4)-5 Supplemental Indentures to Mortgage dated
July 1, 1923 dated, respectively, June 1,
1991, October 1, 1991 and October 15, 1991
(File No. 33-44018, Form S-3, Exhibits (4)-
12, (4)-13 and (4)-14). x
*(4)-6 Supplemental Indenture to Mortgage dated July
1, 1923 dated February 1, 1992 (File No. 1-
1839, Form 10-K for the year ended December
31, 1991, Exhibit (4)-18). x
*(4)-7 Supplemental Indenture to Mortgage dated July
1, 1923 dated May 15, 1992 (File No. 33-
48542, Form S-3, Exhibit (4)-14). x
*(4)-8 Supplemental Indentures to Mortgage dated
July 1, 1923 dated, respectively, July 15,
1992 and September 15, 1992 (File No. 33-
53766, Form S-3, Exhibits (4)-13 and (4)-
14). x
*(4)-9 Supplemental Indenture to Mortgage dated July
1, 1923 dated February 1, 1993 (File No. 1-
1839, Form 10-K for the year ended December
31, 1992, Exhibit (4)-14). x
*(4)-10 Supplemental Indentures to Mortgage dated
July 1, 1923 dated, respectively, April 1,
1993 and April 15, 1993 (File No. 33-64028,
Form S-3, Exhibits (4)-12 and (4)-13). x
*(4)-11 Supplemental Indentures to Mortgage dated
July 1, 1923 dated, respectively, June 15,
1993 and July 1, 1993 (File No. 1-1839, Form
8-K dated May 21, 1993, Exhibits (4)-1 and
(4)-2). x
*(4)-12 Supplemental Indenture to Mortgage dated July
1, 1923 dated July 15, 1993 (File No. 1-
1839, Form 10-Q for the quarter ended June
30, 1993, Exhibit (4)-1). x
*(4)-13 Supplemental Indenture to Mortgage dated July
1, 1923 dated January 15, 1994 (File No. 1-
1839, Form 10-K for the year ended December
31, 1993, Exhibit (4)-15). x
*(4)-14 Supplemental Indenture to Mortgage dated July
1, 1923 dated December 1, 1994 (File No. 1-
1839, Form 10-K for the year ended December
31, 1994, Exhibit (4)-16). x
*(4)-15 Supplemental Indenture to Mortgage dated July
1, 1923 dated June 1, 1996. (File No. 1-
1839, Form 10-K for the year ended December
31, 1996, Exhibit (4)-16). x
*(4)-16 Instrument of Resignation, Appointment and
Acceptance dated January 31, 1996, under the
provisions of the Mortgage dated July 1,
1923, and Indentures Supplemental thereto
(File No. 1-1839, Form 10-K for the year
ended December 31, 1995, Exhibit (4)-28). x

EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- --------------------------------------------- ------ -----

*(4)-17 Instrument dated as of January 31, 1996, for
trustee under the Mortgage dated July 1,
1923 and Indentures Supplemental thereto
(File No. 1-1839, Form 10-K for the year
ended December 31, 1995, Exhibit (4)-29). x
*(4)-18 Indentures of ComEd to The First National
Bank of Chicago, Trustee (Amalgamated Bank
of Chicago, as current successor Trustee),
dated April 1, 1949, October 1, 1949, Octo-
ber 1, 1950, October 1, 1954, January 1,
1958, January 1, 1959 and December 1, 1961
(File No. 1-1839, Form 10-K for the year
ended December 31, 1982, Exhibit (4)-20). x
*(4)-19 Indenture of ComEd dated February 15, 1973 to
The First National Bank of Chicago, Trustee
(LaSalle National Bank, successor Trustee),
and Supplemental Indenture thereto dated
July 13, 1973 (File No. 2-66100, Form S-16,
Exhibit (b)-2). x
*(4)-20 Indenture dated as of September 1, 1987 be-
tween ComEd and Citibank, N.A., Trustee re-
lating to Notes (File No. 33-20619, Form S-
3, Exhibit (4)-13). x
*(4)-21 Supplemental Indenture to Indenture dated
September 1, 1987 dated July 14, 1989 (File
No. 33-32929, Form S-3, Exhibit (4)-16). x
(4)-22 Supplemental Indenture to Indenture dated
September 1, 1987 dated January 1, 1997. x
*(4)-23 Credit Agreement dated as of October 1, 1991,
among ComEd, as borrower, the Banks named
therein and the other Lenders from time to
time parties thereto, and Citibank, N.A.
(File No. 1-1839, Form 10-K for the year
ended December 31, 1991, Exhibit (4)-27). x
*(4)-24 Credit Agreement dated as of October 1, 1991,
among ComEd, as borrower, the Banks named
therein and the other Lenders from time to
time parties thereto, and Citibank, N.A.
(File No. 1-1839, Form 10-K for the year
ended December 31, 1991, Exhibit (4)-28). x
(4)-25 Letter Agreement dated as of September 29,
1997, among ComEd and certain of the Banks
party to the Credit Agreement dated as of
October 1, 1991. x
*(4)-26 Amended and Restated Credit Agreement dated
as of November 15, 1996, among Unicom
Enterprises, the Banks Named Therein and
Citibank, N.A. (File No. 1-11375, Form 10-K
for the year ended December 31, 1996,
Exhibit (4)-31). x
*(4)-27 Amended and Restated Guaranty dated as of No-
vember 15, 1996, by Unicom in favor of the
Lenders and LC Banks parties to the afore-
mentioned Credit Agreement with Unicom En-
terprises (File No. 1-11375, Form 10-K for
the year ended December 31, 1996, Exhibit
(4)-32). x

EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- --------------------------------------------- ------ -----

*(4)-28 Indenture dated September 1, 1995 between
ComEd and Wilmington Trust Company. (File
No. 1-1839, Form 10-K for the year ended De-
cember 31, 1996, Exhibit (4)-34). x
*(4)-29 First Supplemental Indenture dated September
19, 1995 to Indenture dated September 1,
1995. (File No. 1-1839, Form 10-K for the
year ended December 31, 1996, Exhibit (4)-
35). x
*(4)-30 Second Supplemental Indenture dated January
24, 1997 to Indenture dated September 1,
1995. (File No. 1-1839, Form 10-K for the
year ended December 31, 1996, Exhibit (4)-
36). x
*(4)-31 Rights Agreement dated as of February 2, 1998
between Unicom Corporation and First Chicago
Trust Company of New York, as Rights Agent,
which includes as Exhibit A the form of
Rights Certificate and as Exhibit B, the
Summary of Rights to Purchase Common Stock
(File No. 1-11375, Current Report on Form 8-
K dated February 2, 1998, Exhibit 4). x
*(10)-1 Nuclear Fuel Lease Agreement dated as of No-
vember 23, 1993, between CommEd Fuel Compa-
ny, Inc., as Lessor, and ComEd, as Lessee
(File No. 1-1839, Form 10-K for the year
ended December 31, 1993, Exhibit (10)-1). x
+*(10)- Unicom Corporation Amended and Restated Long-
2 Term Incentive Plan (File No. 1-11375,
Unicom Proxy Statement dated April 9, 1997,
Exhibit A). x
+*(10)- 1995 Long-Term Performance Unit Award for
3 Executive and Group Level Employees Payable
in 1998 under the Unicom Corporation Long-
Term Incentive Plan, as amended (File Nos.
1-11375 and 1-1839, Form 10-K for the year
ended December 31, 1995, Exhibit (10)-6). x x
+*(10)- 1996 Long-Term Performance Unit Award for Ex-
4 ecutive and Group Level Employees Payable in
1999 under the Unicom Corporation Long-Term
Incentive Plan (File Nos. 1-11375 and
1-1839, Form 10-K for the year ended Decem-
ber 31, 1995, Exhibit (10)-9). x x
+*(10)-5 1997 Long-Term Performance Unit Award for Ex-
ecutive and Group Level Employees Payable in
2000 under the Unicom Corporation Long-Term
Incentive Plan. (File Nos. 1-11375 and 1-
1839, Form 10-K for the year ended December
31, 1996, Exhibit (10)-12). x x
+(10)-6 1998 Long-Term Performance Unit Award for
Executive and Group Level Employees Payable
in 2001 under the Unicom Corporation Long-
Term Incentive Plan. x x
+*(10)-7 Unicom Corporation General Provisions Regard-
ing 1996 Stock Option Awards Granted under
the Unicom Corporation Long-Term Incentive
Plan. (File Nos. 1-11375 and 1-1839, Form
10-K for the year ended December 31, 1996,
Exhibit (10)-9). x x

EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- --------------------------------------------- ------ -----

+*(10)-8 Unicom Corporation General Provisions Regard-
ing 1996B Stock Option Awards Granted under
the Unicom Corporation Long-Term Incentive
Plan. (File Nos. 1-11375 and 1-1839, Form
10-K for the year ended December 31, 1996,
Exhibit (10)-11). x x
+(10)-9 Unicom Corporation General Provisions Regard-
ing Stock Option Awards Granted under the
Unicom Corporation Long-Term Incentive Plan
(Effective July 10, 1997). x x
+*(10)- 1997 Annual Incentive Award for Management
10 Employees under the Unicom Corporation Long-
Term Incentive Plan. (File Nos. 1-11375 and
1-1839, Form 10-K for the year ended
December 31, 1996, Exhibit (10)-13). x x
+*(10)- 1997 Award to Mr. O'Connor, Mr. Mullin and
11 Mr. Skinner under the Unicom Corporation
Long-Term Incentive Plan. x x
+(10)- 1998 Annual Incentive Award for Management
12 Employees under the Unicom Corporation Long-
Term Incentive Plan. x x
+*(10)- Unicom Corporation Deferred Compensation Unit
13 Plan, as amended (File Nos. 1-11375 and 1-
1839, Form 10-K for the year ended Decem-
ber 31, 1995, Exhibit (10)-12). x x
+*(10)- Deferred Compensation Plan (included in Arti-
14 cle Five of Exhibit (3)-2 above). x
+*(10)- Management Incentive Compensation Plan, ef-
15 fective January 1, 1989 (File No. 1-1839,
Form 10-K for the year ended December 31,
1988, Exhibit (10)-4). x
+*(10)- Amendments to Management Incentive Compensa-
16 tion Plan, dated December 14, 1989 and March
21, 1990 (File No. 1-1839, Form 10-K for the
year ended December 31, 1989, Exhibit (10)-
5). x
+*(10)- Amendment to Management Incentive Compensa-
17 tion Plan, dated March 21, 1991 (File No. 1-
1839, Form 10-K for the year ended December
31, 1991, Exhibit (10)-6). x
+*(10)- Retirement Plan for Directors, effective Sep-
18 tember 1, 1994, as amended through March 12,
1997. (File No. 1-11375, Form 10-K for the
year ended December 31, 1996, Exhibit (10)-
19). x
+*(10)- Retirement Plan for Directors, effective Jan-
19 uary 1, 1987, as amended through March 12,
1997. (File No. 1-1839 Form 10-K for the
year ended December 31, 1996, Exhibit (10)-
20) x
+*(10)- Unicom Corporation 1996 Directors' Fee Plan
20 (File No. 1-11375, Unicom Proxy Statement
dated April 8, 1996, Appendix A). x x
+*(10)- Executive Group Life Insurance Plan (File No.
21 1-1839, Form 10-K for the year ended Decem-
ber 31, 1980, Exhibit (10)-3). x
+*(10)- Amendment to the Executive Group Life Insur-
22 ance Plan (File No. 1-1839, Form 10-K for
the year ended December 31, 1981, Exhibit
(10)-4). x
+*(10)- Amendment to the Executive Group Life Insur-
23 ance Plan dated December 12, 1986 (File No.
1-1839, Form 10-K for the year ended Decem-
ber 31, 1986, Exhibit (10)-6). x

EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- --------------------------------------------- ------ -----

+*(10)- Amendment of Executive Group Life Insurance
24 Plan to implement program of "split dollar
life insurance" dated December 13, 1990
(File No. 1-1839, Form 10-K for the year
ended December 31, 1990, Exhibit (10)-10). x
+*(10)- Commonwealth Edison Company Supplemental Man-
25 agement Retirement Plan (File No. 1-1839,
Form 10-K for the year ended December 31,
1985, Exhibit (10)-6). x
+*(10)- Amendment of Executive Group Life Insurance
26 Plan to stabilize the death benefit applica-
ble to participants dated July 22, 1992
(File No. 1-1839, Form 10-K for the year
ended December 31, 1992, Exhibit (10)-13). x
+*(10)- Letter Agreement dated December 16, 1992 be-
27 tween ComEd and Samuel K. Skinner (File No.
1-1839, Form 10-K for the year ended Decem-
ber 31, 1992, Exhibit (10)-14). x
+*(10)- Amendment dated May 31, 1995 to Letter Agree-
28 ment dated December 16, 1992 between ComEd
and Samuel K. Skinner (File No. 1-1839, Form
10-K for the year ended December 31, 1995,
Exhibit (10)-27). x
+*(10)- Amendments dated December 11, 1996 and March
29 24, 1997 to Letter Agreement dated December
16, 1992 between ComEd and Samuel K. Skin-
ner. (File No. 1-1839, Form 10-K for the
year ended December 31, 1996, Exhibit (10)-
30). x
+*(10)- Letter Agreement dated November 14, 1995 be-
30 tween ComEd and Leo F. Mullin (File No.
1-1839, Form 10-K for the year ended
December 31, 1995, Exhibit (10)-28). x
+*(10)- Amendment dated March 24, 1997 to Letter
31 Agreement dated November 14, 1995 between
ComEd and Leo F. Mullin. (File No. 1-1839,
Form 10-K for the year ended December 31,
1996, Exhibit (10)-32). x
+*(10)- Commonwealth Edison Company Excess Benefit
32 Savings Plan (File No. 1-1839, Form 10-Q for
the quarter ended June 30, 1994, Exhibit
(10)-2). x
+*(10)- Amendment No. 1 to Commonwealth Edison Com-
33 pany Excess Benefit Savings Plan dated May
24, 1995 (File No. 1-1839, Form 10-K for the
year ended December 31, 1995, Exhibit
(10)-30). x
+(10)-34 Amendment No. 2 to Commonwealth Edison Com-
pany Excess Benefit Savings Plan effective
as of September 1, 1997. x
+*(10)- Unicom Corporation Stock Bonus Deferral Plan
35 (File Nos. 1-11375 and 1-1839, Form 10-K for
the year ended December 31, 1995, Exhibit
(10)-31). x x
+(10)-36 Amendment No. 1 to Unicom Corporation Stock
Bonus Deferral Plan dated January 3, 1997. x x
+(10)-37 Form of Stock Award Agreement under the
Unicom Corporation Long-Term Incentive Plan. x x

EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- --------------------------------------------- ------ -----

(12) Statement re computation of ratios of earn-
ings to fixed charges and ratios of earnings
to fixed charges and preferred and prefer-
ence stock dividend requirements for ComEd. x
(18) Letter from independent public accountants
regarding change in accounting principle. x x
(21)-1 Subsidiaries of Unicom. x
(21)-2 Subsidiaries of ComEd. x
(23)-1 Consent of experts for Unicom. x
(23)-2 Consent of experts for ComEd. x
(24)-1 Powers of attorney of Directors whose names
are signed to the Unicom Annual Report on
Form 10-K pursuant to such powers. x
(24)-2 Powers of attorney of Directors whose names
are signed to the ComEd Annual Report on
Form 10-K pursuant to such powers. x
(99)-1 Unicom's Current Report on Form 8-K dated
January 30, 1998. x
(99)-2 ComEd's Current Report on Form 8-K dated Jan-
uary 30, 1998. x

Pursuant to Item 601(b)(4)(iii) of Regulation S-K, Unicom and ComEd
hereby agree to furnish to the SEC, upon request, any instrument
defining the rights of holders of long-term debt of ComEd not filed as
an exhibit herein. No such instrument authorizes securities in excess
of 10% of the total assets of ComEd.

(B) REPORTS ON FORM 8-K:
A Current Report on Form 8-K dated October 9, 1997, was filed by
Unicom and ComEd to announce that James J. O'Connor, Chairman and Chief
Executive Officer of Unicom and ComEd intended to retire from the
companies.

A Current Report on Form 8-K dated December 16, 1997, was filed by
Unicom and ComEd to describe the 1997 Act and the related accounting
effects.this
item. See page 37

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SUPPLEMENTAL SCHEDULE

To Unicom Corporation:

We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of Unicom Corporation and subsidiary
companies incorporated by reference in this Annual Report on Form 10-K, and
have issued our report thereon dated January 30, 1998.

Our audits were made for the purposeReport of forming an opinionIndependent Public Accountants on
the basic
financial statements taken as a whole. The schedule listed in Item 14.(a), is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, fairly states in all
material respects the financial dataSupplemental Schedule on ComEd's Financial Statement Schedules
required to be set forth therein in
relation to the basic financial statements taken as a whole.

Arthur Andersen LLP
Chicago, Illinois
January 30, 1998

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SUPPLEMENTAL SCHEDULE

To Commonwealth Edison Company:

We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of Commonwealth Edison Company and
subsidiary companies incorporated by reference in this Annual Report on Form
10-K, and have issued our report thereon dated January 30, 1998.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in Item 14.(a), is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.

Arthur Andersen LLP
Chicago, Illinois
January 30, 1998

SCHEDULE II

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(THOUSANDS OF DOLLARS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ---------------------------- --------- ----------------- ---------- --------
ADDITIONS
-----------------
BALANCE CHARGED
AT TO COSTS CHARGED BALANCE
BEGINNING AND TO OTHER AT END
DESCRIPTION OF YEAR EXPENSES ACCOUNTS DEDUCTIONS OF YEAR
- ---------------------------- --------- -------- -------- ---------- --------

FOR THE YEAR ENDED DECEMBER
31, 1995
- ----------------------------
Reserve Deducted From Assets
in Consolidated Balance
Sheet:
Provision for uncollectible
accounts (a).............. $10,720 $ 1,108 $ -- $ -- $11,828
======= ======= ====== ======== =======
Estimated Obsolete Materi-
als....................... $13,690 $15,350 $ -- $(12,865)(b) $16,175
======= ======= ====== ======== =======
Other Reserves:
Estimated liabilities asso-
ciated with remediation
costs and former manufac-
tured gas plant sites..... $32,522 $ 2,271 $ -- $ (2,271)(c) $32,522
======= ======= ====== ======== =======
Accumulated provision for
injuries and damages...... $55,312 $21,135 $4,671 $(23,142)(d) $57,976
======= ======= ====== ======== =======
FOR THE YEAR ENDED DECEMBER
31, 1996
- ----------------------------
Reserve Deducted From Assets
in Consolidated Balance
Sheet:
Provision for uncollectible
accounts (a).............. $11,828 $ 1,065 $ -- $ -- $12,893
======= ======= ====== ======== =======
Estimated Obsolete Materi-
als....................... $16,175 $12,000 $ -- $(15,873)(b) $12,302
======= ======= ====== ======== =======
Other Reserves:
Estimated liabilities asso-
ciated with remediation
costs and former manufac-
tured gas plant sites..... $32,522 $ 1,728 $ -- $ (1,728)(c) $32,522
======= ======= ====== ======== =======
Accumulated provision for
injuries and damages...... $57,976 $10,892 $5,713 $(20,609)(d) $53,972
======= ======= ====== ======== =======
FOR THE YEAR ENDED DECEMBER
31, 1997
- ----------------------------
Reserve Deducted From Assets
in Consolidated Balance
Sheet:
Provision for uncollectible
accounts (a).............. $12,893 $ 4,651 $ -- $ -- $17,544
======= ======= ====== ======== =======
Estimated Obsolete Materi-
als....................... $12,302 $62,000 $ -- $(32,559)(b) $41,743
======= ======= ====== ======== =======
Other Reserves:
Estimated liabilities asso-
ciated with remediation
costs and former manufac-
tured gas plant sites..... $32,522 $ 2,410 $ -- $ (2,910)(c) $32,022
======= ======= ====== ======== =======
Accumulated provision for
injuries and damages...... $53,972 $ 8,565 $4,939 $(18,213)(d) $49,263
======= ======= ====== ======== =======

Notes:
(a) Bad debt losses, net of recoveries, and provisions for uncollectible
accounts were charged to operating expense and amounted to $50,574,000,
$41,846,000 and $26,278,000 in 1997, 1996 and 1995, respectively.
(b) Write-off of obsolete materials.
(c) Expenditures for site investigation and cleanup costs.
(d) Payments of claims and related costs.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
40

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS
REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF CHICAGO AND STATE OF ILLINOIS ON THE 27TH
DAY OF MARCH, 1998.
UNICOM CORPORATION
John W. Rowe
By
--------------------------------
John W. Rowe, Chairman,
President and Chief Executive
Officer

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF
OF THE REGISTRANT AND IN THE CAPACITIES INDICATED ON THE 27TH DAY OF
MARCH, 1998.
SIGNATURE
- ----------------------------
TITLE
---------------------

John W. Rowe Chairman, President and
- ---------------------------- Chief Executive Officer
John W. Rowe and Director (principal
executive officer)
John C. Bukovski
- ---------------------------- Senior Vice
John C. Bukovski President(principal
financial officer)
Robert E. Berdelle Comptroller (principal
- ---------------------------- accounting officer)
Robert E. Berdelle

Edward A. Brennan* Director
James W. Compton* Director
Bruce DeMars* Director
Sue L. Gin* Director
Donald P. Jacobs* Director
Edgar D. Jannotta* Director

David A. Scholz
*By
--------------------------------
David A. Scholz, Attorney-in-
fact

[Signature page to Unicom Corporation Annual Report on Form 10-K]

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS
REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF CHICAGO AND STATE OF ILLINOIS ON THE 27TH
DAY OF MARCH, 1998.
COMMONWEALTH EDISON COMPANY
John W. Rowe
By
--------------------------------
John W. Rowe, Chairman,
President and Chief Executive
Officer

Edward A. Brennan* Director
James W. Compton* Director
Bruce DeMars* Director
Sue L. Gin* Director
Donald P. Jacobs* Director
Edgar D. Jannotta* Director

David A. Scholz
*By
--------------------------------
David A. Scholz, Attorney-in-
fact

[Signature page to Commonwealth Edison Company Annual Report on Form 10-K]

Unicom Corporation and
Commonwealth Edison Company
Form 10-K
File Nos. 1-11375 and 1-1839

EXHIBIT INDEXitem.

1. Exhibits:

The following exhibits are filed with the indicated Annual Report on Form
10-K or incorporated therein by reference. Documents indicated by an
asterisk (*) are incorporated by reference to the File No. indicated.
Documents indicated by a plus sign (+) identify management contracts or
compensatory plans or arrangements.

Exhibit
Number Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----

*(2)-1 Asset Sale Agreement dated March 22, 1999 between x
ComEd and Edison Mission Energy. (File No. 1-
1839, Form 10-K for the year ended December 31,
1998, Exhibit (2)-1).
*(2)-2 Amended and Restated Agreement and Plan of Ex-
change and Merger, dated as of September 22,
1999, amended and restated as of January 7,
2000, among Unicom, PECO and Newholdco. (File
Nos. 1-11375 and 1-1839, Current Report on Form
8-K dated January 7, 2000, Exhibit (2)-1). x x
*(3)-1 Articles of Incorporation of Unicom effective
January 28,
1994. (File No. 1-11375, Form 10-K for the year
ended
December 31, 1994, Exhibit (3)-1). x
*(3)-2 Restated Articles of Incorporation of ComEd ef-
fective February 20, 1985, including Statements
of Resolution Establishing Series, relating to
the establishment of three new series of ComEd
preference stock known as the "$9.00 Cumulative
Preference Stock," the "$6.875 Cumulative Pref-
erence Stock" and the "$2.425 Cumulative Prefer-
ence Stock." (File No.
1-1839, Form 10-K for the year ended December
31, 1994, Exhibit (3)-2). x
(3)*(3)-3 By-Laws of Unicom Corporation, effective January
28, 1994 as amended through March 11, 1998.May 28, 1998 (File
No. 1-11375, Form 10-Q for the quarter ended
June 30, 1998, Exhibit (3)-3). x
(3)*(3)-4 By-Laws of Commonwealth Edison Company, effective
September 2, 1988 as amended through March 11,
1998.May 28,
1998 (File No. 1-1839, Form 10-Q for the quarter
ended June 30, 1998, Exhibit (3)-4). x
*(4)-1 Mortgage of ComEd to Illinois Merchants Trust
Company, Trustee (Harris Trust and Savings Bank,
as current successor Trustee), dated July 1,
1923, Supplemental Indenture thereto dated Au-
gust 1, 1944, and amendments and supplements
thereto dated, respectively, August 1, 1946,
April 1, 1953, March 31, 1967, April 1, 1967,
July 1, 1968, October 1, 1968, February 28,
1969, May 29, 1970, January 1, 1971, June 1, 1971, May 31, 1972,
June 1, 1973, June 15, 1973,
October 15, 1973, May 31, 1974, June 13, 1975, May
28, 1976 January 15, 1977 and June 3, 1977 (File No. 2-60201,
Form S-7, Exhibit 2-1). x

Exhibit
Number Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----

*(4)-2 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, May 17, 1978, August
31, 1978, June 18, 1979, June 20, 1980, April
16, 1981, April 30, 1982, April 15, 1983, April
13, 1984 and April 15, 1985 (File No. 2-99665,
Form S-3, Exhibit (4)-3). x

Exhibit
Number Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----

*(4)-3 Supplemental Indenture to Mortgage dated July 1,
1923 dated April 15, 1986 (File No. 33-6879,
Form S-3, Exhibit (4)-9). x
*(4)-4 Supplemental Indentures to Mortgage dated July 1,
1923 dated respectively, February 15, 1990 and
June 15, 1990 (File No. 33-38232,
Form S-3, Ex-
hibits (4)-11 andExhibit (4)-12). x
*(4)-5 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, June 1, 1991, October
1, 1991 and October 15, 1991 (File No. 33-44018,
Form S-3, Exhibits (4)-12, (4)-13 and (4)-14). x
*(4)-6 Supplemental Indenture to Mortgage dated July 1,
1923 dated February 1, 1992 (File No. 1-1839,
Form 10-K for the year ended December 31, 1991,
Exhibit (4)-18). x
*(4)-7 Supplemental Indenture to Mortgage dated July 1,
1923 dated May 15, 1992 (File No. 33-48542, Form
S-3, Exhibit (4)-14). x
*(4)-8 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, July 15, 1992 and SeptemberSep-
tember 15, 1992 (File No. 33-53766, Form S-3,
Exhibits (4)-13 and (4)-14). x
*(4)-9 Supplemental Indenture to Mortgage dated July 1,
1923 dated February 1, 1993 (File No. 1-1839,
Form 10-K for the year ended December 31, 1992,
ExhibitsExhibit (4)-14). x
*(4)-10 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, April 1, 1993 and
April 15, 1993 (File No. 33-64028, Form S-3, Ex-
hibits (4)-12 and (4)-13). x
*(4)-11 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, June 15, 1993 and July
1, 1993 (File No. 1-1839, Form 8-K dated May 21,
1993, Exhibits (4)-1 and (4)-2). x
*(4)-12 Supplemental Indenture to Mortgage dated July 1,
1923 dated July 15, 1993 (File No. 1-1839, Form
10-Q for the quarter ended June 30, 1993, Ex-
hibit (4)-1). x
*(4)-13 Supplemental Indenture to Mortgage dated July 1,
1923 dated January 15, 1994 (File No. 1-1839,
Form 10-K for the year ended December 31, 1993,
Exhibit (4)-15). x
*(4)-14 Supplemental Indenture to Mortgage dated July 1,
1923 dated December 1, 1994 (File No. 1-1839,
Form 10-K for the year ended December 31, 1994,
Exhibit (4)-16). x
*(4)-15 Supplemental Indenture to Mortgage dated July 1,
1923 dated June 1, 1996.1996 (File No. 1-1839, Form
10-K for the year ended December 31, 1996, Ex-
hibit (4)-16). x

231

Exhibit
Number Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----

*(4)-16 Instrument of Resignation, Appointment and Ac-
ceptance dated January 31, 1996, under the pro-
visions of the Mortgage dated July 1, 1923, and
Indentures Supplemental thereto (File No. 1-
1839, Form 10-K for the year ended December 31,
1995, Exhibit (4)-28). x
*(4)-17 Instrument dated as of January 31, 1996, for
trustee under the Mortgage dated July 1, 1923
and Indentures Supplemental thereto (File No. 1-
1839, Form 10-K for the year ended December 31,
1995, Exhibit (4)-29). x
*(4)-18 Indentures of ComEd to The First National Bank of
Chicago, Trustee (Amalgamated Bank of Chicago,
as current successor Trustee), dated April 1,
1949, October 1, 1949, October 1, 1950, October
1, 1954, January 1, 1958, January 1, 1959 and
December 1, 1961 (File No. 1-1839, Form 10-K for
the year ended December 31, 1982, Exhibit (4)-
20). x
*(4)-19 Indenture of ComEd dated February 15, 1973 to The
First National Bank of Chicago, Trustee (LaSalle
National Bank, successor Trustee), and Supple-
mental Indenture thereto dated July 13, 1973
(File No. 2-66100, Form S-16, Exhibit (b)-2). x

*(4)-20 Indenture dated as of September 1, 1987 between
ComEd and Citibank, N.A., Trustee relating to
Notes (File No. 33-20619, Form S-3, Exhibit (4)-
13). x
*(4)-21-20 Supplemental Indenture to Indenture dated Septem-
ber 1, 1987 dated July 14, 1989 (File No. 33-
32929, Form S-3, Exhibit (4)-16). x
(4)-22*(4)-21 Supplemental Indenture to Indenture dated Septem-
ber 1, 1987 dated January 1, 1997. x
*(4)-23(4)-22 Credit Agreement dated as of October 1, 1991,December 17, 1999,
among ComEd, as borrower, the Banks named
therein and the other Lenders from time to time
parties thereto, and Citibank, N.A. (File No. 1-
1839, Form 10-K for the year ended December 31,
1991, Exhibitx
(4)-27). x

Exhibit
Number Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----

*(4)-24-23 Credit Agreement dated as of October 1, 1991,December 17, 1999,
among ComEd, as borrower, the Banks named
therein and the other Lenders from time to time
parties thereto, and Citibank, N.A. (File No. 1-
1839, Form 10-K for the year ended December 31,
1991, Exhibit (4)-28). x
(4)-25 Letter Agreement dated as of September 29, 1997,
among ComEd and certain of the Banks party to
the-24 Credit Agreement dated as of October 1,
1991. x

*(4)-26 Amended and Restated Credit Agreement dated as of
November 15, 1996,December 17, 1999,
among Unicom Enterprises, the Banks Named
Therein and Citibank,Bank One, N.A. (File No.
1-11375, Form 10-K for the year ended December
31, 1996, Exhibitx
(4)-31). x

*(4)-27 Amended and Restated-25 Guaranty dated as of Novem-
ber 15, 1996,December 17, 1999, by Unicom
in favor of the Lenders and LC Banks parties to
the aforementioned Credit Agreement with Unicom
Enterprises (File
No. 1-11375, Form 10-K for the year ended Decem-
ber 31, 1996, Exhibit (4)-32).Enterprises. x
*(4)-28-26 Indenture dated September 1, 1995 between ComEd
and Wilmington Trust Company. (File No. 1-1839,
Form 10-K for the year ended December 31, 1996,
Exhibit (4)-34). x
*(4)-29-27 First Supplemental Indenture dated September 19,
1995 to Indenture dated September 19,
1995 to Indenture dated September 1, 1995. (File
No. 1-1839, Form 10-K for the year ended Decem-
ber 31, 1996, Exhibit (4)-35). x

Exhibit
(4)-35). xNumber Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----

*(4)-30-28 Second Supplemental Indenture dated January 24,
1997 to Indenture dated September 1, 1995. (File
No. 1-1839, Form 10-K for the year ended Decem-
ber 31, 1996, Exhibit (4)-36). x
*(4)-31-29 Rights Agreement dated as of February 2, 1998 betweenbe-
tween Unicom Corporation and First Chicago Trust
Company of New York, as Rights Agent, which includesin-
cludes as Exhibit A the Formform of Rights CertificateCertifi-
cate and as Exhibit B, the Summary of Rights to
Purchase Common Stock (File No. 1-11375, Current
Report on Form 8-K dated February 2, 1998, ExhibitEx-
hibit 4). x
*(4)-30 Amendment dated as of September 22, 1999 to the
aforemention Rights Agreement between Unicom
Corporation and First Chicago Trust Company of
New York, as Rights Agent (File Nos. 1-11375 and
1-1839, Current Report on Form 8-K dated Septem-
ber 22, 1999, Exhibit (4)-1).
*(10)-1 Nuclear Fuel Lease Agreement dated as of November
23, 1993, between CommEd Fuel Company, Inc., as
Lessor, and ComEd, as Lessee (File No. 1-1839,
Form 10-K for the year ended December 31, 1993,
Exhibit (10)-1). x
+*(10)-2 Unicom Corporation Amended and Restated Long-Term
Incentive Plan (File No. 1-11375, Unicom Proxy
Statement dated April 9, 1997,7, 1999, Exhibit A). x
+*(10)-3 1995 Long-Term Performance Unit Award for
Executive and Group Level Employees Payable in
1998 under the Unicom Corporation Long-Term
Incentive Plan, as amended (File Nos. 1-11375 and
1-1839, Form 10-K for the year ended December
31, 1995, Exhibit (10)-6). x x

Exhibit
Number Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----

+*(10)-4 1996 Long-Term Performance Unit Award for Execu-
tive and Group Level Employees Payable in 1999
under the Unicom Corporation Long-Term Incentive
Plan (File Nos. 1-11375 and 1-1839, Form 10-K
for the year ended December 31, 1995, Exhibit
(10)-9). x x

+*(10)-5 1997 Long-Term Performance Unit Award for Execu-
tive and Group Level Employees Payable in 2000
under the Unicom Corporation Long-Term Incentive
Plan. (File Nos. 1-11375 and 1-1839, Form 10-K
for the year ended December 31, 1996, Exhibit
(10)-12). x x
+(10)-6+*(10)-4 1998 Long-Term Performance Unit Award for
Executive and Group Level Employees Payable in
2001 under the Unicom Corporation Long-Term
Incentive Plan. (File Nos. 1-11375 and 1-1839,
Form 10-K for the year ended December 31, 1997,
Exhibit (10)-6). x x
+(10)-5 1999 Long-Term Performance Unit Award for Execu-
tive and Group Level Employees Payable in 2002
under the Unicom Corporation Long-Term Incentive
Plan. x x
+*(10)-7-6 Unicom Corporation General Provisions Regarding
1996 Stock Option Awards Granted under the
Unicom Corporation Long-Term Incentive Plan.
(File Nos. 1-11375 and 1-1839, Form 10-K for the
year ended December 31, 1996, Exhibit (10)-9). x x
+*(10)-8-7 Unicom Corporation General Provisions Regarding
1996B Stock Option Awards Granted under the
Unicom Corporation Long-Term Incentive Plan.
(File Nos. 1-11375 and 1-1839, Form 10-K for the
year ended December 31, 1996, Exhibit (10)-11). x x
+(10)-9+*(10)- Unicom Corporation General Provisions Regarding
8 Stock Option Awards Granted under the
Unicom Corporation Long-Term Incentive Plan
(Effective July 10, 1997). x x

+*(10)-10 1997 Annual Incentive Award for Managment
Employees under the Unicom
Corporation Long-Term Incentive Plan. (File Nos. 1-11375 and 1-1839,
Form 10-K for the year ended December 31, 1996,Plan (Effective
July 10, 1997). x x

Exhibit
(10)-13). x x

+*(10)-11 1997 Award to Mr. O'Connor, Mr. Mullin and Mr.
Skinner under theNumber Description of Document Unicom Corporation Long-Term
Incentive Plan. x xComEd
------- ------------------------------------------------- ------ -----

+(10)-12 1998-9 1999 Annual Incentive Award for Management
Employees under the Unicom Corporation Long-Term
Incentive Plan. x x
+*(10)-13-10 Unicom Corporation Deferred Compensation Unit
Plan, as amended (File Nos. 1-11375 and 1-1839,
Form 10-K for the year ended December 31, 1995,
Exhibit (10)-12). x x
+*(10)-14-11 Deferred Compensation Plan (included in Article
Five of Exhibit (3)-2 above). x
+*(10)-15-12 Management Incentive Compensation Plan, effective
January 1, 1989 (File No. 1-1839, Form 10-K for
the year ended December 31, 1988, Exhibit (10)-
4). x
+*(10)-16-13 Amendments to Management Incentive Compensation
Plan, dated December 14, 1989 and March 21, 1990
(File No. 1-1839, Form 10-K for the year ended
December 14,31, 1989, and March 21, 1990
(File No. 1-1839, Form 10-K for the year ended
December 31, 1989, Exhibit (10)-5). x

5
Exhibit Number Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----
(10)-5). x
+*(10)-17-14 Amendment to Management Incentive Compensation
Plan, dated March 21, 1991 (File No. 1-1839,
Form 10-K for the year ended December 31, 1991,
Exhibit (10)-6). x
+*(10)-18-15 Retirement Plan for Directors, effective
Septem-
berSeptember 1, 1994, as amended through March 12,
1997. (File No. 1-11375, Form 10-K for the year
ended December 31, 1996, Exhibit (10)-19). x
+*(10)-19-16 Retirement Plan for Directors, effective January
1, 1987, as amended through March 12, 1997.
(File No. 1-1839 Form 10-K for the year ended
December 31, 1996, Exhibit (10)-20) x
+*(10)-20-17 Unicom Corporation 1996 Directors' Fee Plan (File
No. 1-11375, Unicom Proxy Statement dated April
8, 1996, Appendix A). x x
+*(10)-18 Employment Agreement among Unicom, ComEd and John
W. Rowe dated as of March 10, 1998. (File Nos.
1-11375 and 1-1839, Form 10-Q for the quarter
ended March 31, 1998, Exhibit (10)-3). x x
+*(10)-19 First Amendment dated December 1, 1998 to
Employment Agreement dated March 10, 1998
between Unicom, ComEd and John Rowe. (File Nos.
1-11375 and 1-1839, Form 10-K for the year ended
December 31, 1998, Exhibit (10)-19). x x
+*(10)-20 Second Amendment dated January 27, 1999 to
Employment Agreement dated March 10, 1998
between Unicom, ComEd and John Rowe. (File Nos.
1-11375 and 1-1839, Form 10-K for the year ended
December 31, 1998, Exhibit (10)-20). x x
+*(10)-21 Third Amendment dated March 8, 1999 to Employment
Agreement dated March 10, 1998 between Unicom,
ComEd and John Rowe. (File Nos. 1-11375 and 1-
1839, Form 10-K for the year ended December 31,
1998, Exhibit (10)-21). x x
+*(10)-22 Employment Agreement dated November 1, 1997
between ComEd and Oliver D. Kingsley, Jr. (File
Nos. 1-11375 and 1-1839, Form 10-K for the year
ended December 31, 1998, Exhibit (10)-22). x x

Exhibit
Number Description of Document Unicom ComEd
------- -------------------------------------------- ------ -----

+*(10)-23 Unicom Corporation Stock Award Agreement
dated January 25, 1999 between Unicom
Corporation and Oliver D. Kingsley, Jr.
(File Nos. 1-11375 and 1-1839, Form 10-K
for the year ended December 31, 1998,
Exhibit (10)-23). x x
+*(10)-24 Change in Control Agreement between Unicom
Corporation, ComEd and certain senior
executives. (File Nos. 1-11375 and 1-1839,
Form 10-K for the year ended December 31,
1998, Exhibit (10)-24). x x
+*(10)-25 Executive Group Life Insurance Plan (File
No. 1-
1839,1-1839, Form 10-K for the year ended
December 31, 1980, Exhibit (10)-3). x
+*(10)-22-26 Amendment to the Executive Group Life InsuranceInsur-
ance Plan (File No. 1-1839, Form 10-K for
the year ended December 31, 1981, Exhibit
(10)-4). x
+*(10)-23-27 Amendment to the Executive Group Life InsuranceInsur-
ance Plan dated December 12, 1986 (File No.
1-1839, Form 10-K for the year ended DecemberDecem-
ber 31, 1986, Exhibit (10)-6). x
+*(10)-24-28 Amendment of Executive Group Life Insurance
Plan to implement program of "split dollar
life in-
surance"insurance" dated December 13, 1990
(File No. 1-
1839,1-1839, Form 10-K for the year
ended December 31, 1990, Exhibit (10)-10). x
+*(10)-25-29 Commonwealth Edison Company Supplemental
Manage-
mentManagement Retirement PlanPlan. (File No. 1-1839,1-
1839, Form 10-K for the year ended December
31, 1985,1998, Exhibit (10)-6)-29). x
+*(10)-26-30 Amendment of Executive Group Life Insurance
Plan to stabilize the death benefit applicableappli-
cable to participants dated July 22, 1992
(File No. 1-
1839,1-1839, Form 10-K for the year
ended December 31, 1992, Exhibit (10)-13). x
+*(10)-27 Letter Agreement dated December 16, 1992 between
ComEd and Samuel K. Skinner (File No. 1-1839,
Form 10-K for the year ended December 31, 1992,
Exhibit (10)-14). x

+*(10)-28 Amendment dated May 31, 1995 to Letter Agreement
dated December 16, 1992 between ComEd and Samuel
K. Skinner (File No. 1-1839, Form 10-K for the
year ended December 31, 1995, Exhibit (10)-27). x

+*(10)-29 Amendments dated December 11, 1996 and March 24,
1997 to Letter Agreement dated December 16, 1992
between ComEd and Samuel K. Skinner. (File No.
1-1839, Form 10-K for the year ended December
31, 1996, Exhibit (10)-30). x

+*(10)-30 Letter Agreement dated November 14, 1995 between
ComEd and Leo F. Mullin (File No. 1-1839, Form
10-K for the year ended December 31, 1995, Ex-
hibit (10)-28). x

Exhibit
Number Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----

+*(10)-31 Amendment dated March 24, 1997 to Letter Agree-
ment dated November 14, 1995 between ComEd and
Leo F. Mullin. (File No. 1-1839, Form 10-K for
the year ended December 31, 1996, Exhibit (10)-
32). x

+*(10)-32 Commonwealth Edison Company Excess Benefit
Sav-
ingsSavings Plan (File No. 1-1839, Form 10-Q
for the quarter ended JuneSeptember 30, 1994,1998,
Exhibit (10)-2)-1). x
+*(10)-33-32 Amendment No. 1 to Commonwealth Edison CompanyCom-
pany Excess Benefit Savings Plan dated May
24, 1995 (File No. 1-1839, Form 10-K for
the year ended December 31, 1995, Exhibit
(10)-30). x
+(10)-34+*(10)-33 Amendment No. 2 to Commonwealth Edison CompanyCom-
pany Excess Benefit Savings Plan effective
as of September 1, 1997. (File No. 1-1839,
Form 10-K for the year ended December 31,
1997, Exhibit (10)-34) x
+*(10)-35-34 Unicom Corporation Stock Bonus Deferral Plan
(File Nos. 1-11375 and 1-1839, Form 10-Q
for the quarter ended September 30, 1998,
Exhibit (10)-3) x x
+*(10)-35 Form of Stock Award Agreement under the
Unicom Corporation Long-Term Incentive Plan
(File Nos. 1-11375 and 1-1839, Form 10-K
for the year ended December 31, 1995,1997, Ex-
hibit (10)-37). x x

Exhibit
Number Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----
(10)-31). x x

+(10)-36 Amendment No. 1 to-38 Amended and Restated Key Management Severance
Plan for Unicom Corporation Stock
Bonus Deferral Planand Commonwealth Ed-
ison Company dated January 3, 1997. x x

+(10)-37 Form of Stock Award Agreement under the Unicom
Corporation Long-Term Incentive Plan.March 8, 1999. x x
(12) Statement re computation of ratios of earnings to
fixed charges and ratios of earnings to fixed
charges and preferred and preference stock divi-
dend requirements for ComEd. x
(18)*(18) Letter from independent public accountants regardingre-
garding change in accounting principle.principle (File
Nos. 1-11375 and 1-1839, Form 10-K for the year
ended December 31, 1997, Exhibit (18)). x x
(21)-1 Subsidiaries of Unicom. x
(21)-2 Subsidiaries of ComEd. x
(23)-1 Consent of experts for Unicom. x
(23)-2 Consent of experts for ComEd. x
(24)-1 Powers of attorney of Directors whose names are
signed to the Unicom Annual Report on Form 10-K
pursuant to such powers. x

(24)-2 Powers of attorney of Directors whose names are
signed to theand ComEd Annual Report on
Form 10-K pursuant to such powers. x (99)-1 Unicom's Current Report on Form 8-K dated January
30, 1998.x
(27) Unicom Financial Data Schedule x
(99)-2-1 ComEd's Current Report on Form 8-K dated JanuaryMarch
30, 1998.2000. x

(b) Reports on Form 8-K:

A Current Report on Form 8-K dated October 12, 1999 was filed by
Unicom and ComEd providing additional information regarding the
transactions contemplated by the Merger Agreement before Unicom
commences repurchases of shares of its common stock.

A Current Report on Form 8-K dated December 15, 1999 was filed by
Unicom and ComEd announcing the completion on the sale of its fossil
generating plants to EME.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SUPPLEMENTAL SCHEDULE

To Commonwealth Edison Company:

We have audited, in accordance with auditing standards generally accepted in
the United States, the consolidated financial statements of Commonwealth
Edison Company and subsidiary companies incorporated by reference in this
Annual Report on Form 10-K, and have issued our report thereon dated January
31, 2000.

Arthur Andersen LLP
Chicago, Illinois
January 31, 2000

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Chicago and state of Illinois on the 30th
day of March, 2000.
UNICOM CORPORATION
/s/ John W. Rowe
By
--------------------------------
John W. Rowe, Chairman,
President and Chief Executive
Officer

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the registrant and in the capacities indicated on the 30th day of
March, 2000.
Signature
- ----------------------------
Title
---------------------

/s/ John W. Rowe Chairman, President and
- ---------------------------- Chief Executive Officer
John W. Rowe and Director (principal
executive officer)
/s/ Ruth Ann M. Gillis
- ---------------------------- Senior Vice
Ruth Ann M. Gillis President(principal
financial officer)
/s/ Robert E. Berdelle Vice President and Comptroller
- ---------------------------- (principal accounting officer)
Robert E. Berdelle

Edward A. Brennan* Director
Carlos Cantu* Director
James W. Compton* Director
Bruce DeMars* Director
Sue L. Gin* Director
Donald P. Jacobs* Director
Edgar D. Jannotta* Director
John W. Rogers, Director
Jr.*
Richard L. Thomas* Director

/s/ John P. McGarrity
*By
--------------------------------
John P. McGarrity, Attorney-
in-fact

[Signature page to Unicom Corporation Annual Report on Form 10-K]

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Chicago and state of Illinois on the 30th
day of March, 2000.
COMMONWEALTH EDISON COMPANY
/s/ John W. Rowe
By
--------------------------------
John W. Rowe, Chairman,
President and Chief Executive
Officer

/s/ John P. McGarrity
*By
--------------------------------
John P. McGarrity, Attorney-
in-fact

[Signature page to Commonwealth Edison Company Annual Report on Form 10-K]

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

INDEX

Page
----

Definitions............................................................... F-2

Supplementary Data
- ------------------

Operating Statistics...................................................... F-3
Summary of Selected Consolidated Financial Data........................... F-4
Price Range and Cash Dividends Paid per Share of Common Stock............. F-4
Quarterly Financial Data.................................................. F-4

Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... F-5

Report of Independent Public Accountants.................................. F-25

Consolidated Financial Statements
- ---------------------------------

Statements of Consolidated Operations for the years 1999, 1998 and 1997... F-26
Consolidated Balance Sheets as of December 31, 1999 and 1998.............. F-27
Statements of Consolidated Capitalization as of December 31, 1999 and
1998..................................................................... F-29
Statements of Consolidated Retained Earnings/(Deficit) for the years 1999,
1998 and 1997............................................................ F-30
Statements of Consolidated Comprehensive Income for the years 1999, 1998
and 1997................................................................. F-30
Statements of Consolidated Cash Flows for the years 1999, 1998 and 1997... F-31

Notes to Financial Statements............................................. F-32

Financial Statement Schedules
- -----------------------------

Schedule II--Valuation and Qualifying Accounts for the years 1997-1999.... F-62

The individual financial statements and schedules of ComEd's nonconsolidated
wholly owned subsidiaries have been omitted from Unicom and ComEd's Annual
Reports on Form 10-K because the investments are not material in relation to
ComEd's financial position or results of operations. As of December 31, 1999,
the assets of the nonconsolidated subsidiaries, in the aggregate, were less
than 1% of ComEd's consolidated assets. The 1999 revenues of the
nonconsolidated subsidiaries, in the aggregate, were less than 1% of ComEd's
consolidated annual revenues.

F-1

DEFINITIONS

The following terms are used in this document with the following meanings:

Term Meaning
---------------------- -------------------------------------------------------

1997 Act Illinois Electric Service Customer Choice and Rate
Relief Law of 1997, as amended
AFUDC Allowance for funds used during construction
APB Accounting Principles Board
APX Automated Power Exchange Inc., a California company
ARES Alternative Retail Electric Suppliers
CERCLA Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended
City City of Chicago
ComEd Commonwealth Edison Company, a Unicom subsidiary
ComEd Funding ComEd Funding, LLC, a ComEd subsidiary
ComEd Funding Trust ComEd Transitional Funding Trust, a ComEd Funding
subsidiary
Congress U.S. Congress
Cotter Cotter Corporation, a ComEd subsidiary
CTC Non-bypassable "competitive transition charge"
DOE U.S. Department of Energy
Edison Development Edison Development Canada Inc., a ComEd subsidiary
EME Edison Mission Energy, an Edison International
subsidiary
EPS Earnings/(Loss) per Common Share
ESPP Employee Stock Purchase Plan
FAC Fuel adjustment clause
FASB Financial Accounting Standards Board
FERC Federal Energy Regulatory Commission
Fossil Plant ComEd's six coal-fired generating plants, an oil and
gas-fired plant, and nine peaking unit sites
GAAP Generally Accepted Accounting Principles
ICC Illinois Commerce Commission
IDR Illinois Department of Revenue
Indiana Company Commonwealth Edison Company of Indiana, Inc., a ComEd
subsidiary
INPO Institute of Nuclear Power Operations
ISO Independent System Operator
MGP Manufactured gas plant
NEIL Nuclear Electric Insurance Limited
Northwind Midway Northwind Midway, LLC, a UT Holdings subsidiary
NRC Nuclear Regulatory Commission
O&M Operation and maintenance
PECO PECO Energy Company, a Pennsylvania company
RES Retail Electric Supplier
SEC Securities and Exchange Commission
SFAS Statement of Financial Accounting Standards
SPEs Special purpose entities
S&P Standard & Poor's
Trusts ComEd Financing I and ComEd Financing II, ComEd
subsidiaries
Trust Securities ComEd-obligated mandatorily redeemable preferred
securities of subsidiary trusts holding solely ComEd's
subordinated debt securities
Unicom Unicom Corporation
Unicom Energy Services Unicom Energy Services Inc., a Unicom Enterprises
subsidiary
Unicom Enterprises Unicom Enterprises Inc., a Unicom subsidiary
Unicom Investment Unicom Investment Inc., a Unicom Enterprises subsidiary
Unicom Power Holdings Unicom Power Holdings Inc., a Unicom Enterprises
subsidiary
Unicom Thermal Unicom Thermal Technologies Inc., a UT Holdings
subsidiary
U.S. EPA U.S. Environmental Protection Agency
UT Holdings UT Holdings Inc., a Unicom Enterprises subsidiary

F-2

Operating Statistics

Year Ended December 31
-------------------------------------
1999 1998 1997
----------- ----------- -----------
Operating Revenues (thousands of dol-
lars):
Residential........................... $ 2,205,066 $ 2,551,741 $ 2,552,742
Small commercial and industrial....... 2,196,069 2,187,532 2,153,113
Large commercial and industrial....... 1,290,926 1,406,720 1,467,574
Public authorities.................... 463,482 510,185 505,907
Electric railroads.................... 20,317 31,022 29,785
Provisions for revenue refunds--ulti-
mate consumers....................... -- (21,848) (45,470)
Sales for resale...................... 490,938 349,818 336,480
Other revenues........................ 181,149 88,240 82,891
----------- ----------- -----------
Total.............................. $ 6,847,947 $ 7,103,410 $ 7,083,022
=========== =========== ===========
Sales (millions of kilowatthours):
Residential........................... 23,716 23,942 22,151
Small commercial and industrial....... 29,125 27,005 25,859
Large commercial and industrial....... 22,474 24,043 24,074
Public authorities.................... 7,778 7,472 7,323
Electric railroads.................... 408 433 418
Sales for resale...................... 19,487 12,262 15,679
----------- ----------- -----------
Total.............................. 102,988 95,157 95,504
=========== =========== ===========
Sources of Electric Energy (millions of
kilowatthours):
Generation--
Nuclear.............................. 73,684 53,958 49,136
Fossil............................... 25,873 29,212 36,604
Fast-start peaking units............. 127 132 121
----------- ----------- -----------
Net generation..................... 99,684 83,302 85,861
Purchased power....................... 11,079 20,704 16,672
Company use and losses................ (7,775) (6,367) (7,029)
----------- ----------- -----------
Total.............................. 102,988 97,639 95,504
=========== =========== ===========
Cost of Fuel Consumed (per kilowatt-
hours):
Nuclear............................... 0.52c 0.53c 0.54c
Coal.................................. 2.26c 2.51c 2.44c
Oil................................... 5.43c 6.26c 5.50c
Natural gas........................... 3.22c 3.04c 3.50c
Average all fuels..................... 1.00c 1.27c 1.40c
Peak Load (kilowatts).................. 21,243,000 19,012,000 18,497,000
Number of Customers (at end of year):
Residential........................... 3,145,712 3,134,490 3,123,364
Small commercial and industrial....... 309,828 304,208 291,143
Large commercial and industrial....... 1,783 1,794 1,566
Public authorities and electric rail-
roads................................ 18,196 14,051 12,182
Sales for resale...................... 58 62 51
----------- ----------- -----------
Total.............................. 3,475,577 3,454,605 3,428,306
=========== =========== ===========
Average Annual Revenue per Residential
Customer.............................. $ 700.98 $ 814.08 $ 817.31
Average Kilowatthour Use per Residen-
tial Customer......................... 7,546 7,642 7,108
Average Revenue per Kilowatthour:
Residential........................... 9.30c 10.66c 11.52c
Small commercial and industrial....... 7.54c 8.10c 8.33c
Large commercial and industrial....... 5.74c 5.85c 6.10c

F-3

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

Summary of Selected Consolidated Financial Data

1999 1998 1997 1996 1995
------- ------- ------- ------- -------
(Millions Except per Share Data)

Operating revenues........... $ 6,848 $ 7,103 $ 7,083 $ 6,937 $ 6,910
Net income (loss)............ $ 570(1) $ 510 $ (853)(2) $ 666 $ 640(3)
Basic earnings (loss) per
common share................ $ 2.62(1) $ 2.35 $ (3.94)(2) $ 3.09 $ 2.98(3)
Diluted earnings (loss) per
common share................ $ 2.61(1) $ 2.34 $ (3.94)(2) $ 3.09 $ 2.98(3)
Cash dividends declared per
common share................ $ 1.60 $ 1.60 $ 1.60 $ 1.60 $ 1.60
Total assets (at end of
year)....................... $23,406 $25,690 $22,700 $23,388 $23,250
Long-term obligations at end
of year excluding current
portion:
Long-term debt, preference
stock and preferred
securities subject to
mandatory redemption
requirements.............. $ 7,480 $ 8,212 $ 6,262 $ 6,487 $ 7,011
Accrued spent nuclear fuel
disposal fee and related
interest................... $ 763 $ 728 $ 693 $ 657 $ 624
Capital lease obligations... $ 162 $ 334 $ 438 $ 477 $ 376
Other long-term obligations. $ 3,182 $ 2,951 $ 3,183 $ 1,991 $ 1,826

- --------
(1) Includes an extraordinary loss related to the early redemption of long-
term debt of $28 million (after-tax) or $0.13 per common share (diluted).
Also, includes $12 million (after-tax), or $0.05 per common share
(diluted), for premiums paid in connection with the redemption of
preference stock.
(2) Includes an extraordinary loss for the write-off of generation-related net
regulatory assets of $810 million (after-tax), or $3.75 per common share
(basic), the loss on the early retirement of Zion nuclear generating
station of $523 million (after-tax), or $2.42 per common share (basic),
and the positive impact of a one-time cumulative effect for a change in
accounting principle for revenue recognition of $197 million (after-tax),
or $0.91 per common share (basic).
(3) Includes an extraordinary loss related to the early redemption of long-
term debt of $20 million (after-tax), or $0.09 per common share (basic).

Price Range* and Cash Dividends Paid per Share of Common Stock

1999 (by quarters) 1998 (by quarters)
--------------------------------- ---------------------------------
Fourth Third Second First Fourth Third Second First
-------- ------- -------- ------- -------- ------ -------- --------

Price range:
High................... 39 9/16 42 3/16 42 13/16 39 1/4 41 3/16 38 36 15/16 35 13/16
Low.................... 30 15/16 35 5/8 35 1/2 33 9/16 36 13/16 33 3/8 32 9/16 30
Cash dividends paid..... 40c 40c 40c 40c 40c 40c 40c 40c

* As reported as NYSE Composite Transactions.
- --------

Unicom's common stock is traded on the New York, Chicago and Pacific stock
exchanges, with the ticker symbol UCM. At December 31, 1999, there were
approximately 111,167 holders of record of Unicom's common stock.

Quarterly Financial Data

Average
Number of Diluted
Common Earnings
Shares Per
Operating Operating Net Outstanding Common
Three Months Ended Revenues Income Income (Diluted) Share
- ------------------ ---------- --------- -------- ----------- --------
(Thousands Except per Share Data)

March 31, 1999............... $1,537,804 $255,951 $ 69,643 217,780 $0.32
June 30, 1999................ $1,685,714 $227,270 $119,392 218,330 $0.55
September 30, 1999........... $2,084,454 $429,428 $279,752 218,265 $1.28
December 31, 1999............ $1,539,975 $273,791 $100,879 217,980 $0.46

March 31, 1998............... $1,664,897 $195,902 $ 53,715 217,386 $0.25
June 30, 1998................ $1,779,146 $220,616 $ 80,458 217,643 $0.37
September 30, 1998........... $2,095,699 $400,186 $264,822 217,761 $1.22
December 31, 1998............ $1,563,668 $225,713 $111,189 217,994 $0.51

F-4

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Changes in the Electric Utility Industry

Unicom and its predominant business, electric energy generation,
transmission and distribution, are in a period of fundamental change. These
changes are attributable to changes in technology and regulation. Federal law
and regulations have been amended to provide for open transmission system
access, and various states, including Illinois, are considering, or have
adopted, new regulatory structures to allow access by some or all customers to
energy suppliers, in addition to the local utility.

Electric Utility Industry. The electric utility industry historically has
consisted of vertically integrated companies which combine generation,
transmission and distribution assets; serve customers within relatively
defined service territories; and operate under extensive regulation with
respect to rates, operations and other matters. Utilities have operated under
a regulatory compact with the state, with a statutory obligation to serve all
of the electricity needs within their service territory in a nondiscriminatory
manner. Historically, investment and operating decisions have been made based
upon the utilities' respective assessment of the current and projected needs
of their customers. In view of this obligation, regulation has focused on
investment and operating costs, and rates have been based on recovery of some
or all of such prudently incurred costs plus a return on invested capital.
Such rate regulation, and the ability of utilities to recover investment and
other costs through rates, have provided the basis for recording certain costs
as regulatory assets. These assets represent costs which are allocated over
future periods reflecting related regulatory treatment, rather than expensed
in the current period.

Federal Regulation. The Federal Energy Policy Act of 1992, among other
things, empowered the FERC to introduce a greater level of competition into
the wholesale marketplace for electric energy. Under FERC Order No. 888,
utilities are required to file open access tariffs with regard to their
transmission systems. These tariffs set forth the terms, including prices,
under which other parties and the utility's wholesale marketing function may
use the utility's transmission system. ComEd has an approved open access
tariff with the FERC. A companion FERC rule, Order No. 889, requires the
separation of the transmission operations and wholesale marketing functions so
as to ensure that unaffiliated third parties have access to the same
information as to system availability and other requirements. The FERC Order
further requires utilities to operate an electronic bulletin board to make
transmission price and access data available to all potential users. A key
feature of FERC Order No. 888 is that it contemplates full recovery of a
utility's costs "stranded" by competition. These costs are "stranded" or
"strandable" to the extent market-based rates would be insufficient to allow
for their full recovery. To recover stranded costs, the utility must show that
it had a reasonable expectation that it would continue to serve the customer
in question under its regulatory compact. In addition, some governmental
entities, such as cities, may elect to "municipalize" a utility's distribution
facilities through condemnation proceedings. Such municipalities would then be
able to purchase electric power on a wholesale basis and resell it to
customers over the newly acquired facilities. The FERC Order provides for the
recovery of a utility's investment stranded by municipalization.

The 1997 Act. In December 1997, the Governor of Illinois signed into law the
1997 Act, which established a phased process to introduce competition into the
electric industry in Illinois under a less regulated structure. The 1997 Act
was amended in June 1999.

As a result of the 1997 Act and FERC rules, prices for the supply of
electric energy are expected to change from cost-based, regulated rates to
rates determined by competitive market forces. Accordingly, the 1997 Act
provides for, among other things, gradual customer access to other electric
suppliers or a power purchase option which allows the purchase of electric
energy from ComEd at

F-5

market based prices, and the collection of a CTC from customers who choose to
purchase electric energy from a RES or elect the power purchase option during
a transition period that extends through 2006. Effective October 1, 1999, the
CTC was established in accordance with a formula defined in the 1997 Act. The
CTC, which is applied on a cents per kilowatthour basis, considers the revenue
which would have been collected from a customer under tariffed rates, reduced
by the revenue the utility will receive for providing delivery services to the
customer, the market price for electricity and a defined mitigation factor,
which represents the utility's opportunity to develop new revenue sources and
achieve cost savings. The CTC allows ComEd to recover some of its costs which
might otherwise be unrecoverable under market-based rates. Nonetheless, ComEd
will need to take steps to address the portion of such costs which are not
recoverable through the CTC. Such steps may include cost control efforts,
developing new sources of revenue and asset dispositions. See "Response to
Regulatory Changes" and "Fossil Plant Sale" below for additional information.

Utilities are required to continue to offer delivery services, including the
transmission and distribution of electric energy, such that customers who
select a RES can receive electric energy from that supplier using existing
transmission and distribution facilities. Such services will continue to be
offered under cost-based, regulated rates. The ICC issued orders in August and
September approving, with modifications, ComEd's delivery service tariffs.

The 1997 Act committed ComEd to spend at least $2 billion during the period
1999 through 2004 on transmission and distribution facilities outside of the
City and to contribute $250 million to an environmental trust, as a result of
closing of the fossil plant sale.

Notwithstanding the rate reductions and subject to certain earnings tests, a
rate freeze will generally be in effect until at least January 1, 2005. During
this period, utilities may reorganize, sell or assign assets, retire or remove
plants from service, and accelerate depreciation or amortization of assets
with limited ICC regulatory review. A utility may request a rate increase
during the rate freeze period only when necessary to ensure the utility's
financial viability, but not before January 1, 2000. Under the earnings
provision of the 1997 Act, if the earned return on common equity of a utility
during this period exceeds an established threshold, one-half of the excess
earnings must be refunded to customers. The threshold rate of return on common
equity for ComEd is based on the 30-Year Treasury Bond rate, plus 5.5% in the
years 1998 and 1999, and plus 8.5% in the years 2000 through 2004. The
utility's earned return on common equity and the threshold return on common
equity are each calculated on a two-year average basis. The earnings sharing
provision is applicable only to ComEd's earnings. In accordance with the
provisions of the 1997 Act, increased amortization of regulatory assets may be
recorded, thereby reducing the earned return on common equity, if earnings
otherwise would have exceeded the maximum allowable rate of return. The
potential for earnings sharing or increased amortization of regulatory assets
could limit earnings in future periods.

F-6

The 1997 Act also requires utilities to establish or join an ISO that will
independently manage and control utility transmission systems. Additionally,
the 1997 Act includes the leveling of certain regulatory requirements to
permit operational flexibility, the leveling of certain regulatory and tax
provisions as applied to various electric suppliers and a new, more stringent,
reliability requirement applicable to ComEd in the event of a major outage.
See "Response to Regulatory Changes" below for additional information.

See Notes 1, under "Regulatory Assets and Liabilities," and 3 of Notes to
Financial Statements for the accounting effects related to the 1997 Act.

Response to Regulatory Changes. Unicom has announced several business and
operational objectives designed to focus efforts in responding to the energy
market changes that are expected to develop from the 1997 Act. Among other
things, these strategic objectives call for a focus on operations to: (1)
provide a reliable supply of electricity as the competitive marketplace
evolves, (2) become a top quartile operator of competitive nuclear plants, (3)
deliver competitive earnings while restructuring the balance sheet to reflect
the realities of the marketplace, (4) expand the offering of energy-related
products and services, and (5) transform the corporate culture of Unicom.

Under the 1997 Act, the role of electric utilities in the supply and
delivery of energy is expected to change. Utilities, such as ComEd,
traditionally have been responsible for providing both adequate supply and
reliable delivery of electricity to customers within their service areas. In
the future, ComEd will continue to be obligated to provide a reliable delivery
system. However, ComEd will be obligated to supply electricity only to those
customers that it continues to serve under tariffs for electricity, but not
for those customers who choose to rely on the marketplace. Nonetheless, during
the transition period to a competitive supply marketplace, ComEd must provide
both an adequate supply and reliable delivery of electricity. Given the tight
capacity situation in ComEd's market, ComEd will be working to maintain its
available capacity, as well as working to assist in the development of a
competitive supply marketplace in Illinois.

ComEd has a significant commitment to, and investment in, nuclear generating
capacity. ComEd has installed a management team responsible for improving
nuclear operations. Such improvements are aimed at increasing levels of energy
generation, or capacity factors, at ComEd's nuclear generating units while
simultaneously improving ComEd's record of meeting NRC requirements and INPO
performance standards. Increased capacity factors generally result in lower
unit production costs and an improved opportunity to generate and sell
electricity in a competitive marketplace. Efforts are also being made to
control capital and operating costs through increased efficiencies, such as
the reduction of downtime and expenses associated with generating unit
maintenance and refueling outages.

ComEd also evaluated the recoverability of its generating plant investment
in 1998 as a result of the 1997 Act. See Note 1 of Notes to Financial
Statements, under "Regulatory Assets and Liabilities," for additional
information. Notwithstanding these efforts, there continues to be an ongoing
analysis of the ability of ComEd's various nuclear plants to generate and
deliver electric energy safely at

F-7

competitive prices in the competitive market for energy. Although short-term
system reliability and capacity constraints are likely to support the
continued operation of ComEd's nuclear units in the near term, expected longer
term developments are likely to make decision-making a function of economic
considerations. In the absence of short-term reliability and capacity
constraints, if a generating plant cannot produce power safely at a cost below
the competitive market price, it will be disposed of or closed. Plant
impairment adjustments have reduced the carrying value of nuclear plants, and
depreciation rates reflecting shortened estimated useful lives for certain
stations will reduce the carrying value further during the next several years.
However, closure of a plant could involve additional charges associated with
the write-off of its then-current carrying value. In January 1998, Unicom and
ComEd announced the decision to permanently cease nuclear generating
operations at ComEd's Zion Station. The related retirement resulted in a
charge in 1997 of $523 million (after-tax), or $2.42 per common share
(diluted), reflecting both a write down of the plant's carrying value and a
liability for future closing costs. A portion of Zion Station is used to
provide voltage support in the transmission system that serves ComEd's
northern region. See Note 5 of Notes to Financial Statements for additional
information.

ComEd joined with other Midwestern utilities to design the Midwest ISO in
1998. These utilities have agreed to place their transmission systems under
the control of the Midwest ISO as soon as it achieves operational status in
2001. The Midwest ISO, a key element in accommodating the FERC-directed
restructuring of the electric industry, is expected to promote enhanced
reliability of the transmission system, equal access to the transmission
system, and foster increased competition. The Midwest ISO will control the
transmission system and will have authority to require modification in the
operation of generators connected to that system during system emergencies.
ComEd, like other utilities, will retain ownership of its transmission lines.
The formation of the Midwest ISO was approved by the FERC in September 1998,
subject to certain conditions. In December 1999, ComEd and other Midwestern
utilities filed a request with the FERC for a Declaratory Order approving a
different organizational template for the regional transmission grid. The
request seeks approval for the creation of for-profit transmission companies,
operating under the general oversight of the Midwest ISO, but fully separated
from their previous vertically integrated utilities. The request was approved,
in part, on February 24, 2000, subject to further development of its elements.

In the absence of an ISO-related power exchange, ComEd has also agreed to
cooperate with APX in the creation of the first electronic energy exchange in
Illinois. Initial products may include hourly, daily and weekly electricity
delivered to and from interconnection points on ComEd's transmission system,
and a standard system of credit and trading interfaces. Unicom has made a $3
million venture capital investment in APX in order to help finance its
expansion in Midwest. Neither ComEd nor Unicom will receive any voting rights.
The power exchange will be independently owned and managed by APX and will
allow wholesale and retail market participants to trade electricity
anonymously through an internet-based computerized system. ComEd will be
treated like any other market participant and will be an active participant in
the power exchange which opened in Illinois in the fourth quarter of 1999.

Under the merger agreement, as amended and restated in January 2000, PECO
and ComEd will become the principal utility subsidiaries of Exelon. This
result will be achieved by a mandatory exchange of the outstanding common
stock of PECO for common stock of Exelon, and a merger of Unicom with and into
Exelon wherein holders of Unicom common stock will receive 0.875 shares of
Exelon common stock plus $3.00 in cash for each of their shares of Unicom
common stock. The merger transaction will be accounted for as a purchase of
Unicom by PECO.

F-8

The Amended and Restated Agreement and Plan of Exchange and Merger, dated as
of January 7, 2000, was filed on January 13, 2000 by Unicom with the SEC as an
exhibit to a Form 8-K, and reference to that filing is made for more detailed
information.

Fossil Plant Sale. In December 1999, ComEd completed the sale of its fossil
generating assets to EME for a cash purchase price of $4.8 billion. The fossil
plant assets represent an aggregate generating capacity of approximately 9,772
megawatts.

Just prior to the consummation of the fossil plant sale, ComEd transferred
these assets to an affiliate, Unicom Investment. In consideration for the
transferred assets, Unicom Investment paid ComEd consideration totalling
approximately $4.8 billion in the form of a demand note in the amount of
approximately $2.4 billion and an interest-bearing Note with a maturity of
twelve years. Unicom Investment immediately sold the fossil plant assets to
EME, in consideration of which Unicom Investment received approximately $4.8
billion in cash from EME. Immediately after its receipt of the cash payment
from EME, Unicom Investment paid the $2.4 billion aggregate principal due to
ComEd under the demand note. Unicom Investment will use the remainder of the
cash received from EME to fund other business opportunities, including the
share repurchases. Of the cash received by ComEd, $1.8 billion is expected to
be used to pay the costs and taxes associated with the fossil plant sale
including ComEd's contribution of $250 million of the proceeds to an
environmental trust as required by the 1997 Act. The remainder of the demand
note proceeds will be available to ComEd to fund, among other things,
transmission and distribution projects, nuclear generation station projects,
and environmental and other initiatives.

As part of the sale transaction, ComEd entered into transitional, limited
term power purchase agreements with the buyer. Such purchase power agreements
will increase ComEd's purchased power costs.

F-9

Liquidity and Capital Resources

UTILITY OPERATIONS

Construction Program. ComEd has a construction program for the year 2000,
which consists principally of improvements to its existing nuclear production,
transmission and distribution facilities. The program, as currently approved
by ComEd, includes the following estimated expenditures (excluding nuclear
fuel expenditures of approximately $260 million).

2000
----
(Millions
of Dollars)

Nuclear................................................... $215
Transmission and Distribution............................. 536
General................................................... 146
----
$897
====

In response to several outages in the summer of 1999, ComEd conducted an
extensive evaluation of the reliability of its transmission and distribution
systems. The construction program above reflects a preliminary evaluation of
improvements necessary to improve reliability of ComEd's transmission and
distribution systems. ComEd is currently evaluating its construction program
for the years 2000, 2001 and 2002. The final results of this planning process
cannot be determined at this time.

ComEd's forecasts of peak load for its traditional service territory
indicate a need for additional resources to meet demand, through generating
capacity, equivalent purchased power and/or the development of additional
demand-side management resources, in 2000 and each year thereafter for the
foreseeable future. ComEd believes that adequate resources, including cost-
effective demand-side management resources, nonutility generation resources,
power purchases and generation resources from ARES, can be obtained in
sufficient quantities to meet such forecasted needs. See "Unregulated
Operations," subcaption "Construction Program" below, for additional
information.

Purchase commitments for ComEd, principally related to construction, nuclear
fuel and coal in support of certain power purchase agreements approximated
$670 million at December 31, 1999. In addition, ComEd's estimated commitments
for expected capacity payments and fixed charges related to power purchase
agreements were as follows:

Commitments(1)
Period ($Millions)
------ --------------

2000............................... $ 783
2001............................... 698
2002............................... 427
2003-2004.......................... 540
2005-2012.......................... 1,039
------
$3,487
======

--------
(1) Capacity payments may be adjusted based on certain conditions. No
estimate of future cost escalation has been made.

See "Changes in the Electric Utility Industry," subcaptions "The 1997 Act"
and "Fossil Plant Sale" above, for additional information.

Capital Resources. In December 1998, ComEd initiated the issuance of $3.4
billion of transitional trust notes through its SPEs, ComEd Funding and ComEd
Funding Trust. The proceeds from the transitional trust notes, net of
transaction costs, were, as required, used to redeem $1,101 million of long-
term debt and $607 million of preference stock in 1999 and reduce ComEd's
outstanding short-term debt by $500 million. In 1999, ComEd recorded an
extraordinary loss related to the early

F-10

redemptions of such long-term debt, which reduced net income on common stock
by approximately $28 million (after-tax), or $0.13 per common share (diluted).
ComEd also recorded $12 million (after-tax), or $0.05 per common share
(diluted), for premiums paid in connection with the redemption of preference
stock. As more fully described below, Unicom has repurchased approximately
26.3 million shares of Unicom common stock using $924 million of proceeds it
received from ComEd's repurchase of its common stock held by Unicom. The
remaining proceeds from the issuance of the transitional trust notes will be
used for the payment of fees and additional common stock repurchases.

In the fourth quarter of 1998, Unicom entered into a forward purchase
arrangement for the repurchase of $200 million of its common stock. This
contract, which was accounted for as an equity instrument as of December 31,
1998, was settled on a net cash basis in February 1999.

During 1999, Unicom also entered into forward purchase arrangements with
financial institutions for the repurchase of approximately 26.3 million shares
of Unicom common stock. The repurchase arrangements were settled in January
2000 on a physical basis. Effective January 2000, the share repurchases will
reduce outstanding shares and reduce common stock equity. Prior to settlement,
the repurchase arrangements were recorded as a receivable on the Consolidated
Balance Sheets based on the aggregate market value of the shares deliverable
under the arrangements. In 1999, net unrealized losses of $44 million (after-
tax), or $0.20 per common share were recorded related to the arrangements. The
settlement of the arrangements in January 2000 resulted in a gain of $113
million (after-tax). See Note 25 of Notes to Financial Statements for
additional information.

See Notes 3 and 7 of Notes to Financial Statements for additional
information regarding the redemptions and repurchases of debt and equity.

ComEd forecasts that internal sources will provide approximately three-
fourths of the funds required for ComEd's 2000 construction program and other
capital requirements, including nuclear fuel expenditures, contributions to
nuclear decommissioning funds, sinking fund obligations and scheduled debt
maturities. See Notes 10 and 12 of Notes to Financial Statements for the
summaries of the annual sinking fund requirements and scheduled maturities for
ComEd preference stock and long-term debt, respectively.

See "Changes in the Electric Utility Industry," subcaption "Fossil Plant
Sale" above, for a description of ComEd's planned uses of the fossil plant
sale proceeds.

The type and amount of external financing will depend on financial market
conditions and the needs and capital structure of ComEd at the time of such
financing. ComEd had total unused bank lines of credit of $800 million at
December 31, 1999, which may be borrowed at various interest rates. Of that
amount, $500 million expires on December 15, 2000 and $300 million expires on
December 17, 2002. The interest rate is set at the time of a borrowing and is
based on several floating rate bank indices plus a spread, which is dependent
upon the credit ratings of ComEd's outstanding first mortgage bonds or on a
prime interest rate. See Note 13 of Notes to Financial Statements for
additional information concerning lines of credit. See the Statements of
Consolidated Cash Flows for the construction expenditures and cash flow from
operating activities for the years 1999, 1998 and 1997. Cash flows from
operating activities were adversely affected in 1998 and positively affected
in 1999 as a result of delayed billings related to the transition to a new
customer information and billing system beginning in July 1998. See Note 1 of
Notes to Financial Statements, under "Customer Receivables and Revenues", for
additional information.

As of January 31, 2000, ComEd has an effective "shelf" registration
statement with the SEC for the future sale of up to an additional $280 million
of debt securities and cumulative preference stock for general corporate
purposes of ComEd, including the discharge or refund of other outstanding
securities.

F-11

ComEd's securities and other securities guaranteed by ComEd are currently
rated by three principal securities rating agencies as follows:

Standard Duff &
Moody's & Poor's Phelps
------- -------- ------

First mortgage and secured pollution control bonds..... Baa1 BBB+ A-
Publicly-held debentures and unsecured pollution con-
trol obligations...................................... Baa2 BBB BBB+
Convertible preferred stock............................ baa3 BBB- BBB
Preference stock....................................... Baa2 BBB- BBB
Trust Securities....................................... baa3 BBB- BBB
Commercial paper....................................... P-2 A-2 D-1

ComEd Funding Trust's securities are currently rated by three principal
securities rating agencies as follows:

Standard Duff &
Moody's & Poor's Phelps
------- -------- ------

Transitional trust notes.......................... Aaa AAA AAA

All three agencies raised their ratings for ComEd in 1999: Duff & Phelps in
December, Moody's in September; and S&P in June.

Capital Structure. ComEd's ratio of long-term debt to total capitalization
has decreased to 55.2% at December 31, 1999 from 58.0% at December 31, 1998.
As of December 31, 1999 and 1998, $716 million and $494 million, respectively,
of retained earnings had been appropriated for Unicom's future dividend
payments.

Year 2000 Conversion. Unicom completed a successful transition to the Year
2000 as systems performed without interruption during the rollover from
December 31, 1999 to January 1, 2000. All Unicom Year 2000 Command Centers
were activated during the critical rollover period.

In addition to 12/31/99, other key Year 2000 dates that Unicom has completed
without Year 2000 problems are 1/1/99, 4/9/99 (99th day of 1999), 8/21/99
(Global Positioning System rollover), 9/9/99 and the rollover from 2/28/00 to
2/29/00.

Unicom depends upon third parties, including customers, suppliers,
government agencies and financial institutions, to reliably deliver its
products and services. Unicom completed an analysis of the Year 2000 readiness
programs of its critical vendors and obtained Year 2000 warranties in certain
new contracts and licenses. Unicom also has introduced protocols for assuring
that software and embedded systems remain Year 2000 ready on a continuing
basis. Even though mission critical products and services of the Unicom supply
chain are Year 2000 ready, contingency plans were developed to prevent or
mitigate interruptions caused by Unicom suppliers.

As of December 31, 1999, approximately $37.4 million has been expended for
external labor, hardware and software costs, and for the costs of Unicom
employees who are dedicated full-time to the Year 2000 project. All of such
costs were expensed as incurred. The foregoing amounts do not include the cost
of new software applications installed as a result of strategic replacement
projects. Such replacement projects were not accelerated because of Year 2000
issues. Unicom expects to incur minimal expenditures for final project wrap-up
activities.

Unicom's Year 2000 project focused on those facets of its business that are
required to deliver reliable electric service. The project encompassed the
computer systems that support core business

F-12

functions, such as customer information and billing, finance, procurement,
supply and personnel, as well as the components of metering, transmission,
distribution and generation support. The project also focused on embedded
systems, instrumentation and control systems in facilities and plants. In
accordance with business plans, Unicom has replaced certain of its financial,
human resources and payroll and customer service and billing software with new
software that is Year 2000 ready and that addresses Unicom's strategic needs
as it enters a less regulated environment.

Market Risks. ComEd is exposed to market risk due to changes in interest
rates and the market price for electricity. Exposure for interest rate changes
relates to its long-term debt and preferred equity obligations. Exposure to
electricity market price risk relates to forward activities taken to manage
effectively the supply of, and demand for, the electric generation capability
of ComEd's generating plants. ComEd has implemented an integrated risk
management framework to manage such risks. A corporate Risk Management
Committee defines the Company's risk tolerance and establishes appropriate
position limits, and corporate policies and procedures have been implemented
to minimize the exposure to market risk. ComEd does not currently utilize
derivative commodity or financial instruments for trading or speculative
purposes.

See "Energy Risk Management Contracts" in Note 1 of Notes to Financial
Statements regarding the accounting for energy risk management contracts.

Interest Rate Exposure. The table below provides the fair value and average
interest or fixed dividend rates of Unicom's outstanding debt and preferred
stock equity instruments as of December 31, 1999.

Expected Maturity Date Fair Value
Unicom and Subsidiary ---------------------------------------- as of
Companies (millions) 2000 2001 2002 2003 2004 Thereafter Total 12/31/99
- --------------------- ---- ---- ---- ---- ---- ---------- ------ ----------

Long-Term Debt-
Fixed Rate............. $387 $ 11 $311 $111 $241 $3,694 $4,755 $4,695
Average Interest Rate.. 6.74% 6.75% 7.93% 6.62% 7.53% 7.68%
Variable Rate.......... $ 92 $ 92 $ 92
Average Interest Rate.. 5.49%
Transitional Trust
Notes................. $350 $340 $340 $340 $340 $1,360 $3,070 $2,894
Average Interest Rate.. 5.31% 3.32% 5.38% 5.42% 5.44% 5.66%
Preferred and Preference
Stock-
Subject to Mandatory
Redemption............ $ 69 $ 69 $ 70
Average Dividend Rate.. 6.93%
Not Subject to Manda-
tory Redemption....... $ 2 $ 2 $ 1
Average Dividend Rate.. 4.48%
Trust Securities........ $ 350 $ 350 $ 339
Average Dividend Rate.. 8.49%

Market Price Exposure. ComEd's energy purchases from other suppliers have
increased as a result of reductions in owned generating capability and system
load growth. The market price of energy is subject to price volatility
associated with changes in supply and demand in the electric supply markets.
In the normal course of business, ComEd utilizes contracts for the forward
sale and purchase of energy to assure system reliability and manage
effectively the utilization of its available generating capability. ComEd also
utilizes put and call option contracts and energy swap arrangements to limit
the market price risk associated with the forward commodity contracts. The
estimated December 31, 1999 fair value of the forward contracts, including
options, for the purchase and sale of energy for the years 2000 through 2007,
was approximately $(70) million. The estimated fair value is based on the
estimated net settlement value of the contracts derived from forward price
curves and market quotes, discounted at a 10% rate. A 10% increase in the
forward price of electricity would decrease the December 31, 1999 fair value
of the forward energy contracts for the years 2000- 2007 by approximately $120
million, of which approximately $65 million is for contracts for the period
2000-2002. Likewise, a 10% decrease would increase the fair value of the
energy contracts by $120 million. Notwithstanding these price risk management
activities, an unexpected loss of generating capability or reduction in demand
could increase ComEd's exposure to market price risks and could have a
material adverse effect on operating results.

F-13

UEI has entered into gas sales contracts which are hedged with gas supply
contracts at lower prices. UEI's margin per therm of gas delivered is not
significantly affected by the market price of gas. UEI has also entered into
electricity contracts for which the mark-to-market at December 31, 1999 is not
material.

UNREGULATED OPERATIONS

Unicom Enterprises is engaged, through subsidiaries, in energy service
activities which are not subject to utility regulation by federal or state
agencies. One of these subsidiaries, UT Holdings, provides district cooling
and related services to offices and other buildings in the central business
district of the City and in other cities in North America, generally working
with local utilities. District cooling involves, in essence, the production of
chilled water at one or more central locations and its circulation to
customers' buildings through a closed circuit of supply and return piping.
Such water is circulated through customers' premises primarily for air
conditioning. This process is used by customers in lieu of self-generated
cooling.

Unicom Energy Services, another subsidiary of Unicom Enterprises, is engaged
in providing energy services, including gas services, performance contracting,
distributed energy and energy management systems. Through an alliance with
AlliedSignal Power Systems, Inc., a subsidiary of AlliedSignal Inc., Unicom
Energy Services is an exclusive distributor for the Parallon 75(TM)
TurboGenerator system, which was developed by AlliedSignal to provide
customers with on-site electricity production. Unicom Energy Services'
exclusive territory for distributing the Parallon 75(TM) system encompasses 12
Midwest states, Ontario, Canada and Puerto Rico.

Unicom Power Holdings, another subsidiary of Unicom Enterprises, is
developing certain generation and cogeneration projects.

Unicom Energy Inc. and Unicom Gas Services, LLC, also subsidiaries of Unicom
Enterprises, are currently engaged in providing retail gas services to
commercial and industrial customers in the Midwest region. Unicom Energy Inc.
also provides retail electric services as an unregulated retail energy
supplier.

Unicom Mechanical Services Inc., a subsidiary of Unicom Enterprises, engages
in the design, installation and servicing of heating, ventilation and air
conditioning facilities for commercial and industrial customers in the City
and surrounding area through subsidiaries conducting business as Midwest
Mechanical and V.A. Smith Company.

Construction Program. Unicom has approved capital expenditures for 2000 of
approximately $85 million for UT Holdings, primarily related to an expansion
of its Chicago district cooling facilities and the related distribution piping
and plants in other cities. As of December 31, 1999, UT Holdings' purchase
commitments, principally related to construction, were approximately $27
million.

Unicom has approved capital expenditures for 2000 of approximately $15
million for Unicom Energy Services. As of December 31, 1999, Unicom Energy
Services had purchase commitments of approximately $24 million.

Unicom Power Holdings intends to purchase approximately 440 MW of combustion
turbine generators and auxiliary equipment. Such generators will either be
sold or placed into cogeneration or

F-14

other peaking applications. Unicom Power Holdings is evaluating the costs and
economics of such alternatives. Unicom Power Holdings anticipates that the
equipment purchases will cost approximately $165 million, of which
approximately $90 million has been incurred as of December 31, 1999. Unicom
Power Holdings may incur significant additional costs to site and install such
power generation equipment.

Capital Resources. Unicom expects to obtain funds to invest in its
unregulated subsidiaries principally from the fossil plant sale proceeds
received by Unicom Investment, although it may also obtain funds from
dividends received on its ComEd common stock and from borrowings. The
availability of ComEd's dividends to Unicom is dependent on ComEd's financial
performance and cash position, as well as legal restrictions on the payment of
dividends by public utilities. Other forms of financing by ComEd to Unicom or
the unregulated subsidiaries of Unicom, such as additional loans or additional
equity investments, which are not expected, would be subject to prior approval
by the ICC.

The fossil plant sale proceeds received by Unicom Investment, after the
payment of the demand note to ComEd, will be used to fund share repurchases
and to invest in new business opportunities. See "Changes in the Electric
Utility Industry" subcaption "Fossil Plant Sale" above, for additional
information.

On November 5, 1999, Duff & Phelps assigned an initial implied senior
unsecured debt rating of BBB- to Unicom, and placed the rating on "Rating
Watch-Up." S&P's current corporate credit rating for Unicom is BBB. On
September 23, 1999, in response to the announced Unicom and PECO merger
agreement, S&P placed Unicom on credit watch with positive implications, and
Moody's confirmed the first-time issuer rating of Baa3 it had assigned to
Unicom on September 15, 1999.

Regulation

ComEd and Indiana Company are subject to federal and state regulation in the
conduct of their respective businesses. Such regulation includes rates,
securities issuance, nuclear operations, environmental and other matters.
Particularly in the cases of nuclear operations and environmental matters,
such regulation can and does affect operational and capital expenditures.

F-15

Rate Matters. See "Changes in the Electric Utility Industry," subcaption
"The 1997 Act" above, for information regarding the effect of the 1997 Act on
rate matters.

Nuclear Matters. Nuclear operations have been, and remain, an important
focus of ComEd. ComEd operates five nuclear plants--Braidwood, Byron, Dresden,
LaSalle and Quad Cities Stations, and is committed to safe, reliable and
efficient operation. See "Changes in the Electric Utility Industry,"
subcaption "Response to Regulatory Changes" above, for information regarding
ComEd's permanent cessation of nuclear generation operations at its Zion
Station.

On May 6, 1999, ComEd's LaSalle Station was officially removed from the
NRC's listing of plants that require increased regulatory scrutiny. LaSalle
Station had been on this list since January 1997. Concurrent with the LaSalle
Station action, the NRC announced the formal removal of the Quad Cities
Station from its list of plants with declining performance trends. Quad Cities
Station had been on the declining trend list since January 1998. With these
actions, all of ComEd's nuclear plants are now placed in the NRC's "routine
oversight" category. This represents the first time since 1990 that none of
ComEd's nuclear generating units are under special NRC oversight.

The NRC and representatives of ComEd's management have met, and will
continue to meet periodically as part of the NRC's normal oversight process,
to discuss the overall performance of the ComEd nuclear program.

Based on ComEd's most recent study, decommissioning costs are estimated to
be $5.7 billion in current-year (2000) dollars, including a contingency
allowance. This estimate includes $617 million of non-radiological costs,
which are included in ComEd's proposed rider for recovery, as discussed below.
ComEd's decommissioning cost expenditures at the end of the units' operating
lives are estimated to total approximately $13.8 billion. These expenditures
are expected to occur primarily during the period from 2007 through 2034. All
such costs are expected to be funded by the external decommissioning trusts,
which ComEd established in compliance with Illinois law and into which ComEd
has been making annual contributions. Future decommissioning cost estimates
may be significantly affected by the adoption of or changes to NRC
regulations, as well as changes in the assumptions used in making such
estimates, including changes in technology, available alternatives for the
disposal of nuclear waste and inflation.

Since 1995, ComEd has collected decommissioning costs from its ratepayers in
conjunction with a rider to its tariffs. The rider allows annual adjustments
to decommissioning cost collections outside the context of a traditional rate
proceeding and will continue under the 1997 Act. The current estimated
decommissioning costs include a contingency allowance, but, except at Dresden
Unit 1, exclude amounts for alternative spent fuel storage installations,
which may be necessary to store spent fuel during the period beginning at the
end of the NRC license lives of the plants to the date when the DOE accepts
the spent fuel for permanent storage. Contingency allowances used in
decommissioning cost estimates provide for currently unspecifiable costs that
are likely to occur after decommissioning begins and generally range from 20%
to 25% of the currently specifiable costs. Under its most recent annual rider,
filed with the ICC on February 26, 1999, ComEd has proposed to increase its
estimated annual decommissioning cost accrual from $84 million to $130
million. The proposed increase primarily reflects an increase in low-level
waste disposal cost escalation, the inclusion of $219 million in current-year
(2000) dollars for safety-related costs of maintaining Zion Station in a
mothballed condition until dismantlement begins, and the inclusion of non-
radiological costs in the decommissioning cost estimates for recovery under
the rider. See Note 1 of Notes to Financial Statements, under "Depreciation,
Amortization of Regulatory Assets and Liabilities, and Decommissioning," for
additional information regarding decommissioning costs.

Environmental Matters. ComEd is involved in administrative and legal
proceedings concerning air quality, water quality and other matters. The
outcome of these proceedings may require

F-16

increases in future construction expenditures and operating expenses and
changes in operating procedures. See Note 22 of Notes to Financial Statements
for additional information.

Results of Operations

Unicom's basic and diluted earnings/(loss) per common share for 1999, 1998
and 1997 were as follows:

1999 1998 1997
----- ----- ------

Basic Earnings/(Loss) per Common Share...................... $2.62 $2.35 $(3.94)
===== ===== ======
Diluted Earnings/(Loss) per Common Share.................... $2.61 $2.34 $(3.94)
===== ===== ======

Substantially all of the results of operations for Unicom are the results of
operations for ComEd. As such, the following section generally discusses, in
more detail, the effect of ComEd's operations on Unicom's financial results.
All EPS computations shown below reflect the impact on Unicom's diluted EPS.

Net Income for the Year 1999. The increase in Unicom's net income in 1999
reflects, among other factors, ComEd's increased energy sales, the fossil
plant sale, improved nuclear performance which resulted in lower fuel and
purchased power costs and lower taxes except income taxes.

Kilowatthour sales increased 8% for the year 1999, compared to 1998, driven
largely by a 59% increase in kilowatthour sales for resale. See "Operating
Revenues" below for additional information.

Fuel and purchased power costs decreased 14% in 1999, compared to 1998,
resulting from improved nuclear performance. See "Fuel Costs" and "Purchased
Power" below for additional information.

O&M expenses increased 6% for the year 1999, compared to the year 1998, as
discussed in "Operation and Maintenance Expenses" below.

Earnings for the year were positively impacted by the fossil plant sale.
Consistent with the provisions of the 1997 Act, the after-tax gain on the
fossil plant sale of $1.56 billion ($7.12 per common share) resulted in a
regulatory liability. Increased regulatory asset amortization amounted to
$2.46 billion, before tax, ($6.76 per common share, after-tax) as discussed in
Note 5 of Notes to Financial Statements. The earnings increase was also
partially offset by a net unrealized loss of $44 million (after-tax), or $0.20
per common share, related to forward share repurchase arrangements, a charge
of $41 million (after-tax), or $0.19 per common share, for an increase in the
estimated liability for the remediation of former MGP sites, extraordinary
losses related to the early redemptions of long-term debt, which reduced net
income on common stock by $28 million (after-tax), or $0.13 per common share,
and premiums of $12 million (after-tax), or $0.05 per common share, paid in
connection with the redemption of preference stock. ComEd's net income for the
year 1999 represents the maximum return on average common equity allowable for
the year before triggering the earnings sharings provision of the 1997 Act.

Taxes other than income taxes decreased by $17 million or $0.05 per common
share after excluding the effects of the change in presentation for certain
state and municipal taxes ($174 million) as discussed in "Operating Revenues"
below. The $17 million decrease is principally due to lower municipal
compensation taxes.

Net Income for the Year 1998. The increase in earnings for 1998 was
primarily due to increased kilowatthour sales, which increased both operating
revenues and energy costs, reduced

F-17

O&M expenses, lower depreciation and amortization expenses, lower than
expected Zion Station closing costs, gains on the sales of certain assets and
a lower effective income tax rate. In December 1997, ComEd discontinued
regulatory accounting practices for the generation portion of its business and
recorded other non-recurring accounting charges as a result of the 1997 Act,
which primarily contributed to the loss for 1997. The 1997 operating results
also include the write-off for the closure of the Zion nuclear generating
station, partially offset by a cumulative one-time positive impact of $197
million (after-tax), or $0.91 per common share, for a change in accounting
method for revenue recognition to record ComEd's revenues associated with
service which has been provided to customers but has not yet been billed at
the end of each accounting period, retroactive to January 1, 1997.

Fuel and purchased power costs increased 10% in 1998, compared to the year
1997, reflecting increased demand for electricity, as well as the effects of
higher purchased power prices. See "Purchased Power" below for additional
information.

O&M expenses decreased 6% for the year 1998, compared to the year 1997, as
discussed in "Operation and Maintenance Expenses" below.

The year 1998 includes a 6% decrease in depreciation and amortization
expenses, as discussed in "Depreciation and Amortization" below, and a $15
million (after-tax), or $0.07 per common share, reduction in the estimated
liability for closing costs related to the Zion nuclear generating station,
both of which increased operating results.

Also, 1998 operating results reflect realized gains on the sales of certain
assets of $31 million (after-tax), or $0.14 per common share. The sold assets
consisted principally of surplus inventory of emission allowances.

Net Loss for the Year 1997. ComEd's kilowatthour sales, including sales to
wholesale customers, increased 5% during 1997, compared to 1996, as discussed
below. In 1997, O&M expenses increased 13%, as discussed below.

Also, 1997 operating results were reduced by $336 million for increased fuel
and purchased power costs, as discussed below. In addition, a 4% increase in
depreciation expense, primarily due to an increase in certain nuclear plant
depreciation, resulted in a charge of $23 million (after-tax), or $0.11 per
common share.

ComEd discontinued regulatory accounting practices for the generation
portion of its business in the fourth quarter of 1997 due to the expected
transition of electric generation services to market-based pricing as a result
of the 1997 Act. Accordingly, ComEd's generation-related net regulatory
assets, which represent assets and liabilities properly recorded under
regulatory accounting practices but which would not be recorded under GAAP for
non-regulated entities, were written off, resulting in an extraordinary charge
in 1997 of $810 million (after-tax), or $3.75 per common share.

In addition, pursuant to an option contained in the 1997 Act, ComEd filed a
tariff in December 1997 to eliminate its FAC. Under ComEd's regulated rates,
the FAC provided for the recovery of changes in fossil and nuclear fuel costs
and the energy portion of purchased power costs, compared to the fuel and
purchased energy costs included in ComEd's base rates. The 1997 Act provided
that upon the elimination of the FAC, ComEd would be required to refund to
customers the net FAC charges billed during the calendar year 1997. Net FAC
charges billed by ComEd during the year 1997 were $25 million (after tax) or
$0.12 per common share (diluted). These costs, as well as deferred,
underrecovered energy costs of $19 million (after-tax), or $0.08 per common
share (diluted), which ComEd would have been entitled to recover if the FAC
had remained in effect, were recorded as a charge to operating results in the
fourth quarter of 1997. Elimination of the FAC could increase volatility in
future earnings due to changes in fuel and purchased power costs.

F-18

Additionally, the elimination of the FAC and the transition to market-based
pricing for generation-related costs required ComEd to write-off its
investment in uranium-related properties. An impairment study indicated the
expected incremental costs of mining and milling uranium at those properties
would exceed the expected market price for uranium. These costs, which were
previously recoverable through the FAC, are not expected to be recoverable in
a competitive market. A write-off of uranium-related properties to reflect
market value resulted in a charge of $60 million (after-tax), or $0.28 per
common share (diluted), in December 1997.

Partially offsetting the charges to operations for 1997 was a change in the
accounting method for revenue recognition to record ComEd's revenues
associated with service which has been provided to customers but has not yet
been billed at the end of each accounting period, retroactive to January 1,
1997. This change in accounting method had a one-time cumulative positive
impact for years prior to 1997 of $197 million (after-tax), or $0.91 per
common share.

The year 1997 also included a charge of $523 million (after-tax), or $2.42
per common share, reflecting the write-off of the unrecoverable portion of the
cost of ComEd's Zion Station plant and inventories, and a liability for future
closing costs, resulting from the decision in January 1998 to permanently
cease nuclear generation operations at Zion Station.

Operating Revenues. ComEd's electric operating revenues reflect revenues
from sales to ultimate consumers (including residential, commercial and
industrial customers within its service territory) and revenues from sales for
resale (i.e., sales to wholesale customers, principally other electric
utilities). Operating revenues are affected by kilowatthour sales and rate
levels. Kilowatthour sales, in turn, are affected by weather, the level of
economic activity within ComEd's service area, and off-system or wholesale
sales to other utilities. Off-system sales are affected by a number of
factors, including nuclear generating station availability and performance.
Revenues have also been reduced by a change in presentation for certain
utility taxes. The 1997 Act changed the nature of several state and municipal
taxes that are collected through customer billings. Before August 1998, the
utility taxes were assessed against the utility. Effective August 1998, the
utility taxes are assessed on the electric consumer rather than the utility.
Accordingly, ComEd records the collections as liabilities and no longer
records the taxes collected through billing as revenues and tax expense. The
change in presentation for utility taxes did not have an effect on results of
operations. See Note 1 of Notes to Financial Statements, under "Use of
Estimates" and "Customer Receivables and Revenues", for additional
information.

ComEd's operating revenues decreased $322 million in 1999, compared to 1998,
due in part to the approximately $226 million impact of the 15% residential
base rate reduction that took effect August 1, 1998. Operating revenues for
1999 also were reduced by approximately $174 million, compared to 1998, due to
the change in presentation for certain state and municipal taxes. Kilowatthour
sales increased 8%, primarily due to sales for resale. In 1998, operating
revenues increased $15 million, compared to the year 1997, primarily due to
warmer summer weather experienced in 1998 and continued economic growth in
ComEd's service territory, partially offset by a 15% residential rate
reduction ($170 million) and reserves for various federal and state litigation
matters ($35 million). Operating revenues for 1998 were reduced by
approximately $110 million, as compared to 1997, due to the change in
presentation for certain state and municipal taxes. During 1997, electric
operating revenues increased $139 million, primarily due to a 29% increase in
kilowatthour sales to wholesale customers. Kilowatthour sales to ultimate
consumers during 1997 increased 1%, compared to 1996, reflecting continued
economic growth in ComEd's service territory. Operating revenues in 1997 were
reduced by the provision for revenue refunds of $45 million, including revenue
taxes, related to the elimination of the FAC.

Unicom's unregulated businesses' operating revenues increased $87 million in
1999, compared to 1998. The increase is primarily due to increased revenues
related to performance contracting and district cooling services and the
acquisition of new businesses in 1999.

F-19

Fuel Costs. Changes in fuel expense for the years 1999, 1998 and 1997
primarily resulted from changes in the average cost of fuel consumed, changes
in the mix of fuel sources of electric energy generated and changes in net
generation of electric energy. Fuel mix is determined primarily by system
load, the costs of fuel consumed and the availability of nuclear generating
units. The cost of fuel consumed, net generation of electric energy and fuel
sources of kilowatthour generation were as follows:

1999 1998 1997
----------------------- ------------------------ ------------------------
Fuel Costs Cost per KWh Fuel Costs Cost per KWh Fuel Costs Cost per KWh
---------- ------------ ---------- ------------ ---------- ------------
(000's) (000's) (000's)

Cost of fuel consumed:
Nuclear........................ $380,489 0.52c $ 286,619 0.53c $ 263,163 0.54c
Coal........................... 525,896 2.26 626,442 2.51 810,144 2.44
Oil............................ 7,854 5.43 20,822 6.26 17,829 5.50
Natural gas.................... 83,023 3.22 123,644 3.04 113,082 3.50
-------- ---- ---------- ---- ---------- ----
Total/Average all fuels........ $997,262 1.00c $1,057,527 1.27c $1,204,218 1.40c
======== ==== ========== ==== ========== ====
Net generation of electric energy
(millions of kilowatthours)..... 99,684 83,302 85,861
Fuel sources of kilowatthour gen-
eration:
Nuclear........................ 74% 65% 57%
Coal........................... 23 30 39
Oil............................ -- -- --
Natural gas.................... 3 5 4
-------- ---------- ----------
100% 100% 100%
======== ========== ==========

The increases in net generation of electric energy and nuclear generation
for 1999, compared to the prior years, are primarily due to significant
improvement in the performance of ComEd's nuclear fleet. The overall nuclear
capacity factor was 89% for 1999, compared to 66% for 1998 and 49% for 1997.
The decreases in the net generation of electric energy for 1998, compared to
1997, are primarily due to the sales of State Line and Kincaid Station in
December 1997 and February 1998, respectively, and lower nuclear plant
availability in 1997. The decrease in net generation of electric energy from
1997 to 1998 due to the sale of State Line Station was 2,378,413 megawatthours
and the decrease from 1997 to 1998 due to the sale of Kincaid Station was
2,357,488 megawatthours. See "Regulation," subcaption "Nuclear Matters" above,
for information regarding ComEd's nuclear generating stations.

Purchased Power. Amounts of purchased power are primarily affected by system
load, the availability of ComEd's generating units and the availability and
cost of power from other utilities. Purchased power decreased $196 million and
increased $348 million in 1999 and 1998, compared to 1998 and 1997,
respectively. The decrease in 1999 was due to the improved nuclear and fossil
operating performance, which reduced the need to purchase power from other
parties. The increase in purchased power costs in 1998 reflects the effects of
an extraordinary combination of heat, storms and equipment problems
experienced throughout the Midwest in late June 1998 which resulted in
unprecedented purchased power price levels. See "Regulation," subcaption
"Nuclear Matters" above, for information regarding ComEd's nuclear generating
stations. For additional information concerning ComEd's purchase power
commitments see "Liquidity and Capital Resources," subcaption "UTILITY
OPERATIONS--Construction Program," above and Note 22 of Notes to Financial
Statements.

The number and average cost of kilowatthours purchased were as follows:

1999 1998 1997
------ ------ ------

Kilowatthours (millions)............................. 11,561 20,704 16,672
Cost per kilowatthour................................ 4.77c 3.84c 2.40c

F-20

The market price for electricity is subject to price volatility associated
with changes in supply and demand in the electric supply markets. ComEd
utilizes energy put and call option contracts and energy swap arrangements to
limit market price risk associated with forward commodity contracts. See
"Liquidity and Capital Resources," subcaption "UTILITY OPERATIONS--Market
Risks" above, for additional information.

Operation and Maintenance Expenses. O&M expenses include the expenses
associated with operating and maintaining ComEd's generation, transmission and
distribution assets, as well as administrative overhead and support, and the
expenses associated with Unicom's unregulated businesses. Given the variety of
expense categories covered, there are a number of factors which affect the
level of such expenses within any given period. Two major components of such
expenses, however, are the costs associated with operating and maintaining
ComEd's generating facilities. Generating station expenses are affected by the
cost of materials, regulatory requirements and expectations, the age of
facilities and cost control efforts.

During the three years presented in the financial statements, the aggregate
level of O&M expenses increased 6% in 1999 compared to 1998, decreased 6% in
1998 compared to 1997, and increased 13% in 1997 compared to 1996.

O&M expenses associated with nuclear generating stations decreased $75
million and $172 million and increased $122 million for years 1999, 1998 and
1997, respectively. The decrease in 1999 was due to shorter refueling outages
and fewer forced outages. The decrease in 1998 was principally due to the
permanent cessation of nuclear generation operations at Zion Station. The
increase in 1997 was a result of increased levels of activities associated
with the repair, replacement and improvement of nuclear generating facility
equipment. See "Changes in the Electric Utility Industry," subcaption
"Response to Regulatory Changes" above, regarding the permanent cessation of
nuclear operations at Zion Station.

O&M expenses associated with fossil generating stations decreased $42
million and $5 million and increased $31 million for the years 1999, 1998 and
1997, respectively. The decrease in 1999 was primarily due to reductions in
plant refurbishment and maintenance costs. The decrease related to fossil
generating stations in 1998 was primarily due to the sales of State Line and
Kincaid Stations in December 1997 and February 1998, respectively ($25
million), partially offset by plant refurbishment costs ($19 million).

O&M expenses associated with ComEd's transmission and distribution system
increased $77 million, $32 million and $15 million for the years 1999, 1998
and 1997, respectively. The increase in 1999 was primarily due to an increase
in tree trimming expenses and the costs associated with ComEd's extensive
evaluation of the reliability of its transmission and distribution system
following outages which occurred during the summer of 1999. The increase also
reflects restoration and other outage-related costs associated with the
summer heat wave. The 1998 and 1997 increases were primarily due to increased
emergency restoration of electric service, higher maintenance expenses and
tree trimming costs. O&M expenses associated with customer-related activities
increased $40 million, $19 million and $11 million for the years 1999, 1998
and 1997, respectively. The increase in 1999 was primarily due to the ongoing
implementation of a new customer information and billing system.

O&M expenses for the year 1999 reflect an increase of $68 million in ComEd's
estimated environmental liability for the remediation of former manufactured
gas plant sites.

O&M expenses also include employee benefits expenses. Since 1995, ComEd has
reduced the size of its workforce by offering incentives for employees to
leave the company voluntarily. Such incentives included both current payments
and earlier eligibility for postretirement health care benefits, in

F-21

addition to certain other employee-related costs, resulting in charges of $10
million, $48 million and $39 million for the years 1999, 1998 and 1997,
respectively.

Other ComEd employee benefits expenses, excluding the effects of employee
separation plans and certain other employee-related costs increased
$16 million and $41 million and decreased $11 million for the years 1999, 1998
and 1997, respectively. The increase for the year 1999 was primarily due to
higher accruals for incentive compensation. The increase in 1998 was primarily
due to accruals for estimated incentive compensation recorded in 1998. The
decrease in 1997 was primarily due to a reduction in medical costs for active
employees.

O&M expenses included a $25 million charge for the year 1999 as a result of
a franchise related settlement agreement between ComEd and the City.

O&M expenses associated with certain administrative and general costs
decreased $7 million and $22 million and increased $35 million for the years
1999, 1998 and 1997, respectively. The 1999 decrease was due to a variety of
reasons, including reductions in nuclear insurance ($38 million), partially
offset by increased charges for uncollectible accounts resulting from billing
and collection delays experienced following the implementation of a new
customer information system ($25 million). The decrease in 1998 reflects a
reduction of $34 million in certain nuclear maintenance costs due to
technological improvements, compared to 1997. The effects of inflation have
also increased O&M expenses during the years and are also reflected in the
increases and decreases discussed herein.

O&M expenses associated with Unicom's unregulated businesses increased $82
million in 1999, compared to 1998. The increase is primarily related to their
increased level of operation and the acquisition of new businesses in 1999.

Depreciation, Amortization and Decommissioning. Depreciation, amortization
and decommissioning expense decreased $100 million and $62 million and
increased $36 million for the years 1999, 1998 and 1997, respectively. The
decrease in the year 1999 was primarily due to the fossil plant sale.
Consistent with the provisions of the 1997 Act, the (pre-tax) gain on the sale
of $2.587 billion resulted in a regulatory liability, which was used to
recover regulatory assets. Therefore, the gain on the sale, excluding $43
million of amortization of investment tax credits, was recorded as a
regulatory liability in the amount of $2.544 billion and amortized in the
fourth quarter of 1999. The amortization of the regulatory liability and
additional regulatory asset amortization of $2.456 billion are reflected in
depreciation and amortization expense on Unicom's Statements of Consolidated
Operations and resulted in a net reduction to depreciation and amortization
expense of $88 million. Depreciation expense decreased $95 million and
increased $36 million for the years 1998 and 1997, respectively. The decrease
in 1998 reflects the retirement of Zion Station ($31 million), the reduction
in depreciable plant due to the plant impairment recorded by ComEd in the
second quarter of 1998 ($65 million), the sales of State Line and Kincaid ($4
million), lower depreciation of steam generators at Byron Unit 1 and Braidwood
Unit 1 in 1998 compared to 1997 ($25 million), partially offset by plant
additions ($16 million) and shortened depreciable lives for certain nuclear
stations ($14 million). The $36 million increase in depreciation expense in
1997 is principally due to the early retirement of the steam generators at
Byron Unit 1 and Braidwood Unit 1. See Note 1 of Notes to Financial
Statements, under "Depreciation, Amortization of Regulatory Assets and
Liabilities, and Decommissioning," for additional information.

The staff of the SEC has questioned certain of the current accounting
practices of the electric utility industry, including ComEd, regarding the
recognition, measurement and classification of decommissioning costs for
nuclear generating stations in the financial statements of electric utilities.
In response to these questions, the FASB is reviewing the accounting for asset
removal costs including those related to nuclear decommissioning. If current
electric utility industry accounting practices for

F-22

such decommissioning costs are changed, annual provisions for decommissioning
could increase and the estimated costs of decommissioning could be recorded as
a liability rather than as accumulated depreciation. Decommissioning costs of
currently retired nuclear plants are recorded as a liability. Unicom and ComEd
do not believe that such changes, if required, would have an adverse effect on
their results of operations due to ComEd's ability to recover decommissioning
costs through rates.

Interest on Debt. Changes in interest on long-term debt and notes payable
for the years 1999, 1998 and 1997 were due to changes in average interest
rates and in the amounts of long-term debt and notes payable outstanding.
Changes in interest on ComEd's long-term debt also reflected new issues of
debt, the retirement and early redemption of debt, and the retirement and
redemption of issues which were refinanced at generally lower rates of
interest. See Notes 3 and 7 of Notes to Financial Statements for information
regarding the redemptions and repurchases of debt and equity. The average
amounts of ComEd's long-term debt and notes payable outstanding and average
interest rates thereon were as follows:

1999 1998 1997
------ ------ ------

Long-term debt outstanding:
Average amount (millions)............................. $8,119 $6,099 $6,256
Average interest rate................................. 6.76% 7.06% 7.65%
Notes payable outstanding:
Average amount (millions)............................. $ 320 $ 344 $ 153
Average interest rate................................. 5.82% 5.68% 5.95%

Other Items. The amounts of AFUDC reflect changes in the average levels of
investment subject to AFUDC and changes in the average annual capitalization
rates as discussed in Note 1 of Notes to Financial Statements, under "AFUDC
and Interest Capitalized." ComEd discontinued SFAS No. 71 regulatory
accounting practices in December 1997 for the generation portion of its
business, and as a result, began capitalizing interest in 1998. ComEd
capitalized $22 million and $28 million for the years 1999 and 1998,
respectively, of interest costs on its generation-related construction work in
progress and nuclear fuel in process. AFUDC and interest capitalized do not
contribute to the current cash flow of Unicom or ComEd.

ComEd's ratios of earnings to fixed charges for the years 1999, 1998 and
1997 were 2.45, 2.59 and 0.58, respectively. ComEd's ratios of earnings to
fixed charges and preferred and preference stock dividend requirements for the
years 1999, 1998 and 1997 were 2.32, 2.24 and 0.49, respectively.

Business corporations, in general, have been adversely affected by inflation
because amounts retained after the payment of all costs have been inadequate
to replace, at increased costs, the productive assets consumed. Electric
utilities, in particular, have been especially affected as a result of their
capital intensive nature and regulation which limits capital recovery and
prescribes installation or modification of facilities to comply with
increasingly stringent safety and environmental requirements. Because the
regulatory process limits the amount of depreciation expense included in
ComEd's revenue allowance to the original cost of utility plant investment,
the resulting cash flows are inadequate to provide for replacement of that
investment in future years or preserve the purchasing power of common equity
capital previously invested.

Foward-Looking Information. Except for historical data, the information
contained herein constitutes forward-looking statements. Forward-looking
statements are inherently uncertain and subject to risks. Such statements
should be viewed with caution. Actual results or experience could differ
materially from the forward-looking statements as a result of many factors.
Forward-looking statements in this report include, but are not limited to: (1)
statements regarding expectations of revenue reductions and collections of
future CTC revenues as a result of the 1997 Act in "Management's Discussion
and Analysis of Financial Condition and Results of Operations," subcaption

F-23

"Changes in the Electric Utility Industry--The 1997 Act," and in Notes 1 and 3
of Notes to Financial Statements, (2) statements regarding estimated capital
expenditures in "Management's Discussion and Analysis of Financial Condition
and Results of Operations," subcaptions "Liquidity and Capital Resources--
UTILITY OPERATIONS--Construction Program" and "Liquidity and Capital
Resources--UNREGULATED OPERATIONS--Construction Program," and "Changes in the
Electric Utility Industry--Response to Regulatory Changes," (3) statements
regarding the costs of decommissioning nuclear generating stations in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," subcaption "Regulation--Nuclear Matters," and in Note 1 of Notes
to Financial Statements, under "Depreciation, Amortization of Regulatory
Assets and Liabilities and Decommissioning," (4) statements regarding cleanup
costs associated with MGPs and other remediation sites in Note 22 of Notes to
Financial Statements, (5) statements regarding the estimated fair value of
forward energy contracts in "Management's Discussion and Analysis of Financial
Condition and Results of Operations," subcaption "Liquidity and Capital
Resources--UTILITY OPERATIONS--Market Risks," (6) statements regarding the
risks and uncertainties relating to Year 2000 issues set forth in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," subcaption "Liquidity and Capital Resources--UTILITY OPERATIONS--
Year 2000 Conversion," including Unicom's dependence upon the Year 2000
readiness of third parties with whom it has significant business relationships
and the estimated costs for final project wrap-up activities, (7) statements
regarding the use of fossil plant sale proceeds in "Management's Discussion
and Analysis of Financial Condition and Results of Operations," subcaptions
"Changes in the Electric Utility Industry--Fossil Plant Sale," "Liquidity and
Capital Resources--UTILITY OPERATIONS--Construction Program," and "Liquidity
and Capital Resources--UNREGULATED OPERATIONS--Capital Resources," and in Note
5 of Notes to Financial Statements, (8) statements regarding estimates of
claims resulting from the summer of 1999 outages set forth in Note 22 of Notes
to Financial Statements and (9) statements regarding the Merger Agreement in
Note 2 of Notes to Financial Statements and in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" subcaption "Changes
in the Electric Utility Industry--Merger Agreement." Management cannot predict
the course of future events or anticipate the interaction of multiple factors
beyond management's control and their effect on revenues, project timing and
costs. The statements regarding revenue reductions and collections of future
CTC revenues are subject to unforeseen developments in the market for
electricity in Illinois resulting from regulatory changes. The statements
regarding estimated capital expenditures, decommissioning costs, cleanup costs
and Year 2000 wrap-up costs are subject to changes in the scope of work and
manner in which the work is performed and consequent changes in the timing and
level of the projected expenditure, and are also subject to changes in laws
and regulations or their interpretation or enforcement. The statements
regarding expectations for Year 2000 readiness are also subject to the risk
that Year 2000 remediation efforts of other parties with whom Unicom has
significant business relationships are not successful. The statements
regarding the fair value of forward energy contracts are subject to changes in
generating capability and reduction in the demand for electricity. The
statement regarding the use of proceeds from the fossil plant sale is subject
to the possibility that regulatory action might affect the amount and use of
such proceeds and the possibility that, due to changing market conditions,
Unicom and ComEd may determine that other uses of the proceeds may be in their
best interest. The statements regarding estimates of claims resulting from the
summer of 1999 outages are subject to the risk that the actual amount of
losses suffered by customers and restoration costs may exceed the estimated
amounts. The statements regarding the Merger Agreement and the associated
repurchase of shares are subject to the risk of a significant delay in the
expected completion of, and unexpected consequences resulting from, the
transactions contemplated by the Merger Agreement, including the inability to
close the transaction, and to changes in the number of shares of outstanding
common stock of Unicom and PECO for unforeseen reasons. Unicom and ComEd make
no commitment to disclose any revisions to the forward-looking statements, or
any facts, events or circumstances after the date hereof that may bear upon
forward-looking statements.

F-24

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of Unicom Corporation:

We have audited the accompanying consolidated balance sheets and statements
of consolidated capitalization of UNICOM CORPORATION (an Illinois corporation)
and subsidiary companies as of December 31, 1999 and 1998, and the related
statements of consolidated operations, retained earnings/(deficit),
comprehensive income and cash flows for each of the three years in the period
ended December 31, 1999. These financial statements and the schedule referred
to below are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Unicom
Corporation and subsidiary companies as of December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the three years
in the period ended December 31, 1999 in conformity with accounting principles
generally accepted in the United States.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed under Item 14.(a)
is presented for the purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.

Arthur Andersen LLP

Chicago, Illinois
January 31, 2000

F-25

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED OPERATIONS

The following Statements of Consolidated Operations for the years 1999, 1998
and 1997 reflect the results of past operations and are not intended as any
representation as to results of operations for any future period. Future
operations will necessarily be affected by various and diverse factors and
developments, including changes in electric prices, regulation, population,
business activity, asset dispositions, competition, taxes, environmental
control, energy use, fuel, cost of labor, purchased power and other matters,
the nature and effect of which cannot now be determined.

1999 1998 1997
---------- ---------- -----------

Operating Revenues........................ $6,847,947 $7,103,410 $ 7,083,022
---------- ---------- -----------
Operating Expenses and Taxes:
Fuel.................................... $ 997,262 $1,057,527 $ 1,204,218
Purchased power......................... 551,575 748,017 400,055
Operation and maintenance............... 2,427,599 2,285,034 2,438,944
Depreciation and amortization........... 843,248 943,288 1,005,089
Taxes (except income)................... 508,453 699,834 800,886
Income taxes............................ 359,198 355,023 317,558
Investment tax credits deferred--net ... (25,828) (27,730) (31,015)
---------- ---------- -----------
$5,661,507 $6,060,993 $ 6,135,735
---------- ---------- -----------
Operating Income.......................... $1,186,440 $1,042,417 $ 947,287
---------- ---------- -----------
Other Income and (Deductions):
Interest on long-term debt, net of
interest capitalized................... $ (544,962) $ (444,322) $ (488,033)
Interest on notes payable............... (18,602) (19,560) (9,134)
Allowance for funds used during
construction........................... 21,812 16,464 42,325
Income taxes applicable to nonoperating
activities............................. 27,083 4,974 11,010
Provisions for dividends and redemption
premiums--
Preferred and preference stocks of
ComEd................................. (23,756) (56,884) (60,486)
ComEd-obligated mandatorily redeemable
preferred securities of subsidiary
trusts holding solely ComEd's
subordinated debt securities.......... (29,710) (29,710) (28,860)
Loss on nuclear plant closure........... -- -- (885,611)
Income tax effects of nuclear plant
closure................................ -- -- 362,952
Miscellaneous--net...................... (21,060) (3,195) (130,665)
---------- ---------- -----------
$ (589,195) $ (532,233) $(1,186,502)
========== ========== ===========
Net Income/(Loss) before Extraordinary
Items and Cumulative Effect of Change in
Accounting Principle..................... $ 597,245 $ 510,184 $ (239,215)
Extraordinary Losses, less Applicable
Income Taxes............................. (27,579) -- (810,335)
Cumulative Effect of Change in Accounting
Principle................................ -- -- 196,700
---------- ---------- -----------
Net Income/(Loss)......................... $ 569,666 $ 510,184 $ (852,850)
---------- ---------- -----------
Earnings/(loss) per common share before
extraordinary items and cumulative effect
of change in accounting principle--
Basic................................... $ 2.75 $ 2.35 $ (1.10)
Diluted................................. $ 2.74 $ 2.34 $ (1.10)
Extraordinary losses, less applicable
income taxes (basic and diluted)......... $ (0.13) $ -- $ (3.75)
Cumulative effect of change in accounting
principle (basic and diluted)............ $ -- $ -- $ 0.91
Earnings/(loss) per common share--
Basic................................... $ 2.62 $ 2.35 $ (3.94)
Diluted................................. $ 2.61 $ 2.34 $ (3.94)
Cash Dividends Declared per Common Share.. $ 1.60 $ 1.60 $ 1.60

The accompanying Notes to Financial Statements are an integral part of the
above statements.

F-26

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

December 31
------------------------
ASSETS 1999 1998
------ ----------- -----------
(Thousands of Dollars)

Utility Plant:
Plant and equipment, at original cost (includes
construction work in progress of $672 million and
$858 million, respectively)....................... $25,007,637 $27,801,246
Less--Accumulated provision for depreciation....... 13,729,223 15,234,320
----------- -----------
$11,278,414 $12,566,926
Nuclear fuel, at amortized cost.................... 843,724 874,979
----------- -----------
$12,122,138 $13,441,905
----------- -----------
Investments and Other Property:
Nuclear decommissioning funds...................... $ 2,546,540 $ 2,267,317
Subsidiary companies............................... 50,417 41,150
Other, at cost..................................... 470,848 275,794
----------- -----------
$ 3,067,805 $ 2,584,261
----------- -----------
Current Assets:
Cash and temporary cash investments................ $ 1,696,336 $ 55,828
Cash held for redemption of securities............. 285,056 3,062,816
Other cash investments............................. 62 --
Special deposits................................... 1,845,730 271
Receivables--
Customers........................................ 1,224,678 1,369,701
Forward share repurchase contract................ 813,046 --
Other............................................ 181,532 136,701
Provisions for uncollectible accounts............ (50,814) (48,645)
Coal and fuel oil, at average cost................. 15,613 135,415
Materials and supplies, at average cost............ 221,157 232,246
Deferred income taxes related to current assets and
liabilities....................................... 60,056 24,339
Prepayments and other.............................. 36,268 20,301
----------- -----------
$ 6,328,720 $ 4,988,973
----------- -----------
Deferred Charges and Other Noncurrent Assets:
Regulatory assets.................................. $ 1,792,907 $ 4,578,427
Other.............................................. 94,463 96,907
----------- -----------
$ 1,887,370 $ 4,675,334
----------- -----------
$23,406,033 $25,690,473
=========== ===========

The accompanying Notes to Financial Statements are an integral part of the
above statements.

F-27

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

December 31
-----------------------
CAPITALIZATION AND LIABILITIES 1999 1998
------------------------------ ----------- -----------
(Thousands of Dollars)

Capitalization (see accompanying statements):
Common stock equity.................................. $ 5,332,611 $ 5,099,444
Preferred and preference stocks of ComEd--
Without mandatory redemption requirements.......... 1,790 74,488
Subject to mandatory redemption requirements....... -- 69,475
ComEd-obligated mandatorily redeemable preferred se-
curities of subsidiary trusts holding solely ComEd's
subordinated debt securities*....................... 350,000 350,000
Long-term debt....................................... 7,129,906 7,792,502
----------- -----------
$12,814,307 $13,385,909
----------- -----------
Current Liabilities:
Notes payable........................................ $ 4,750 $ 292,963
Current portion of long-term debt, redeemable prefer-
ence stock and capitalized lease obligations of sub-
sidiary companies................................... 915,439 2,314,443
Accounts payable..................................... 582,920 604,936
Accrued interest..................................... 146,718 180,674
Accrued taxes........................................ 1,386,930 134,976
Dividends payable.................................... 94,090 105,133
Customer deposits.................................... 68,128 56,954
Accrued plant closing costs.......................... -- 78,430
Other................................................ 316,542 155,262
----------- -----------
$ 3,515,517 $ 3,923,771
----------- -----------
Deferred Credits and Other Noncurrent Liabilities:
Deferred income taxes................................ $ 2,484,883 $ 3,805,460
Nuclear decommissioning liability for retired plants. 1,259,700 1,215,400
Accumulated deferred investment tax credits.......... 484,717 562,285
Accrued spent nuclear fuel disposal fee and related
interest............................................ 763,427 728,413
Obligations under capital leases of subsidiary compa-
nies................................................ 161,611 333,653
Regulatory liabilities............................... 596,157 595,005
Other................................................ 1,325,714 1,140,577
----------- -----------
$ 7,076,209 $ 8,380,793
----------- -----------
Commitments and Contingent Liabilities (Note 22)
$23,406,033 $25,690,473
=========== ===========

*As described in Note 11 of Notes to Financial Statements, the sole asset of
ComEd Financing I, a subsidiary trust of ComEd, is $206.2 million principal
amount of ComEd's 8.48% subordinated deferrable interest notes due September
30, 2035. The sole asset of ComEd Financing II, also a subsidiary trust of
ComEd, is $154.6 million principal amount of ComEd's 8.50% subordinated
deferrable interest debentures due January 15, 2027.

The accompanying Notes to Financial Statements are an integral part of the
above statements.

F-28

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED CAPITALIZATION

December 31
------------------------
1999 1998
----------- -----------
(Thousands of Dollars)

Common Stock Equity:
Common stock, without par value--
Outstanding--217,835,570 shares and 217,094,560
shares, respectively.............................. $ 4,971,618 $ 4,966,630
Preference stock expense of ComEd................... (72) (3,199)
Retained earnings................................... 363,621 142,813
Accumulated other comprehensive income.............. 7,539 --
Treasury stock--264,406 shares and 178,982 shares,
respectively....................................... (10,095) (6,800)
----------- -----------
$ 5,332,611 $ 5,099,444
----------- -----------
Preferred and Preference Stocks of ComEd--
Without Mandatory Redemption Requirements:
Preference stock, cumulative, without par value--
Outstanding--No shares and 13,499,549 shares,
respectively.................................... $ -- $ 504,957
Current redemption requirements for preference
stock included in current liabilities............ -- (432,320)
$1.425 convertible preferred stock, cumulative,
without par value--
Outstanding--56,291 shares and 58,211 shares,
respectively.................................... 1,790 1,851
Prior preferred stock, cumulative, $100 par value
per share--
No shares outstanding............................ -- --
----------- -----------
$ 1,790 $ 74,488
----------- -----------
Subject to Mandatory Redemption Requirements:
Preference stock, cumulative, without par value--
Outstanding--700,000 shares and 1,720,345 shares,
respectively.................................... $ 69,475 $ 171,348
Current redemption requirements for preference
stock included
in current liabilities........................... (69,475) (101,873)
----------- -----------
$ -- $ 69,475
----------- -----------
ComEd-Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trusts Holding Solely
ComEd's Subordinated Debt Securities................. $ 350,000 $ 350,000
----------- -----------
Long-Term Debt:
First mortgage bonds:
Maturing 2000 through 2004--6 3/8% to 9 3/8%...... $ 698,245 $ 1,080,000
Maturing 2005 through 2014--4.40% to 8 3/8%....... 1,299,400 1,485,400
Maturing 2015 through 2023--5.85% to 9 7/8%....... 1,589,443 1,981,000
----------- -----------
$ 3,587,088 $ 4,546,400
Transitional trust notes, due 2000 through 2008--
5.29% to 5.74%..................................... 3,070,000 3,400,000
Sinking fund debentures, due 2001 through 2011--2
3/4% to 7 5/8%..................................... 30,866 94,159
Pollution control obligations, due 2007 through
2014--5.3% to 5 7/8%............................... 139,200 140,700
Other long-term debt................................ 1,089,347 1,259,204
Current maturities of long-term debt included in
current liabilities................................ (737,615) (1,585,281)
Unamortized net debt discount and premium........... (48,980) (62,680)
----------- -----------
$ 7,129,906 $ 7,792,502
----------- -----------
$12,814,307 $13,385,909
----------- -----------

The accompanying Notes to Financial Statements are an integral part of the
above statements.

F-29

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED RETAINED EARNINGS/(DEFICIT)

1999 1998 1997
-------- -------- ----------
(Thousands of Dollars)

Balance at Beginning of Period................. $142,813 $(21,184) $1,177,997
Add--Net income/(loss)......................... 569,666 510,184 (852,850)
-------- -------- ----------
$712,479 $489,000 $ 325,147
-------- -------- ----------
Deduct--
Cash dividends declared on
common stock.............................. $347,783 $347,161 $ 346,225
Other capital stock transactions--net....... 1,075 (974) 106
-------- -------- ----------
$348,858 $346,187 $ 346,331
-------- -------- ----------
Balance at End of Period (Includes $716
million, $494 million and $331 million of
appropriated retained earnings at December
31, 1999, 1998 and 1997, respectively)....... $363,621 $142,813 $ (21,184)
======== ======== ==========

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

1999 1998 1997
-------- -------- ----------
(Thousands of Dollars)

Net Income/(Loss) on Common Stock.............. $569,666 $510,184 $ (852,850)
Other Comprehensive Income
Unrealized gains on securities............... $ 12,471 $ -- $ --
Income taxes on other comprehensive income... (4,932) -- --
-------- -------- ----------
Other comprehensive income, net of tax....... $ 7,539 $ -- $ --
-------- -------- ----------
Comprehensive Income/(Loss).................... $577,205 $510,184 $ (852,850)
======== ======== ==========

The accompanying Notes to Financial Statements are an integral part of the
above statements.

F-30

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED CASH FLOWS

1999 1998 1997
----------- ----------- -----------
(Thousands of Dollars)

Cash Flow from Operating Activities:
Net income/(loss)...................... $ 569,666 $ 510,184 $ (852,850)
Adjustments to reconcile net
income/(loss) to net cash provided by
operating activities:
Depreciation and amortization........ 908,894 994,861 1,051,543
Deferred income taxes and investment
tax credits--net.................... (1,448,363) 69,768 (345,042)
Contribution to environmental trust.. (250,000) -- --
Recovery of coal reserve regulatory
assets.............................. 197,974 108,372 82,441
Increase in MGP liability............ 68,078 -- --
Extraordinary loss related to write-
off of certain net regulatory
assets.............................. -- -- 810,335
Cumulative effective of change in
accounting principle................ -- -- (196,700)
Loss on nuclear plant closure........ -- -- 885,611
Write-down of uranium-related
properties.......................... -- -- 64,387
Provisions/(payments) for revenue
refunds--net........................ (22,603) (23,622) 45,470
Equity component of allowance for
funds used during construction...... (7,789) (6,959) (23,770)
Provisions/(payments) for liability
for separation costs--net........... (62,396) 9,757 15,986
Net effect on cash flows of changes
in:
Receivables........................ 103,515 (486,838) 24,083
Coal and fuel oil.................. 618 (14,751) 19,698
Materials and supplies............. (5,202) 19,805 41,659
Accounts payable excluding nuclear
fuel lease principal payments and
separation costs--net............. (19,251) 97,094 259,810
Accrued interest and taxes......... 1,246,007 (27,201) (17,903)
Other changes in certain current
assets and liabilities............ 124,154 144,290 39,005
Other--net........................... (43,257) 27,525 109,927
----------- ----------- -----------
$ 1,360,045 $ 1,422,285 $ 2,013,690
----------- ----------- -----------
Cash Flow from Investing Activities:
Construction expenditures.............. $(1,204,064) $ (966,494) $(1,043,311)
Nuclear fuel expenditures.............. (253,483) (166,168) (185,373)
Sales of generating plants............. 4,885,720 177,454 60,791
Equity component of allowance for
funds used during construction........ 7,789 6,959 23,770
Contributions to nuclear
decommissioning funds................. (89,945) (136,771) (114,825)
Other investments and special
deposits.............................. (1,886,323) (10,965) (13,246)
Plant removals--net.................... (74,584) (86,988) (85,923)
----------- ----------- -----------
$ 1,385,110 $(1,182,973) $(1,358,117)
----------- ----------- -----------
Cash Flow from Financing Activities:
Issuance of securities--
Transitional trust notes.............. $ -- $ 3,382,629 $ --
Other long-term debt.................. 201,764 382,270 362,663
Company-obligated mandatorily
redeemable preferred securities if
subsidiary trust holding solely the
Company's subordinated debt
securities........................... -- -- 150,000
Capital stock......................... 20,941 16,644 15,778
Retirement and redemption of
securities--
Transitional trust notes.............. (330,000) -- --
Other long-term debt.................. (1,431,545) (615,858) (746,240)
Capital stock......................... (639,342) (34,066) (44,111)
Repurchase of common stock............. (813,046) (6,800) --
Cash dividends paid on common stock.... (347,564) (346,954) (345,936)
Proceeds from sale/leaseback of
nuclear fuel.......................... -- 101,038 149,955
Nuclear fuel lease principal payments.. (255,402) (255,605) (166,411)
Increase/(decrease) in short-term
borrowings............................ (288,213) 134,813 29,400
----------- ----------- -----------
$(3,882,407) $ 2,758,111 $ (594,902)
----------- ----------- -----------
Change in Net Cash Balance.............. $(1,137,252) $ 2,997,423 $ 60,671
Cash, Temporary Cash Investments and
Cash Held for Redemption of Securities:
Balance at Beginning of Period....... 3,118,644 121,221 60,550
----------- ----------- -----------
Balance at End of Period............. $ 1,981,392 $ 3,118,644 $ 121,221
=========== =========== ===========

The accompanying Notes to Financial Statements are an integral part of the
above statements.

F-31

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

(1) Summary of Significant Accounting Policies.

Corporate Structure and Basis of Presentation. Unicom is the parent holding
company of ComEd and Unicom Enterprises. ComEd, a regulated electric utility,
is the principal subsidiary of Unicom. Unicom Enterprises is an unregulated
subsidiary of Unicom and is engaged, through its subsidiaries, in energy
service activities.

The consolidated financial statements include the accounts of Unicom, ComEd,
Indiana Company, Edison Development, the Trusts, ComEd Funding, ComEd Funding
Trust and Unicom's unregulated subsidiaries. All significant intercompany
transactions have been eliminated. Although the accounts of ComEd Funding and
ComEd Funding Trust, which are SPEs, are included in the consolidated
financial statements, as required by GAAP, ComEd Funding and ComEd Funding
Trust are legally separated from Unicom and ComEd. The assets of the SPEs are
not available to creditors of Unicom or ComEd and the transitional property
held by the SPEs are not assets of Unicom or ComEd.

Use of Estimates. The preparation of financial statements in conformity with
GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Due to the transition to a new
customer information and billing system, a larger portion of customer revenues
and net receivables were based on estimates for the period July 1998 through
November 1999 than in previous periods.

Regulation. ComEd is subject to regulation as to accounting and ratemaking
policies and practices by the ICC and FERC. ComEd's accounting policies and
the accompanying consolidated financial statements conform to GAAP applicable
to rate-regulated enterprises for the non-generation portion of its business,
including the effects of the ratemaking process in accordance with SFAS
No. 71, Accounting for the Effects of Certain Types of Regulation. Such
effects on the non-generation portion of its business concern mainly the time
at which various items enter into the determination of operating results in
order to follow the principle of matching costs with the applicable revenues
collected from or returned to customers through future rates. See Note 3 for
information regarding the write-off of generation-related regulatory assets
and liabilities in December 1997.

ComEd's investment in generation-related net utility plant, not subject to
cost-based rate regulation, including construction work in progress and
nuclear fuel, and excluding the decommissioning costs included in the
accumulated provision for depreciation was $7.8 billion and $9.2 billion as of
December 31, 1999 and 1998, respectively. See "Regulatory Assets and
Liabilities" below regarding the plant impairment recorded by ComEd in the
second quarter of 1998.

F-32

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

Regulatory Assets and Liabilities. Regulatory assets are incurred costs
which have been deferred and are amortized for ratemaking and accounting
purposes. Regulatory liabilities represent amounts to be settled with
customers through future rates. Regulatory assets and liabilities reflected on
the Consolidated Balance Sheets at December 31, 1999 and 1998 were as follows:

December 31
---------------------
1999 1998
---------- ----------
(Thousands of
Dollars)

Regulatory assets:
Impaired production plant............................... $ 366,221 $2,955,154
Deferred income taxes (1)............................... 688,946 680,356
Nuclear decommissioning costs--Dresden Unit 1........... 202,308 255,031
Nuclear decommissioning costs--Zion Units 1 and 2....... 496,638 443,130
Coal reserves........................................... -- 197,975
Unamortized loss on reacquired debt (2)................. 38,794 46,781
---------- ----------
$1,792,907 $4,578,427
========== ==========
Regulatory liabilities:
Deferred income taxes (1)............................... $ 596,157 $ 595,005
========== ==========

- --------
(1) Recorded in compliance with SFAS No. 109, Accounting for Income Taxes, for
non-generation related temporary differences.
(2) Amortized over the remaining lives of the non-generation related long-term
debt issued to finance the reacquisition. See "Loss on Reacquired Debt"
below for additional information.

ComEd performed a SFAS No. 121 impairment analysis in 1998 which concluded
that future revenues, excluding the collection of the CTC expected to be
recovered from electric supply services, would be insufficient to cover the
costs of certain of its generating assets. Because future regulated cash
flows, which include the CTC, tariff revenues and gains from the disposition
of assets, are expected to provide recovery of the impaired plant assets, a
regulatory asset was recorded for the same amount. This regulatory asset is
currently being amortized as it is recovered through regulated cash flows over
a transition period that extends through 2006. Consistent with the provisions
of the 1997 Act, the (pre-tax) gain on the sale of $2.587 billion resulted in
a regulatory liability, which was used to recover regulatory assets.
Therefore, the gain on the sale, excluding $43 million of amortization of
investment tax credits, was recorded as a regulatory liability in the amount
of $2.544 billion and amortized in the fourth quarter of 1999. The
amortization of the regulatory liability and additional regulatory asset
amortization of $2.456 billion are reflected in depreciation and amortization
expense on Unicom's Statements of Consolidated Operations and resulted in a
net reduction to depreciation and amortization expense of $88 million. See
Note 3 for additional information regarding amortization of regulatory assets
with respect to limits on ComEd's earnings due to statutory sharing
provisions. See Note 5 for additional information regarding the fossil plant
sale.

The regulatory assets for Dresden Unit 1 and Zion Units 1 and 2 represent
unrecovered nuclear decommissioning costs, which are expected to be recovered
over the periods 2000-2011 and 2000-2013, respectively, through a separate
rate recovery rider provided for by the 1997 Act. See "Depreciation,
Amortization of Regulatory Assets and Liabilities and Decommissioning" below
for additional information.

F-33

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

Depreciation, Amortization of Regulatory Assets and Liabilities, and
Decommissioning. Depreciation, amortization of regulatory assets and
liabilities, and decommissioning for the years 1999, 1998 and 1997 were as
follows:

1999 1998 1997
-------- -------- ----------
(Thousands of Dollars)

Depreciation expense.............................. $713,340 $788,057 $ 881,196
Amortization of regulatory assets and
liabilities--net................................. 46,088 65,211 15,272
-------- -------- ----------
$759,428 $853,268 $ 896,468
Decommissioning expense........................... 83,820 90,020 108,621
-------- -------- ----------
$843,248 $943,288 $1,005,089
======== ======== ==========

Provisions for depreciation, including nuclear plant, were at average annual
rates of average depreciable utility plant and equipment for the years 1999,
1998 and 1997 as follows:

1999 1998 1997
---- ---- ----

Average annual depreciation rates............................. 2.66% 3.02% 3.36%

Depreciation is provided on a straight-line basis by amortizing the cost of
depreciable plant and equipment over estimated service lives for each class of
plant. The decrease in the average depreciation rates for the year 1999,
compared to 1998, relates primarily to a reduction in nuclear depreciation
rates due to the partial impairment of production plant, which was recorded as
a component of accumulated depreciation, partially offset by shortened
depreciable lives for certain nuclear stations. See "Regulatory Assets and
Liabilities" above for additional information on the partial impairment of
production plant.

Nuclear plant decommissioning costs generally are accrued over the current
NRC license lives of the related nuclear generating units. The accrual is
based on an annual levelized cost of the unrecovered portion of estimated
decommissioning costs, which are escalated for expected inflation to the
expected time of decommissioning and are net of expected earnings on the trust
funds. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations," subcaption "Results of Operations--Depreciation,
Amortization and Decommissioning," for a discussion of questions raised by the
staff of the SEC and a FASB review regarding the electric utility industry's
method of accounting for decommissioning costs. Dismantling is expected to
occur relatively soon after the end of the current NRC license life of each
generating station currently operating. The accrual for decommissioning is
based on the prompt removal method authorized by NRC guidelines. ComEd's ten
operating units have remaining current NRC license lives ranging from 7 to 28
years. ComEd's Zion Station and its first nuclear unit, Dresden Unit 1, are
retired and are expected to be dismantled beginning in the years 2014 and
2011, respectively, which is consistent with the regulatory treatment for
recovery of the related decommissioning costs.

F-34

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued
the adoption of or changes to NRC regulations, as well as changes in the
assumptions used in making such estimates, including changes in technology,
available alternatives for the disposal of nuclear waste and inflation.

Since 1995, ComEd has collected decommissioning costs from its ratepayers in
conjunction with a rider to its tariffs. The rider allows annual adjustments
to decommissioning cost collections outside the context of a traditional rate
proceeding and will continue under the 1997 Act. The current estimated
decommissioning costs include a contingency allowance, but, except at Dresden
Unit 1, exclude amounts for alternative spent fuel storage installations,
which may be necessary to store spent fuel during the period beginning at the
end of the NRC license lives of the plants to the date when the DOE accepts
the spent fuel for permanent storage. Contingency allowances used in
decommissioning cost estimates provide for currently unspecifiable costs that
are likely to occur after decommissioning begins and generally range from 20%
to 25% of the currently specifiable costs. In February 1998, the ICC
authorized a reduction in the annual decommissioning cost accrual from $109
million to $84 million. The reduction primarily reflected stronger than
expected after-tax returns on the external trust funds and lower than expected
escalation in low-level waste disposal costs, partially offset by the higher
current-year cost estimates, including a contingency allowance.

Under its most recent annual rider, filed with the ICC on February 26, 1999,
ComEd has proposed to increase its estimated annual decommissioning cost
accrual from $84 million to $130 million. The proposed increase primarily
reflects an increase in low-level waste disposal cost escalation, the
inclusion of $219 million in current-year (2000) dollars for safety-related
costs of maintaining Zion Station in a mothballed condition until
dismantlement begins, and the inclusion of non-radiological costs in the
decommissioning cost estimates for recovery under the rider.

The proposed annual decommissioning cost accrual of $130 million was
determined using the following assumptions: the decommissioning cost estimate
of $5.7 billion in current-year (2000) dollars, after-tax earnings on the tax-
qualified and nontax-qualified decommissioning funds of 7.49% and 6.83%,
respectively, and an escalation rate for future decommissioning costs of
4.84%. The proposed annual accrual provided over the current NRC license lives
of the nuclear plants, coupled with the expected fund earnings and amounts
previously recovered in rates, is expected to aggregate to approximately $13.8
billion.

For the ten operating nuclear units, decommissioning cost accruals are
recorded as portions of depreciation expense and accumulated provision for
depreciation on the Statements of Consolidated Operations and the Consolidated
Balance Sheets, respectively, as such costs are recovered through rates. As of
December 31, 1999, the total decommissioning costs included in the accumulated
provision for depreciation were $2,100 million.

For ComEd's retired nuclear units, the total estimated liability for nuclear
decommissioning in current-year (2000) dollars is recorded as a noncurrent
liability. The unrecovered portion of the liability is recorded as a
regulatory asset. The nuclear decommissioning liability for retired plants as
of December 31, 1999 was as follows:

Zion
Dresden Units
Unit 1 1 and 2 Total
-------- -------- ----------
(Thousands of Dollars)

Amounts recovered through rates and investment
fund earnings.................................... $104,792 $455,962 $ 560,754
Unrecovered portion of the liability.............. 202,308 496,638 698,946
-------- -------- ----------
Nuclear decommissioning liability for retired
plants.......................................... $307,100 $952,600 $1,259,700
======== ======== ==========

F-35

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

Under Illinois law, decommissioning cost collections are required to be
deposited into external trusts. Consequently, such collections do not add to
the cash flows available for general corporate purposes. The ICC has approved
ComEd's funding plan, which provides for annual contributions of current
accruals and ratable contributions of past accruals over the remaining current
NRC license lives of the nuclear plants. The fair value of funds accumulated
in the external trusts at December 31, 1999 was $2,547 million, which includes
pre-tax unrealized appreciation of $721 million. The earnings on the external
trusts for operating plants accumulate in the fund balance and accumulated
provision for depreciation. Nuclear decommissioning funding as of December 31,
1999 was as follows:

(Thousands of Dollars)

Amounts recovered through rates and investment fund
earnings for operating plants (included in the
accumulated provision for depreciation)................ $2,099,796
Amounts recovered through rates and investment fund
earnings for retired plants............................ 560,754
Less past accruals not yet contributed to the trusts.... 114,010
----------
Fair value of external trust funds..................... $2,546,540
==========

Customer Receivables and Revenues. ComEd is engaged principally in the
production, purchase, transmission, distribution and sale of electricity to a
diverse base of residential, commercial, industrial and wholesale customers.
ComEd's electric service territory has an area of approximately 11,300 square
miles and an estimated population of approximately eight million as of
December 31, 1999. It includes the City, an area of about 225 square miles
with an estimated population of approximately three million from which ComEd
derived approximately 30 percent of its ultimate consumer revenues in 1999.
ComEd had approximately 3.5 million electric customers at December 31, 1999.
Revenues are recognized as electric and delivery services are provided to
customers.

As a result of the implementation of a new customer billing and information
system in July 1998, billing and collection delays have temporarily increased
accounts receivable from customers. ComEd has recorded increased provisions
for uncollectible accounts to recognize the estimated portion of the
receivables that are not expected to be recoverable. Such provisions increased
O&M expenses by $35 million and $10 million in 1999 and 1998, respectively,
compared to normally expected levels. See "Use of Estimates" above for
additional information regarding ComEd's revenues and net receivables.

See Notes 3 and 19 for additional information.

Nuclear Fuel. The cost of nuclear fuel is amortized to fuel expense based on
the quantity of heat produced using the unit of production method. As
authorized by the ICC, provisions for spent nuclear fuel disposal costs have
been recorded at a level required to recover the fee payable on the current
nuclear-generated and sold electricity and the current interest accrual on the
one-time fee payable to the DOE for nuclear generation prior to April 7, 1983.
The one-time fee and interest thereon have been recovered and the current fee
and interest on the one-time fee are presently being recovered through base
rates. See Note 14 for additional information concerning the disposal of spent
nuclear fuel, one-time fee and interest accrual on the one-time fee. Nuclear
fuel expenses, including leased fuel costs and provisions for spent nuclear
fuel disposal costs, were $380 million, $325 million and $298 million for the
years 1999, 1998 and 1997, respectively.

Income Taxes. Deferred income taxes are provided for income and expense
items recognized for financial accounting purposes in periods that differ from
those for income tax purposes. Income taxes deferred in prior years are
charged or credited to income as the book/tax temporary differences reverse.
Prior years' deferred investment tax credits are amortized through credits to
income generally over the lives of the related property. Income tax credits
resulting from interest charges applicable to nonoperating activities,
principally construction, are classified as other income.

F-36

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

AFUDC and Interest Capitalized. In accordance with the uniform systems of
accounts prescribed by regulatory authorities, ComEd capitalizes AFUDC,
compounded semiannually, which represents the estimated cost of funds used to
finance its construction program for the non-generation portion of its
business. The equity component of AFUDC is recorded on an after-tax basis and
the borrowed funds component of AFUDC is recorded on a pre-tax basis. The
average annual capitalization rates were 7.81%, 8.34% and 9.39% for the years
1999, 1998 and 1997, respectively. ComEd discontinued SFAS No. 71 regulatory
accounting practices in December 1997 for the generation portion of its
business, and as a result began capitalizing interest in 1998. ComEd
capitalized $22 million and $28 million for the years 1999 and 1998,
respectively, in interest costs on its generation-related construction work in
progress and nuclear fuel in process. AFUDC and interest capitalized do not
contribute to the current cash flow of Unicom or ComEd.

Interest. Total interest costs incurred on debt, leases and other
obligations were $642 million, $538 million and $598 million for the years
1999, 1998 and 1997, respectively.

Debt Discount, Premium and Expense. Discount, premium and expense on long-
term debt of ComEd are being amortized over the lives of the respective
issues.

Loss on Reacquired Debt. Consistent with regulatory treatment, the net loss
from ComEd's reacquisition, in connection with the refinancing of first
mortgage bonds, sinking fund debentures and pollution control obligations
prior to their scheduled maturity dates, is deferred and amortized over the
lives of the long-term debt issued to finance the reacquisition for non-
generation related financings. See "Regulatory Assets and Liabilities" above
and Note 3 for additional information.

Stock Option Awards/Employee Stock Purchase Plan. Unicom has elected to
adopt SFAS No. 123, Accounting for Stock-Based Compensation, for disclosure
purposes only. Unicom accounts for its stock option awards and ESPP under APB
Opinion No. 25, Accounting for Stock Issued to Employees. See Note 8 for
additional information.

Average Common Shares Outstanding. The number of average outstanding common
shares used to compute basic and diluted EPS for the years, 1999, 1998 and
1997 were as follows:

1999 1998 1997
------- ------- -------
(Thousands of Shares)

Average Number of Common Shares Outstanding:
Average Number of Common Shares--Basic................. 217,303 216,942 216,330
Potentially Dilutive Common Shares--Treasury Method:
Stock Options........................................ 660 633 136
Other Convertible Securities......................... 88 85 98
------- ------- -------
Average Number of Common Shares--Diluted................ 218,051 217,660 216,564
======= ======= =======

Energy Risk Management Contracts. In the normal course of business, ComEd
utilizes contracts for the forward sale and purchase of energy to manage
effectively the utilization of its available generating capability. ComEd also
utilizes put and call option contracts and energy swap arrangements to limit
the market price risk associated with the forward commodity contracts. As
ComEd does not currently utilize financial or commodity instruments for
trading or speculative purposes, any gains or losses on forward commodity
contracts are recognized when the underlying transactions affect earnings.
Revenues and expenses associated with market price risk management contracts
are amortized over the terms of such contracts.

F-37

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, which establishes accounting and reporting
standards requiring that every derivative instrument, including certain
derivative instruments embedded in other contracts, be recorded on the
Consolidated Balance Sheets as either an asset or liability measured at its
fair value. SFAS No. 133 requires that changes in the derivative's fair value
be recognized currently in earnings, unless specific hedge accounting criteria
are met. Special accounting for qualifying hedges allows a derivative's gains
and losses to offset related results on the hedged item on the Statements of
Consolidated Operations, and requires Unicom and ComEd to formally document,
designate, and assess the effectiveness of transactions that receive hedge
accounting.

The effective date of SFAS No. 133 has been delayed for one year, to fiscal
years beginning after June 15, 2000. SFAS No. 133 may be implemented prior to
June 15, 2000, but such implementation cannot be applied retroactively. SFAS
No. 133 must be applied to (i) derivative instruments and (ii) certain
derivative instruments embedded in hybrid contracts that were issued,
acquired, or substantively modified after January 1, 1998 or January 1, 1999
at the Company's election.

Unicom and ComEd are in the process of reviewing their various contracts to
determine which contracts meet the requirements of SFAS No. 133 and would need
to be reflected as derivatives under the standard and accounted for at fair
value. Among the contracts that are being reviewed are purchase power
agreements, contracts related to electricity purchases and sales, contracts
related to gas purchases and sales, normal purchase orders, securities issued
and insurance contracts. Unicom and ComEd have not yet quantified the effects
on their financial statements of adopting SFAS No. 133. However, adoption of
SFAS No. 133 could increase volatility in earnings and other comprehensive
income.

Reclassifications. Certain prior year amounts have been reclassified to
conform with current period presentation. These reclassifications had no
effect on operating results.

Cash Held for Redemption of Securities. As of December 31, 1999, the cash
held for redemption of securities reported on the Consolidated Balance Sheets
includes $222 million in unused cash proceeds from the issuance of the
transitional trust notes and $63 million of escrowed cash and pending
instrument funding charges collected from ComEd customers to be applied to the
principal and interest payment on the transitional trust notes. See Note 3 for
additional information.

Special Deposits. As of December 31, 1999, special deposits included $1.8
billion for cash deposited by Unicom Investments in connection with a
contemplated like-kind exchange transaction involving certain of the sold
fossil plants.

Statements of Consolidated Cash Flows. For purposes of the Statements of
Consolidated Cash Flows, temporary cash investments, generally investments
maturing within three months at the time of purchase, and cash held for
redemption of securities are considered to be cash equivalents. Supplemental
cash flow information for the years 1999, 1998 and 1997 was as follows:

1999 1998 1997
-------- -------- --------
(Thousands of Dollars)

Supplemental Cash Flow Information:
Cash paid during the period for:
Interest (net of amount capitalized)............ $597,984 $454,091 $512,050
Income taxes (net of refunds)................... $455,180 $272,476 $264,802
Supplemental Schedule of Non-Cash Investing and
Financing Activities:
Capital lease obligations incurred by subsidiary
companies........................................ $ 1,744 $106,370 $158,412

F-38

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

(2) Merger Agreement. In September 1999, the Boards of Directors of Unicom
and PECO approved a merger of equals that will create a new holding company,
Exelon. The merger is conditioned, among other things, upon the approvals of
the shareholders of both companies and by various regulatory bodies. The
merger is currently expected to be completed in the latter half of 2000.

(3) Accounting Effects Related to the 1997 Act. In December 1997, the
Governor of Illinois signed into law the 1997 Act, which established a phased
process to introduce competition into the electric industry in Illinois under
a less regulated structure. The 1997 Act was amended in June 1999.

As a result of the 1997 Act and FERC rules, prices for the supply of
electric energy are expected to transition from cost-based, regulated rates to
rates determined by competitive market forces. Accordingly, the 1997 Act
provides for, among other things, gradual customer access to other electric
suppliers or a power purchase option which allows the purchase of electric
energy from ComEd at market based prices, and the collection of a CTC from
customers who choose to purchase electric energy from a RES or elect the power
purchase option during a transition period that extends through 2006.
Effective October 1, 1999, the CTC was established in accordance with a
formula defined in the 1997 Act. The CTC, which is applied on a cents per
kilowatthour basis, considers the revenue which would have been collected from
a customer under tariffed rates, reduced by the revenue the utility will
receive for providing delivery services to the customer, the market price for
electricity and a defined mitigation factor, which represents the utility's
opportunity to develop new revenue sources and achieve cost savings. The CTC
allows ComEd to recover some of its costs which might otherwise be
unrecoverable under market-based rates. Nonetheless, ComEd will need to take
steps to address the portion of such costs which are not recoverable through
the CTC. Such steps may include cost control efforts, developing new sources
of revenue and asset dispositions. See Note 5 for additional information.

On October 1, 1999, more than 41,000 non-residential customers became
eligible to choose a new electric supplier or elect the purchase power option.
The remainder of non-residential customers will become eligible to choose an
electric supplier or the purchase power option between June 1 and December 31,
2000. As of December 31, 1999, over 4,700 non-residential customers,
representing approximately ten percent of ComEd's 1998 retail kilowatthour
sales, elected to receive their electric energy from a RES or chose the
purchase power option. As a result of the collection of CTC's from such
customers, ComEd does not expect these elections to have a material effect on
its results of operations in the near term.

Utilities are required to continue to offer delivery services, including the
transmission and distribution of electric energy, such that customers who
select a RES can receive electric energy from

F-39

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued
that supplier using existing transmission and distribution facilities. Such
services will continue to be offered under cost-based, regulated rates. The
ICC issued orders in August and September 1999 approving, with modifications,
ComEd's delivery service tariffs.

Notwithstanding the rate reductions and subject to certain earnings tests, a
rate freeze will generally be in effect until at least January 1, 2005. During
this period, utilities may reorganize, sell or assign assets, retire or remove
plants from service, and accelerate depreciation or amortization of assets
with limited ICC regulatory review. A utility may request a rate increase
during the rate freeze period only when necessary to ensure the utility's
financial viability, but not before January 1, 2000. Under the earnings
provision of the 1997 Act, if the earned return on common equity of a utility
during this period exceeds an established threshold, one-half of the excess
earnings must be refunded to customers. The threshold rate of return on common
equity is based on the 30-Year Treasury Bond rate, plus 5.5% in the years 1998
and 1999, and plus 8.5% in the years 2000 through 2004. The utility's earned
return on common equity and the threshold return on common equity for ComEd
are each calculated on a two-year average basis. The earnings sharing
provision is applicable only to ComEd's earnings. Consistent with the
provisions of the 1997 Act, increased amortization of regulatory assets may be
recorded, thereby reducing the earned return on common equity, if earnings
otherwise would have exceeded the maximum allowable rate of return. The
potential for earnings sharing or increased amortization of regulatory assets
could limit earnings in future periods.

The 1997 Act also allows a portion of ComEd's future revenues to be
segregated and used to support the issuance of securities by ComEd or a SPE.
The proceeds, net of transaction costs, from such security issuances must be
used to refinance outstanding debt or equity or for certain other limited
purposes. The total amount of such securities that may be issued is
approximately $6.8 billion. In December 1998, ComEd initiated the issuance of
$3.4 billion of transitional trust notes through its SPEs, ComEd Funding and
ComEd Funding Trust. The proceeds from the transitional trust notes, net of
transaction costs, were, as required, used to redeem $1,101 million of long-
term debt and $607 million of preference stock in 1999 and reduce by $500
million ComEd's outstanding short-term debt. During the year 1999, ComEd
recorded an extraordinary loss related to the early redemptions of such long-
term debt, which reduced net income on common stock by approximately $28
million (after-tax), or $0.13 per common share (diluted). ComEd also recorded
$12 million (after-tax), or $0.05 per common share (diluted), for premiums
paid in connection with the redemption of such preference stock. The
preference stock premiums were included in the provision for dividends for
preference stocks of ComEd on the Statements of Consolidated Operations. As
more fully described in Note 7, Unicom has repurchased approximately 26.3
million shares of Unicom common stock using $924 million of proceeds it
received from ComEd's repurchase of its common stock held by Unicom. The
remaining proceeds from the issuance of the transitional trust notes will be
used for the payment of fees and additional common stock repurchases. See Note
7 for additional information regarding Unicom's share repurchases.

Because the 1997 Act is expected ultimately to lead to market-based pricing
of electric generation services, ComEd discontinued SFAS No. 71 regulatory
accounting practices for the generation portion

F-40

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued
of its business in December 1997. ComEd evaluated the regulatory assets and
liabilities related to the generation portion of its business and determined
that it was not probable that such costs would be recovered through the cash
flows from the regulated portion of its business. Accordingly, the generation-
related regulatory assets and liabilities were written off in the fourth
quarter of 1997, resulting in an extraordinary charge of $810 million (after-
tax), or $3.75 per common share (diluted). The fourth quarter of 1997 also
reflected charges totaling $44 million (after-tax), or $0.20 per common share
(diluted), as a result of ComEd's elimination of its FAC pursuant to an option
in the 1997 Act, and a charge of $60 million (after-tax), or $0.28 per common
share (diluted), for a write down of ComEd's investment in uranium-related
properties to realizable value. Projections of the market price for uranium
indicated that the expected incremental costs of mining and milling uranium at
the properties would exceed the expected market price for uranium and such
costs are not expected to be recoverable in a competitive market.

(4) Cumulative Effect of a Change in Accounting Principle. In the fourth
quarter of 1997, ComEd changed its accounting method for revenue recognition
to record revenues associated with service which has been provided to
customers but has not yet been billed at the end of each accounting period,
retroactive to January 1, 1997. This change in accounting method increased
operating results for the year 1997 to reflect the one-time cumulative effect
of the change for years prior to 1997 by $197 million (after-tax), or $0.91
per common share.

(5) Sale of Plants and Closure. In December 1999, ComEd completed the sale
of its fossil generating assets to EME for a cash purchase price of $4.8
billion. The fossil generating assets represent an aggregate generating
capacity of approximately 9,772 megawatts.

Just prior to the consummation of the fossil plant sale, ComEd transferred
these assets to an affiliate, Unicom Investment. In consideration for the
transferred assets, Unicom Investment paid ComEd consideration totalling
approximately $4.8 billion in the form of a demand note in the amount of
approximately $2.4 billion and an interest-bearing Note with a maturity of
twelve years. Unicom Investment immediately sold the fossil plant assets to
EME, in consideration of which Unicom Investment received approximately $4.8
billion in cash from EME. Immediately after its receipt of the cash payment
from EME, Unicom Investment paid the $2.4 billion aggregate principal due to
ComEd under the demand note. Unicom Investment will use the remainder of the
cash received from EME to fund other business opportunities, including the
share repurchases. Of the cash received by ComEd, $1.8 billion is expected to
be used to pay the costs and taxes associated with the fossil plant sale,
including ComEd's contribution of $250 million of the proceeds to an
environmental trust as required by the 1997 Act. The remainder of the demand
note proceeds will be available to ComEd to fund, among other things,
transmission and distribution projects, nuclear generation station projects,
and environmental and other initiatives.

F-41

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued
remaining balance of ComEd's regulatory asset for unrecovered coal reserves of
$178 million and the recognition of $172 million of settlement payments
related to the above-market portion of coal purchase commitments ComEd
assigned to EME at market value upon completion of the fossil plant sale. The
severance costs included pension and post-retirement welfare benefit
curtailment and special termination benefit costs of $51 million and
transition, separation and retention payments of $61 million. A total of 1,730
fossil station employee positions were eliminated upon completion of the
fossil plant sale on December 15, 1999. As of December 31, 1999, 1,590 of the
employees whose positions were eliminated had been terminated and 140 affected
employees were in a transition program which generally extends 60 days from
the date of the fossil plant sale. Consistent with the provisions of the 1997
Act, the (pre-tax) gain on the sale of $2.587 billion resulted in a regulatory
liability, which was used to recover regulatory assets. Therefore, the gain on
the sale, excluding $43 million of amortization of investment tax credits, was
recorded as a regulatory liability in the amount of $2.544 billion and
amortized in the fourth quarter of 1999. The amortization of the regulatory
liability and additional regulatory asset amortization of $2.456 billion are
reflected in depreciation and amortization expense on Unicom's Statement of
Consolidated Operations and resulted in a net reduction to depreciation and
amortization expense of $88 million. See Note 1, under "Regulatory Assets and
Liabilities," for additional information.

In January 1998, the Boards of Directors of Unicom and ComEd authorized the
permanent cessation of nuclear generation operations and retirement of
facilities at ComEd's 2,080 megawatt Zion nuclear generating station. Such
retirement resulted in a charge in the fourth quarter of 1997 of $523 million
(after-tax), or $2.42 per common share (diluted). The charge included a
liability for estimated future closing costs associated with the retirement of
the station, excluding severance costs, resulting in a charge of $117 million
(after-tax). ComEd has recorded reductions to the expected liability for
future closing costs of $16 million (after-tax), or $0.07 per common share
(diluted), and $15 million (after-tax), or $0.07 per common share (diluted),
in 1999 and 1998, respectively, to reflect employees being reassigned or
removed from the payroll sooner than anticipated, and lower support costs and
use of contractors. See Note 17 for information regarding costs of voluntary
employee separation plans.

ComEd completed the sale of its State Line and Kincaid coal-fired generating
stations (representing 1,598 megawatts of generating capacity) in December
1997 and February 1998, respectively. The net proceeds of the sales, after
income tax effects and closing costs, were approximately $190 million. The
proceeds were used to retire or redeem existing debt in the first quarter of
1998. ComEd has entered into 15-year purchased power agreements for the output
of the stations.

(6) Authorized Shares, Voting Rights and Stock Rights of Capital Stock. At
December 31, 1999, Unicom's authorized shares consisted of 400,000,000 shares
of common stock. The authorized shares of ComEd preferred and preference
stocks at December 31, 1999 were: preference stock--7,510,451 shares; $1.425
convertible preferred stock--56,291 shares; and prior preferred stock--850,000
shares. The preference and prior preferred stocks are issuable in series and
may be issued with or without mandatory redemption requirements. Holders of
outstanding Unicom shares are entitled to one vote for each share held on each
matter submitted to a vote of such shareholders; and holders of outstanding
ComEd shares are entitled to one vote for each share held on each matter
submitted to a vote of such shareholders. All such shares have the right to
cumulate votes in elections for the directors of the corporation which issued
the shares.

F-42

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

Pursuant to a plan adopted by the Unicom Board of Directors on February 2,
1998, each share of Unicom's common stock carries the right (referred to
herein as a "Right") to purchase one-thousandth of one share of Unicom's
common stock at a purchase price of $100 per whole share of common stock,
subject to adjustment. The plan was amended on September 22, 1999 to render
the Rights inapplicable to the transactions contemplated by the Merger
Agreement. The Rights are tradable only with Unicom's common stock until they
become exercisable. The Rights become exercisable upon the earlier of ten days
following a public announcement that a person (an "Acquiring Person") has
acquired 15% or more of Unicom's outstanding common stock or ten business days
(or such later date as may be determined by action of the Board of Directors)
following the commencement of a tender or exchange offer which, if
consummated, would result in a person or group becoming an Acquiring Person.
The Rights are subject to redemption by Unicom at a price of $0.01 per Right,
subject to certain limitations, and will expire on February 2, 2008. If a
person or group becomes an Acquiring Person, each holder of a Right will
thereafter have the right to receive, upon exercise, Unicom common stock at a
50% discount from the then current market price. If Unicom is acquired in a
merger or other business combination transaction in which Unicom is not the
survivor, or 50% or more of Unicom's assets or earning power is sold or
transferred, each holder of a Right shall then have the right to receive, upon
exercise, common stock of the acquiring company at a 50% discount from the
then current market price of such common stock. Rights held by an Acquiring
Person become void upon the occurrence of such events.

(7) Common Equity. In the fourth quarter of 1998, Unicom entered into a
forward purchase arrangement for the repurchase of $200 million of its common
stock. This contract, which was accounted for as an equity instrument as of
December 31, 1998, was settled on a net cash basis in February 1999, resulting
in a $16 million reduction to common stock equity on the Consolidated Balance
Sheets.

During 1999, Unicom also entered into forward purchase arrangements with
financial institutions for the repurchase of approximately 26.3 million shares
of Unicom common stock. The repurchase arrangements were settled in January
2000 on a physical basis. Effective January 2000, the share repurchases will
reduce outstanding shares and reduce common stock equity. Prior to the
settlement, the repurchase arrangements were recorded as a receivable on the
Consolidated Balance Sheets based on the aggregate market value of the shares
deliverable under the arrangements. In 1999, net unrealized losses of $44
million (after-tax), or $0.20 per common share, were recorded related to the
arrangements. The settlement of the arrangements in January 2000 resulted in a
gain of $113 million (after-tax).

At December 31, 1999, shares of Unicom common stock were reserved for the
following purposes:

Long-Term Incentive Plan........................................ 2,231,763
Employee Stock Purchase Plan.................................... 323,797
Shareholder Rights Plan......................................... 400,000
Exchange for ComEd common stock not held by Unicom.............. 87,650
1996 Directors' Fee Plan........................................ 162,459
---------
3,205,669
=========

F-43

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

Common stock issued for the years 1999, 1998 and 1997 was as follows:

1999 1998 1997
------- -------- --------

Shares of Common Stock Issued:
Long-Term Incentive Plan......................... 451,501 494,302 208,104
Employee Stock Purchase Plan..................... 89,500 94,270 196,003
Employee Savings and Investment Plan............. -- -- 274,203
Exchange for ComEd common stock not held by
Unicom.......................................... (2,454) 12,757 12,370
1996 Directors' Fee Plan......................... 5,521 12,733 14,175
Treasury Stock................................... (85,424) (178,982) --
------- -------- --------
458,644 435,080 704,855
======= ======== ========

(Thousands of Dollars)

Changes in Common Stock Accounts:
Total shares issued.............................. $21,290 $ 16,847 $ 15,768
Net cash settlement of forward share repurchase
contract........................................ (16,454)
Shares held by trustee for Unicom Stock Bonus De-
ferral Plan..................................... -- 6,775 (2,476)
Other............................................ 151 (203) 10
------- -------- --------
$ 4,987 $ 23,419 $ 13,302
======= ======== ========

As of December 31, 1999 and 1998, 264,406 and 178,982 shares, respectively,
of Unicom common stock were reacquired and held as treasury stock at a cost of
$10 million and $7 million, respectively.

At December 31, 1999 and 1998, 75,692 and 76,079, respectively, of ComEd
common stock purchase warrants were outstanding. The warrants entitle the
holders to convert such warrants into common stock of ComEd at a conversion
rate of one share of common stock for three warrants.

As of December 31, 1999 and 1998, $716 million and $494 million,
respectively, of retained earnings had been appropriated for future dividend
payments.

(8) Stock Option Awards/Employee Stock Purchase Plan. Unicom has a
nonqualified stock option awards program under its Long-Term Incentive Plan.
The stock option awards program was adopted by Unicom in July 1996 to reward
valued employees responsible for, or contributing to, the management, growth
and profitability of Unicom and its subsidiaries. The stock options granted
expire ten years from their grant date. One-third of the shares subject to the
options vest on each of the first three anniversaries of the option grant
date. In addition, the stock options will become fully vested immediately if
the holder dies, retires, is terminated by the Company, other than for cause,
or qualifies for long-term disability. Options granted before July 22, 1998
also vest in full upon a change in control, while options granted on or after
July 22, 1998 vest in full if the option holder is terminated within 24 months
after a change of control.

F-44

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

Stock option transactions for the years 1999, 1998 and 1997 are summarized
as follows:

Number of Weighted Average
Options Exercise Price
--------- ----------------

Outstanding as of January 1, 1997................... 1,188,000 $25.500
Granted during the year............................. 1,339,350 22.313
Exercised during the year........................... (23,423) 25.500
Expired/cancelled during the year................... (212,549) 23.632
---------
Outstanding as of December 31, 1997................. 2,291,378 23.810
Granted during the year............................. 1,379,525 35.234
Exercised during the year........................... (404,082) 24.244
Expired/cancelled during the year................... (123,928) 25.715
---------
Outstanding as of December 31, 1998................. 3,142,893 28.694
Granted during the year............................. 1,848,050 35.750
Exercised during the year........................... (313,231) 24.102
Expired/cancelled during year....................... (179,076) 33.551
---------
Outstanding as of December 31, 1999................. 4,498,636 31.719
=========

Of the stock options outstanding at December 31, 1999, 1,676,854 had vested
with a weighted average exercise price of $27.

The fair value of each stock option is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted average
assumptions:

Stock Option Grant Date
-----------------------
1999 1998 1997
------- ------- -------

Expected option life.................................... 7 years 7 years 7 years
Dividend yield.......................................... 4.50% 4.54% 7.20%
Expected volatility..................................... 23.02% 21.95% 22.29%
Risk-free interest rate................................. 4.83% 5.58% 6.25%

The estimated weighted average fair value for each stock option granted in
1999, 1998 and 1997 was $6.48, $6.62 and $2.79, respectively.

The ESPP allows employees to purchase Unicom common stock at a ten percent
discount from market value. Substantially all of the employees of Unicom,
ComEd and their subsidiaries are eligible to participate in the ESPP. Unicom
issued 89,500, 94,270 and 196,003 shares of common stock during the year 1999,
1998 and 1997, respectively, under the ESPP at a weighted average annual
purchase price of $33.58, $33.11 and $19.15, respectively.

Unicom has adopted the disclosure-only provisions of SFAS No. 123. For
financial reporting purposes, Unicom has adopted APB No. 25, and thus no
compensation cost has been recognized for the stock option awards program or
ESPP. If Unicom had recorded compensation expense for the stock options
granted and the shares of common stock issued under the ESPP in accordance
with SFAS No. 123 using the fair value based method of accounting, the
additional charge to operations would have been $4 million (after-tax), or
$0.02 per common share (diluted), $2 million (after-tax), or $0.01 per common
share (diluted), and $2 million (after tax), or $0.01 per common share
(diluted), for the years 1999, 1998 and 1997, respectively.

F-45

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

(9) ComEd Preferred and Preference Stocks Without Mandatory Redemption
Requirements. During the year 1999, 13,499,549 shares of preferred or
preference stock without mandatory redemption requirements were redeemed and
no shares were issued. No shares of ComEd preferred or preference stocks
without mandatory redemption requirements were issued or redeemed during 1998
and 1997. All series other than Series $1.425 have been redeemed.

The outstanding shares of ComEd's $1.425 convertible preferred stock are
convertible at the option of the holders thereof, at any time, into common
stock of ComEd at the rate of 1.02 shares of common stock for each share of
convertible preferred stock, subject to future adjustment. The convertible
preferred stock may be redeemed by ComEd at $42 per share, plus accrued and
unpaid dividends, if any. The involuntary liquidation price of the $1.425
convertible preferred stock is $31.80 per share, plus accrued and unpaid
dividends, if any.

(10) ComEd Preference Stock Subject to Mandatory Redemption
Requirements. During 1999, 1998 and 1997, no shares of ComEd preference stock
subject to mandatory redemption requirements were issued. During 1999, 1998
and 1997, 1,020,345, 338,215 and 438,215 shares, respectively, of ComEd
preference stock subject to mandatory redemption requirements were reacquired
to meet sinking fund requirements or were part of the early redemption in
1999. There were 700,000 shares of Series $6.875 preference stock outstanding
at December 31, 1999, at an aggregate stated value of $69 million. This series
is non-callable and is required to be redeemed on May 1, 2000. The sinking
fund price is $100 and the involuntary liquidation price is $99.25 per share,
plus accrued and unpaid dividends, if any. The $69 million is included in
current liabilities.

(11) ComEd-Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trusts Holding Solely ComEd's Subordinated Debt Securities. In
September 1995, ComEd Financing I, a wholly-owned subsidiary trust of ComEd,
issued 8,000,000 of its 8.48% ComEd-obligated mandatorily redeemable preferred
securities. The sole asset of ComEd Financing I is $206.2 million principal
amount of ComEd's 8.48% subordinated deferrable interest notes due September
30, 2035. In January 1997, ComEd Financing II, a wholly-owned subsidiary trust
of ComEd, issued 150,000 of its 8.50% ComEd-obligated mandatorily redeemable
capital securities. The sole asset of ComEd Financing II is $154.6 million
principal amount of ComEd's 8.50% subordinated deferrable interest debentures
due January 15, 2027. There is a full and unconditional guarantee by ComEd of
the Trusts' obligations under the securities issued by the Trusts. However,
ComEd's obligations are subordinate and junior in right of payment to certain
other indebtedness of ComEd. ComEd has the right to defer payments of interest
on the subordinated deferrable interest notes by extending the interest
payment period, at any time, for up to 20 consecutive quarters. Similarly,
ComEd has the right to defer payments of interest on the subordinated
deferrable interest debentures by extending the interest payment period, at
any time, for up to ten consecutive semi-annual periods. If interest payments
on the subordinated deferrable interest notes or debentures are so deferred,
distributions on the preferred securities will also be deferred. During any
deferral, distributions will continue to accrue with interest thereon. In
addition, during any such deferral, ComEd may not declare or pay any dividend
or other distribution on, or redeem or purchase, any of its capital stock.

The subordinated deferrable interest notes are redeemable by ComEd, in whole
or in part, from time to time, on or after September 30, 2000, and with
respect to the subordinated deferrable interest debentures, on or after
January 15, 2007, or at any time in the event of certain income tax
circumstances. If the subordinated deferrable interest notes or debentures are
redeemed, the Trusts must redeem preferred securities having an aggregate
liquidation amount equal to the aggregate

F-46

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued
principal amount of the subordinated deferrable interest notes or debentures
so redeemed. In the event of the dissolution, winding up or termination of the
Trusts, the holders of the preferred securities will be entitled to receive,
for each preferred security, a liquidation amount of $25 for the securities of
ComEd Financing I and $1,000 for the securities of ComEd Financing II, plus
accrued and unpaid distributions thereon, including interest thereon, to the
date of payment, unless in connection with the dissolution, the subordinated
deferrable interest notes or debentures are distributed to the holders of the
preferred securities.

(12) Long-Term Debt. ComEd initiated the issuance of $3.4 billion of
transitional trust notes through its SPEs, ComEd Funding and ComEd Funding
Trust, in the fourth quarter of 1998. The current amount outstanding is as
follows:

Series Principal Amount
------------------------ ----------------------
(Thousands of Dollars)

5.38% due March 25, 2000........................... $ 94,967
5.29% due June 25, 2001............................ 425,033
5.34% due March 25, 2002........................... 258,861
5.39% due June 25, 2003............................ 421,139
5.44% due March 25, 2005........................... 598,511
5.63% due June 25, 2007............................ 761,489
5.74% due December 25, 2008........................ 510,000
----------
$3,070,000
==========

For accounting purposes, the liabilities of ComEd Funding Trust for the
transitional trust notes are reflected as long-term debt on the Consolidated
Balance Sheets of Unicom and ComEd.

The proceeds, net of transaction costs, from the transitional trust notes
have been used, as required, to redeem debt and equity. During 1999, ComEd
redeemed or reacquired $1,101 million of long-term debt.

Sinking fund requirements and scheduled maturities remaining through 2004
for ComEd's first mortgage bonds, transitional trust notes, sinking fund
debentures and other long-term debt outstanding at December 31, 1999, after
deducting deposits made for the retirement of sinking fund debentures, are
summarized as follows: 2000--$732 million; 2001--$345 million; 2002--$645
million; 2003--$445 million; and 2004--$577 million.

At December 31, 1999, ComEd's outstanding first mortgage bonds maturing
through 2004 were as follows:

Series Principal Amount
-------------------------------- ----------------------
(Thousands of Dollars)

9 3/8% due February 15, 2000....................... $ 42,245
6 1/2% due April 15, 2000.......................... 230,000
6 3/8% due July 15, 2000........................... 100,000
7 3/8% due September 15, 2002...................... 200,000
6 5/8% due July 15, 2003........................... 100,000
5 3/10% due January 15, 2004....................... 26,000
--------
$698,245
========

F-47

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

Other long-term debt outstanding at December 31, 1999 is summarized as
follows:

Principal
Debt Security Amount Interest Rate
- ---------------------------------------- ---------- ------------------------------------------
(Thousands
of
Dollars)

Unicom--
Loans Payable:
Loan due January 1, 2003 $ 5,519 Interest rate of 8.31%
Loan due January 1, 2004 6,371 Interest rate of 8.44%
Loan due January 15, 2009 6,025 Interest rate of 8.30%
Loan due January 15, 2009 7,567 Interest rate of 8.55%
Loan due January 15, 2010 6,803 Interest rate of 8.88%
Loan due July 15, 2010 9,225 Interest rate of 7.98%
----------
$ 41,510
----------
ComEd--
Notes:
Medium Term Notes, Series 3N due vari-
ous dates through October 15, 2004 $ 156,000 Interest rates ranging from 9.17% to 9.20%
Notes due January 15, 2004 150,000 Interest rate of 7.375%
Notes due October 15, 2005 235,000 Interest rate of 6.40%
Notes due January 15, 2007 150,000 Interest rate of 7.625%
Notes due July 15, 2018 225,000 Interest rate of 6.95%
----------
$ 916,000
----------
Purchase Contract Obligation
due April 30, 2005 $ 301 Interest rate of 3.00%
----------
Total ComEd $ 916,301
----------
Unicom Enterprises--
Notes:
Unicom Thermal Guaranteed Senior Note
due May 30, 2012 $ 120,000 Interest rate of 7.38%
Northwind Midway Guaranteed Senior Note
due June 30, 2023 11,523 Interest rate of 7.68%
Unicom Mechanical Services Note
due January 1, 2001 13 Interest rate of 8.50%
----------
Total Unicom Enterprises $ 131,536
----------
Total Unicom $1,089,347
==========

Long-term debt maturing within one year has been included in current
liabilities.

ComEd's outstanding first mortgage bonds are secured by a lien on
substantially all property and franchises, other than expressly excepted
property, owned by ComEd.

In July 1998, Unicom Thermal issued a $120 million 7.38% unsecured
guaranteed senior Note due May 2012, the proceeds of which were used to
refinance existing debt. The Note is guaranteed by Unicom and includes certain
covenants with respect to Unicom and Unicom Thermal's operations. Such
covenants include, among other things, (i) a requirement that Unicom and its
consolidated subsidiaries maintain a tangible net worth at least $10 million
greater than that of ComEd and its consolidated subsidiaries, (ii) a
requirement that Unicom's consolidated debt to consolidated capitalization not
exceed 0.65 to 1, (iii) restrictions on the indebtedness for borrowed money
that Unicom Thermal may incur, and (iv) a requirement that Unicom own,
directly or indirectly, 51% of the outstanding stock of Unicom Thermal and at
least 80% of the outstanding stock of ComEd.

F-48

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

In June 1999, Northwind Midway issued $12 million of 7.68% guaranteed senior
Notes due June 2023, the proceeds of which will be used primarily to finance
certain project construction costs. The Notes are guaranteed by Unicom and
include certain covenants with respect to Unicom and Northwind Midway's
operations. Such covenants include, among other things, a requirement that
Unicom and its consolidated subsidiaries own no less than 65% of the voting
membership interest of Northwind Midway.

(13) Lines of Credit. ComEd had total unused bank lines of credit of $800
million at December 31, 1999. Of that amount, $500 million expires on December
15, 2000 and $300 million expires on December 17, 2002. The interest rate is
set at the time of a borrowing and is based on several floating rate bank
indices plus a spread which is dependent upon the credit rating of ComEd's
outstanding first mortgage bonds or on a prime interest rate. ComEd is
obligated to pay commitment and facility fees with respect to the line of
credit.

Unicom Enterprises has an unused $400 million credit facility which will
expire December 15, 2000. The credit facility can be used by Unicom
Enterprises to finance investments in unregulated businesses and projects,
including UT Holdings and Unicom Energy Services, and for general corporate
purposes. The credit facility is guaranteed by Unicom and includes certain
covenants with respect to Unicom and Unicom Enterprises' operations. Such
covenants include, among other things, (i) a requirement that Unicom and its
consolidated subsidiaries maintain a tangible net worth at least $3.5 million
over that of ComEd and its consolidated subsidiaries, (ii) a requirement that
Unicom's consolidated debt to consolidated capitalization not exceed 0.65 to
1, (iii) restrictions on the indebtedness for borrowed money that Unicom
(excluding ComEd) and Unicom Enterprises may incur, and (iv) a requirement
that Unicom own 100% of the outstanding stock of Unicom Enterprises and at
least 80% of the outstanding stock of ComEd; and provide that Unicom may not
declare or pay dividends during the continuance of an event of default.
Interest rates for borrowings under the credit facility are set at the time of
a borrowing and are based on either a prime interest rate or a floating rate
bank index plus a spread which varies with the credit rating of ComEd's
outstanding first mortgage bonds. Unicom Enterprises is obligated to pay
commitment fees with respect to the unused portion of such lines of credit.

(14) Disposal of Spent Nuclear Fuel. Under the Nuclear Waste Policy Act of
1982, the DOE is responsible for the selection and development of repositories
for, and the disposal of, spent nuclear fuel and high-level radioactive waste.
ComEd, as required by that Act, has entered into a contract with the DOE to
provide for the disposal of spent nuclear fuel and high-level radioactive
waste from ComEd's nuclear generating stations. The contract with the DOE
requires ComEd to pay the DOE a one-time fee applicable to nuclear generation
through April 6, 1983 of $277 million, with interest to date of payment, and a
fee payable quarterly equal to one mill per kilowatthour of nuclear-generated
and sold electricity after April 6, 1983. Pursuant to the contract, ComEd has
elected to pay the one-time fee, with interest, just prior to the first
delivery of spent nuclear fuel to the DOE. The liability for the one-time fee
and the related interest is reflected on the Consolidated Balance Sheets. The
contract also provided for acceptance by the DOE of such materials to begin in
January 1998; however, that date was not met by the DOE and is expected to be
delayed significantly. The DOE's current estimate for opening a facility to
accept such waste is 2010. This extended delay in spent nuclear fuel
acceptance by the DOE has led to ComEd's consideration of additional dry
storage alternatives. On July 30, 1998, ComEd filed a complaint against the
United States in the United States Court of Federal Claims seeking to recover
damages caused by the DOE's failure to honor its contractual obligation to
begin disposing of spent nuclear fuel in January 1998. On November 5, 1999,
ComEd's case was stayed

F-49

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued
pending the decision of the United States Court of Appeals for the Federal
Circuit in several similar cases brought by other utilities.

(15) Fair Value of Financial Instruments. The following methods and
assumptions were used to estimate the fair value of financial instruments
either held, or issued and outstanding. The disclosure of such information
does not purport to be a market valuation of Unicom and subsidiary companies
as a whole. The impact of any realized or unrealized gains or losses related
to such financial instruments on the financial position or results of
operations of Unicom and subsidiary companies is primarily dependent on the
treatment authorized under future ComEd ratemaking proceedings.

Investments. Securities included in the nuclear decommissioning funds have
been classified and accounted for as "available for sale" securities. The
estimated fair value of the nuclear decommissioning funds, as determined by
the trustee and based on published market data, as of December 31, 1999 and
1998 was as follows:

December 31, 1999 December 31, 1998
-------------------------------- --------------------------------
Unrealized
Gains/ Unrealized
Cost Basis (Losses) Fair Value Cost Basis Gains Fair Value
---------- ---------- ---------- ---------- ---------- ----------
(Thousands of Dollars)

Short-term investments.. $ 41,362 $ 95 $ 41,457 $ 40,907 $ 42 $ 40,949
U.S. Government and
Agency issues.......... 245,399 (1,993) 243,406 197,240 20,213 217,453
Municipal bonds......... 383,816 (940) 382,876 416,121 24,124 440,245
Corporate bonds......... 196,942 (5,699) 191,243 241,111 8,790 249,901
Common stock............ 832,802 732,893 1,565,695 740,956 565,630 1,306,586
Other................... 125,072 (3,209) 121,863 11,345 838 12,183
---------- -------- ---------- ---------- -------- ----------
$1,825,393 $721,147 $2,546,540 $1,647,680 $619,637 $2,267,317
========== ======== ========== ========== ======== ==========

At December 31, 1999, the debt securities held by the nuclear
decommissioning funds had the following maturities:

Cost Basis Fair Value
---------- ----------
(Thousands of
Dollars)

Within 1 year....................................... $ 47,853 $ 48,421
1 through 5 years................................... 263,588 263,117
5 through 10 years.................................. 227,927 225,860
Over 10 years....................................... 409,823 400,358

The net earnings of the nuclear decommissioning funds, which are recorded in
the accumulated provision for depreciation, for the years 1999, 1998 and 1997
were as follows:

1999 1998 1997
---------- ---------- ----------
(Thousands of Dollars)

Gross proceeds from sales of securities....... $1,765,000 $1,795,484 $2,163,522
Less cost based on specific identification.... 1,718,151 1,728,092 2,088,300
---------- ---------- ----------
Realized gains on sales of securities......... $ 46,849 $ 67,392 $ 75,222
Other realized fund earnings, net of expenses. 62,927 40,374 39,123
---------- ---------- ----------
Total realized net earnings of the funds...... $ 109,776 $ 107,766 $ 114,345
Unrealized gains.............................. 101,510 190,503 198,741
---------- ---------- ----------
Total net earnings of the funds.............. $ 211,286 $ 298,269 $ 313,086
========== ========== ==========

F-50

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

Securities held by certain trusts, which were established to provide for
supplemental retirement benefits and executive medical claims, have been
classified and accounted for as "available for sale." The estimated fair value
of these securities, as determined by the trustee and based on published
market data, as of December 31, 1999 was as follows:

Cost Unrealized Fair
Basis Gain Value
------- ---------- -------
(Thousands of Dollars)

Short-term investments.............................. $ 162 $ -- $ 162
Registered investment companies..................... 21,641 12,471 34,112
------- ------- -------
$21,803 $12,471 $34,274
======= ======= =======

Current Assets. Cash, temporary cash investments, cash held for redemption
of securities and other cash investments, which include U.S. Government
obligations and other short-term marketable securities, and special deposits,
are stated at cost, which approximates their fair value because of the short
maturity of these instruments. The securities included in these categories
have been classified as "available for sale" securities.

Capitalization. The estimated fair values of ComEd preferred and preference
stocks, ComEd-obligated mandatorily redeemable preferred securities of
subsidiary trusts holding solely ComEd's subordinated debt securities,
transitional trust notes and long-term debt were obtained from an independent
consultant. The estimated fair values, which include the current portions of
redeemable preference stock and long-term debt but exclude accrued interest
and dividends, as of December 31, 1999 and 1998 were as follows:

December 31, 1999 December 31, 1998
--------------------------------- --------------------------------
Unrealized
Carrying Losses/ Carrying Unrealized Fair
Value (Gains) Fair Value Value Losses Value
---------- ---------- ---------- ---------- ---------- ----------
(Thousands of Dollars)

ComEd preferred and
preference stocks...... $ 71,265 $ 58 $ 71,323 $ 678,156 $ 11,500 $ 689,656
ComEd-obligated
mandatorily redeemable
preferred securities of
subsidiary trusts
holding solely ComEd's
subordinated debt
securities............. $ 350,000 $ (10,595) $ 339,405 $ 350,000 $ 20,678 $ 370,678
Transitional trust
notes.................. $3,057,112 $(163,600) $2,893,512 $3,382,821 $ 67,168 $3,449,989
Long-term debt.......... $4,757,062 $ (23,987) $4,733,075 $5,911,757 $451,240 $6,362,997

Long-term notes payable, which are not included in the above table, amounted
to $53 million and $100 million as of December 31, 1999 and 1998,
respectively. Such notes, for which interest is paid at fixed and prevailing
rates, are included in the consolidated financial statements at cost, which
approximates their fair value.

Current Liabilities. The carrying value of notes payable, which consists of
commercial paper and bank loans maturing within one year, approximates the
fair value because of the short maturity of these instruments. See
"Capitalization" above for a discussion of the fair value of the current
portion of long-term debt and redeemable preference stock.

Other Noncurrent Liabilities. The carrying value of accrued spent nuclear
fuel disposal fee and related interest represents the settlement value as of
December 31, 1999 and 1998; therefore, the carrying value is equal to the fair
value.

F-51

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

(16) Pension and Postretirement Benefits. As of December 31, 1999, ComEd had
a qualified non-contributory defined benefit pension plan which covers all
regular employees of ComEd and certain of Unicom's subsidiaries. Benefits
under this plan reflect each employee's compensation, years of service and age
at retirement. Funding is based upon actuarially determined contributions that
take into account the amount deductible for income tax purposes and the
minimum contribution required under the Employee Retirement Income Security
Act of 1974, as amended. The December 31, 1999 and 1998 pension liabilities
and related data were determined using the January 1, 1999 actuarial
valuation. Additionally, ComEd maintains a nonqualified supplemental
retirement plan which covers any excess pension benefits that would be payable
to management employees under the qualified plan but which are limited by the
Internal Revenue Code. In 1998, Indiana Company's qualified defined benefit
pension plan was merged into ComEd's pension plan as a result of the sale of
Indiana Company's State Line Station and the transfer of its remaining
employees to ComEd.

ComEd and certain of Unicom's subsidiaries provide certain postretirement
medical, dental and vision care, and life insurance for retirees and their
dependents and for the surviving dependents of eligible employees and
retirees. Generally, the employees become eligible for postretirement benefits
if they retire no earlier than age 55 with ten years of service. The liability
for postretirement benefits is funded through trust funds based upon
actuarially determined contributions that take into account the amount
deductible for income tax purposes. The health care plans are contributory,
funded jointly by the companies and the participating retirees. The December
31, 1999 and 1998 postretirement benefit liabilities and related data were
determined using the January 1, 1999 actuarial valuations.

Reconciliations of the beginning and ending balances of the projected
pension benefit obligation and the accumulated postretirement benefit
obligation, and the funded status of these plans for the years 1999 and 1998
were as follows:

Twelve Months Ended Twelve Months Ended
December 31, 1999 December 31, 1998
-------------------------- --------------------------
Other Other
Pension Postretirement Pension Postretirement
Benefits Benefits Benefits Benefits
---------- -------------- ---------- --------------
(Thousands of Dollars)
Change in benefit
obligation
- -----------------

Benefit obligation at
beginning of period.... $4,326,000 $1,236,000 $4,010,000 $1,139,000
Service cost............ 120,000 41,000 115,000 38,000
Interest cost........... 285,000 82,000 273,000 78,000
Plan participants' con-
tributions............. -- 4,000 -- 3,000
Actuarial loss/(gain)... (458,000) (188,000) 165,000 25,000
Benefits paid........... (241,000) (51,000) (237,000) (47,000)
Special termination ben-
efits.................. 62,000 27,000 -- --
---------- ---------- ---------- ----------
Benefit obligation at
end of period......... $4,094,000 $1,151,000 $4,326,000 $1,236,000
---------- ---------- ---------- ----------

Change in plan assets
- ---------------------

Fair value of plan as-
sets at beginning of
period................. $4,015,000 $ 865,000 $3,706,000 $ 767,000
Actual return on plan
assets................. 492,000 105,000 535,000 122,000
Employer contribution... 3,000 24,000 11,000 20,000
Plan participants' con-
tributions............. -- 4,000 -- 3,000
Benefits paid........... (241,000) (51,000) (237,000) (47,000)
---------- ---------- ---------- ----------
Fair value of plan as-
sets at end of period. $4,269,000 $ 947,000 $4,015,000 $ 865,000
---------- ---------- ---------- ----------
Plan assets
greater/(less) than
benefit obligation..... $ 175,000 $ (204,000) $ (311,000) $ (371,000)
Unrecognized net actuar-
ial loss/(gain)........ (523,000) (555,000) 36,000 (371,000)
Unrecognized prior serv-
ice cost/(asset)....... (51,000) 41,000 (60,000) 48,000
Unrecognized transition
obligation/(asset)..... (79,000) 276,000 (101,000) 323,000
---------- ---------- ---------- ----------
Accrued liability for
benefits.............. $ (478,000) $ (442,000) $ (436,000) $ (371,000)
========== ========== ========== ==========

F-52

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

The assumed discount rate used to determine the benefit obligation as of
December 31, 1999 and 1998 was 7.75% and 6.75%, respectively. The fair value
of plan assets excludes $25 million and $21 million held in grantor trust as
of December 31, 1999 and 1998, respectively, for the payment of benefits under
the supplemental plan and $9 million and $7 million held in a grantor trust as
of December 31, 1999 and 1998, respectively, for the payment of postretirement
medical benefits.

The components of pension and other postretirement benefit costs, portions
of which were recorded as components of construction costs, for the years,
1999, 1998 and 1997 were as follows:

1999 1998 1997
-------- --------- ---------
(Thousands of Dollars)

Pension Benefit Costs
- ---------------------
Service cost.................................. $120,000 $ 115,000 $ 100,000
Interest cost on projected benefit obligation. 285,000 273,000 261,000
Expected return on plan assets................ (362,000) (342,000) (310,000)
Amortization of transition asset.............. (13,000) (12,000) (13,000)
Amortization of prior service asset........... (4,000) (4,000) (4,000)
Recognized loss............................... 3,000 2,000 2,000
Curtailment (gain)/loss....................... 16,000 -- (5,000)
-------- --------- ---------
Net periodic benefit cost.................... $ 45,000 $ 32,000 $ 31,000
======== ========= =========
Other Postretirement Benefit Costs
- ----------------------------------
Service cost.................................. $ 41,000 $ 38,000 $ 34,000
Interest cost on accumulated benefit
obligation................................... 82,000 78,000 76,000
Expected return on plan assets................ (76,000) (69,000) (61,000)
Amortization of transition obligation......... 22,000 22,000 22,000
Amortization of prior service cost............ 4,000 4,000 4,000
Recognized gain............................... (14,000) (14,000) (13,000)
Severance plan cost........................... 1,000 6,000 8,000
Curtailment loss.............................. 35,000 -- --
-------- --------- ---------
Net periodic benefit cost.................... $ 95,000 $ 65,000 $ 70,000
======== ========= =========

In accounting for the pension costs and other postretirement benefit costs
under the plans, the following weighted average actuarial assumptions were
used for the periods during 1999, 1998 and 1997:

Other
Pension Benefits Postretirement Benefits
----------------- -----------------------
1999 1998 1997 1999 1998 1997
----- ----- ----- ------- ------- -------

Annual discount rate................. 6.75% 7.00% 7.50% 6.75% 7.00% 7.50%
Annual long-term rate of return on
plan assets......................... 9.25% 9.50% 9.75% 8.97% 9.20% 9.40%
Annual rate of increase in future
compensation levels................. 4.00% 4.00% 4.00% -- -- --

The pension curtailment gain in December 1997 represents the recognition of
prior service costs, the transition asset and the decrease in the projected
benefit obligation related to the reduction in the number of employees due to
Indiana Company's sale of State Line Station. The pension and other
postretirement benefit curtailment losses in December 1999 represent the
recognition of prior service costs and transition obligations, and an increase
in the benefit obligations resulting from special termination benefits,
related to the reduction in the number of employees due to ComEd's sale of the
fossil stations.

F-53

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

The health care cost trend rates used to measure the expected cost of the
postretirement medical benefits are assumed to be 8.0% for pre-Medicare
recipients and 6.0% for Medicare recipients for 1999. Those rates are assumed
to decrease in 0.5% annual increments to 5% for the years 2005 and 2001,
respectively, and to remain level thereafter. The health care cost trend
rates, used to measure the expected cost of postretirement dental and vision
benefits, are a level 3.5% and 2.0% per year, respectively. Assumed health
care cost trend rates have a significant effect on the amounts reported for
the health care plans. A one percentage point change in the assumed health
care cost trend rates would have the following effects:

1 Percentage 1 Percentage
Point Increase Point Decrease
-------------- --------------
(Thousands of Dollars)

Effect on total 1999 service and interest cost
components...................................... $ 26,000 $ (20,000)
Effect on postretirement benefit obligation as of
December 31, 1999............................... 190,000 (151,000)

In addition, an employee savings and investment plan is available to
eligible employees of ComEd and certain of its and Unicom's subsidiaries.
Under the plan, each participating employee may contribute up to 20% of such
employee's base pay and the participating companies match the first 6% of such
contribution equal to 100% of the first 2% of contributed base salary, 70% of
the next 3% of contributed base salary and 25% of the next 1% of contributed
base salary. The participating companies' contributions were $32 million, $32
million and $33 million for the years 1999, 1998 and 1997, respectively.

(17) Separation Plan Costs. O&M expenses included $10 million, $48 million
and $39 million for the years 1999, 1998 and 1997, respectively, for costs
related to voluntary separation offers to certain employees of ComEd and
Indiana Company, as well as certain other employee-related costs. Such costs
resulted in charges of $6 million (after-tax), or $0.03 per common share
(diluted), $29 million (after-tax), or $0.13 per common share (dilutive) and
$24 million (after-tax), or $0.11 per common share (diluted), for the years
1999, 1998 and 1997, respectively. See Note 5 regarding employee separation
costs related to the fossil plant sale.

(18) Income Taxes. The components of the net deferred income tax liability
at December 31, 1999 and 1998 were as follows:

December 31
----------------------
1999 1998
---------- ----------
(Thousands of
Dollars)

Deferred income tax liabilities:
Accelerated cost recovery and liberalized deprecia-
tion, net of removal costs........................... $2,815,972 $4,028,351
Overheads capitalized................................. 159,836 140,922
Repair allowance...................................... 221,502 233,861
Regulatory assets recoverable through future rates.... 688,946 680,356
Deferred income tax assets:
Postretirement benefits............................... (376,538) (331,651)
Unamortized investment tax credits.................... (161,756) (191,135)
Regulatory liabilities to be settled through future
rates................................................ (596,157) (595,005)
Nuclear plant closure................................. (5,456) (38,354)
Other--net............................................ (321,522) (146,224)
---------- ----------
Net deferred income tax liability...................... $2,424,827 $3,781,121
========== ==========

F-54

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

The $1,356 million decrease in the net deferred income tax liability from
December 31, 1998 to December 31, 1999 is comprised of a $1,377 million credit
to net deferred income tax expense pertaining primarily to the fossil plant
sale, a $7 million increase in regulatory assets net of regulatory liabilities
pertaining to income taxes for the period, and $14 million related to other
items. The amount of accelerated cost recovery and liberalized depreciation
included in deferred income tax liabilities for both periods includes amounts
related to the regulatory asset for impaired production plant. The amount of
regulatory assets included in deferred income tax liabilities primarily
relates to the equity component of AFUDC which is recorded on an after-tax
basis, the borrowed funds component of AFUDC which was previously recorded net
of tax and other temporary differences for which the related tax effects were
not previously recorded. The amount of other regulatory liabilities included
in deferred income tax assets primarily relates to deferred income taxes
provided at rates in excess of the current statutory rate.

The components of net income tax expense charged/(credited) to continuing
operations for the years 1999, 1998 and 1997 were as follows:

1999 1998 1997
---------- -------- ---------
(Thousands of Dollars)

Operating income:
Current income taxes........................ $1,762,281 $304,889 $ 255,057
Deferred income taxes....................... (1,403,083) 50,134 62,501
Investment tax credits deferred--net........ (25,828) (27,730) (31,015)
Other (income) and deductions:
Current income taxes........................ 457 (51,816) 1,116
Deferred income taxes....................... 25,739 59,458 (385,994)
Investment tax credits...................... (51,740) (12,107) (22,526)
---------- -------- ---------
Net income taxes charged/(credited) to con-
tinuing operations.......................... $ 307,826 $322,828 $(120,861)
========== ======== =========

Provisions for current and deferred federal and state income taxes and
amortization of investment tax credits resulted in the following effective
income tax rates for the years 1999, 1998 and 1997:

1999 1998 1997
-------- -------- ---------
(Thousands of Dollars)

Net income/(loss) before extraordinary items.... $597,245 $510,184 $(239,215)
Net income taxes charged/(credited) to continu-
ing operations................................. 307,826 322,828 (120,861)
Provision for dividends on ComEd preferred and
preference stocks.............................. 23,756 56,884 60,486
-------- -------- ---------
Pre-tax income/(loss) before extraordinary items
and provision for dividends.................... $928,827 $889,896 $(299,590)
-------- -------- ---------
Effective income tax rate....................... 33.1% 36.3% 40.3%
======== ======== =========

The principal differences between net income taxes charged/(credited) to
continuing operations and the amounts computed at the federal statutory rate
of 35% for the years 1999, 1998 and 1997 were as follows:

1999 1998 1997
-------- -------- ---------
(Thousands of Dollars)

Federal income taxes computed at statutory rate. $325,089 $311,464 $(104,857)
Equity component of AFUDC which was excluded
from taxable income............................ (436) (390) (8,320)
Amortization of investment tax credits, net of
deferred income taxes.......................... (48,216) (25,503) (53,541)
State income taxes, net of federal income taxes. 45,882 40,899 (682)
Unrealized loss/(gain) on forward share
repurchase contract............................ 15,390 -- --
Earnings on nontax-qualified decommissioning
fund........................................... (8,915) -- --
Differences between book and tax accounting,
primarily property-related deductions.......... (20,968) (3,642) 46,539
-------- -------- ---------
Net income taxes charged/(credited) to
continuing operations.......................... $307,826 $322,828 $(120,861)
======== ======== =========

F-55

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

(19) Taxes, Except Income Taxes. Provisions for taxes, except income taxes,
for the years 1999, 1998 and 1997 were as follows:

1999 1998 1997
-------- -------- --------
(Thousands of Dollars)

Illinois public utility revenue...................... $ 981 $114,981 $228,350
Illinois invested capital............................ -- -- 99,503
Illinois electricity distribution tax................ 114,241 110,026 --
Municipal utility gross receipts..................... 99,701 152,501 168,094
Real estate.......................................... 115,208 125,521 151,508
Municipal compensation............................... 73,349 89,210 78,286
Energy assistance and renewable energy charge........ 34,423 32,736 --
Other--net........................................... 70,550 74,859 75,145
-------- -------- --------
$508,453 $699,834 $800,886
======== ======== ========

Effective January 1, 1998, the Illinois invested capital tax was repealed
and the Illinois electricity distribution tax was enacted as a replacement.
The new tax is based on the kilowatthours delivered to ultimate consumers.

The 1997 Act changed the nature of several state and municipal taxes that
are collected through customer billings. Before August 1998, the utility taxes
were assessed against the utility. Effective August 1998, the utility taxes
are assessed on the electric consumer rather than the utility. Accordingly,
ComEd records the collections as liabilities and no longer records the taxes
collected through billings as revenues and tax expense. The reduction in
operating revenues and taxes, except income taxes, due to the change in
presentation for such taxes was approximately $174 million in 1999, compared
to 1998, and $110 million in 1998, compared to 1997. This change in
presentation for such taxes did not have an effect on operations.

See Note 22 for additional information regarding Illinois invested capital
taxes.

(20) Lease Obligations of Subsidiary Companies. Under its nuclear fuel lease
arrangement, ComEd may sell and lease back nuclear fuel from a lessor who may
borrow an aggregate of $267 million, consisting of intermediate term notes, to
finance the transactions. A commercial paper/bank borrowing portion expired on
November 23, 1999. With respect to the intermediate term notes, $75 million
expires on November 23, 2000, $40 million expires on November 23, 2001, $77
million expires on November 23, 2002 and $75 million expires on November 23,
2003. At December 31, 1999, ComEd's obligation to the lessor for leased
nuclear fuel amounted to approximately $270 million. ComEd has agreed to make
lease payments which cover the amortization of the nuclear fuel used in
ComEd's reactors plus the lessor's related financing costs. ComEd has an
obligation for spent nuclear fuel disposal costs of leased nuclear fuel.

As of December 31, 1999, future minimum rental payments, net of executory
costs, for capital leases are estimated to aggregate to $298 million,
including $121 million in 2000, $96 million in 2001, $48 million in 2002 and
$33 million in 2003. The estimated interest component of such rental payments
aggregates $27 million. The estimated portions of obligations due within one
year under capital leases of $108 million and $195 million at December 31,
1999 and 1998, respectively, were included in current liabilities on the
Consolidated Balance Sheets.

Future minimum rental payments at December 31, 1999 for operating leases are
estimated to aggregate to $305 million, including $33 million in 2000, $27
million in 2001, $27 million in 2002, $24 million in 2003, $23 million in 2004
and $171 million in 2005-2043.

(21) Joint Plant Ownership. ComEd has a 75% undivided ownership interest in
the Quad Cities nuclear generating station. Further, ComEd is responsible for
75% of all costs which are

F-56

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued
charged to appropriate investment and O&M accounts, and provides its own
financing. ComEd's net plant investment, including construction work in
progress, in Quad Cities Station on the Consolidated Balance Sheets was $22
million at December 31, 1999, after reflecting the accounting impairment
recorded in the second quarter of 1998. See Note 1, under "Regulatory Assets
and Liabilities," for additional information.

(22) Commitments and Contingent Liabilities. Purchase commitments,
principally related to construction, nuclear fuel, and coal in support of
certain power purchase agreements approximated $799 million at December 31,
1999, comprised of $670 million for ComEd, $27 million for UT Holdings, $24
million for Unicom Energy Services and $78 million for Unicom Power Holdings.
In addition, ComEd has substantial commitments for expected capacity payments
and fixed charges related to power purchase agreements. Upon completion of the
fossil plant sale with EME, ComEd entered into arrangements to assign or
settle a substantial portion of its coal purchase commitments and entered into
purchase power agreements with EME. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations," subcaption "Liquidity and
Capital Resources--UTILITY OPERATIONS--Construction Program," for additional
information regarding ComEd's purchase commitments.

ComEd is a member of NEIL which provides insurance coverage against property
damage and associated replacement power costs occurring at members' nuclear
generating facilities. All companies insured with NEIL are subject to
retrospective premium adjustments if losses exceed accumulated reserve funds.
Capital has been accumulated in the reserve funds such that ComEd would not be
liable for any single incident. However, ComEd could be subject to assessments
in any policy year for each of three types of coverage provided. The maximum
assessments are approximately $53 million for primary property damage, $73
million for excess property damage and $22 million for replacement power.

The NRC's indemnity for public liability coverage under the Price-Anderson
Act is supported by a mandatory industry-wide program under which owners of
nuclear generating facilities could be assessed in the event of nuclear
incidents. Based on the number of nuclear reactors with operating licenses,
ComEd would currently be subject to a maximum assessment of $1,145 million in
the event of an incident, limited to a maximum of $130 million in any calendar
year.

In addition, ComEd participates in the American Nuclear Insurers Master
Worker Program, which provides coverage for worker tort claims filed for
bodily injury caused by the nuclear energy hazard. This program was modified,
effective January 1, 1998, to provide coverage to all workers whose "nuclear-
related employment" began on or after the commencement date of reactor
operations. ComEd will not be liable for a retrospective assessment under this
new policy. However, ComEd is still subject to a maximum retroactive
assessment of up to $36 million in the event losses incurred under the small
number of policies in the old program exceed accumulated reserves.

Three of ComEd's wholesale municipal customers filed a complaint and request
for refund with the FERC alleging that ComEd failed to properly adjust their
rates, as provided for under the terms of their electric service contracts, to
track certain refunds made to ComEd's retail customers in the years 1992
through 1994. In the third quarter of 1998, the FERC granted the complaint and
directed that refunds be made, with interest. ComEd filed and was granted a
request for rehearing for purposes of reconsideration with the FERC. If the
order is upheld, ComEd must make refunds within 15 days of the resolution for
rehearing. ComEd's management believes an adequate reserve has been
established in connection with this case.

F-57

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

During 1989 and 1991, actions were brought in federal and state courts in
Colorado against ComEd and Cotter seeking unspecified damages and injunctive
relief based on allegations that Cotter has permitted radioactive and other
hazardous material to be released from its mill into areas owned or occupied
by the plaintiffs resulting in property damage and potential adverse health
effects. With respect to Cotter, in 1994 a federal jury returned nominal
dollar verdicts against Cotter on eight plaintiffs' claims in the 1989 cases,
which verdicts were upheld on appeal. The remaining claims in the 1989 actions
have been settled and dismissed. On July 15, 1998, a jury verdict was rendered
in Dodge v. Cotter (United States District Court for the District of Colorado,
Civil Action No. 91-Z-1861), a case relating to 14 of the plaintiffs in the
1991 cases. The verdict against Cotter and in favor of the plaintiff, after an
amended judgement was issued March 11, 1999, totaled approximately $6 million,
including compensatory and punitive damages, interest, and medical monitoring.
On February 11, 2000, the Tenth Circuit Court of Appeals agreed with Cotter,
found that the trial judge had erred in critical rulings and reversed the jury
verdict, remanding the case for new trial. A case involving the next group of
plaintiffs is set for trial in federal district court in Denver on October 2,
2000. Although ComEd sold its investment in Cotter in February 2000, ComEd
will continue to be liable for any court verdicts in favor of the plaintiffs.
The other 1991 cases will necessarily involve the resolution of numerous
contested issues of law and fact. It is Unicom and ComEd's assessment that
these actions will not have a material impact on their financial position or
results of operations.

In August 1999, three class action lawsuits were filed against ComEd related
to a series of service interruptions during the summer of 1999. The combined
effect of these events resulted in over 100,000 customers losing service. On
August 12, 1999, service was interrupted to ComEd customers on the near north
and near west side of the City's central business district. While major
commercial customers were affected, all service was restored on the same date.
The class action complaints have been consolidated and seek to recover damages
for personal injuries and property damage, as well as economic loss for these
events. Further, ComEd initiated expedited claim settlements for those with
primarily food spoilage claims. Conditional class certification has been
approved by the Court for the sole purpose of exploring settlement talks. The
lawsuits are pending in the Circuit Court of Cook County. ComEd has filed a
motion challenging the legal sufficiency of the consolidated complaints. The
plaintiff's response is due April 14, 2000 and any reply by ComEd is due May
12, 2000. The motion to dismiss is currently scheduled to be argued on May 23,
2000. ComEd's management believes adequate reserves have been established in
connection with these cases.

Following the above-referenced series of service interruptions, the ICC
opened a three-phase investigation of the design and reliability of ComEd's
transmission and distribution system. At the conclusion of each phase of the
investigation, the ICC will issue a report that will include specific
recommendations for ComEd and a timetable for executing the recommendations.
Hearings on Phase I of the investigation were held the week of January 3,
2000, which focused on the outages of July and August 1999. Reports on Phase
II and Phase III, focusing on the transmission and distribution system
generally, are anticipated in the second quarter of 2000. The final phase of
the investigation is expected to conclude in early 2001.

ComEd is involved in administrative and legal proceedings concerning air
quality, water quality and other matters. The outcome of these proceedings may
require increases in future construction expenditures and operating expenses
and changes in operating procedures. ComEd and its subsidiaries are or are
likely to become parties to proceedings initiated by the U.S. EPA, state
agencies and/or other responsible parties under CERCLA with respect to a
number of sites, including MGP sites, or may voluntarily undertake to
investigate and remediate sites for which they may be liable under CERCLA.

F-58

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

ComEd generally did not operate MGPs as a corporate entity but did, however,
acquire MGP sites as part of the absorption of smaller utilities.
Approximately half of these sites were transferred to then Northern Illinois
Gas Company (Nicor Gas) as part of a general conveyance in 1954. ComEd also
acquired former MGP sites as vacant real estate on which ComEd facilities have
been constructed. To date, ComEd has identified 44 former MGP sites for which
it may be liable for remediation. In the fourth quarter of 1999, ComEd re-
evaluated its environmental remediation strategies. As a result of this re-
evaluation, ComEd's current best estimate of its cost of former MGP site
investigation and remediation is $93 million in current-year (2000) dollars
(reflecting a discount rate of 6.5%). Such estimate, reflecting an estimated
inflation rate of 3% and before the effects of discounting, is $182 million.
It is expected that the costs associated with investigation and remediation of
former MGP sites will be substantially incurred through 2012, however
monitoring and certain other costs are expected to be incurred through 2042.
ComEd's current estimate of its costs of former MGP site investigation and
remediation of $93 million has been included in other noncurrent liabilities
on the Consolidated Balance Sheets as of December 31, 1999. The increase in
ComEd's estimated costs of former MGP sites of $68 million in 1999 over 1998
was included in operation and maintenance expenses on Unicom and ComEd's
Statements of Consolidated Operations. In addition, as of December 31, 1999
and 1998, a reserve of $8 million has been included in other noncurrent
liabilities on the Consolidated Balance Sheets, representing ComEd's estimate
of the liability associated with cleanup costs of sites other than former MGP
sites. These cost estimates are based on currently available information
regarding the responsible parties likely to share in the costs of responding
to site contamination, the extent of contamination at sites for which the
investigation has not yet been completed and the cleanup levels to which sites
are expected to have to be remediated. While ComEd may have rights of
reimbursement under insurance policies, amounts that may be recoverable from
other entities are not considered in establishing the estimated liability for
the environment remediation costs.

The IDR has issued Notices of Tax Liability to ComEd alleging deficiencies
in Illinois invested capital tax payments for the years 1988 through 1997. The
alleged deficiencies, including interest and penalties, totaled approximately
$52 million as of December 31, 1999. ComEd has protested the notices, and the
matter is currently pending before the IDR's Office of Administrative
Hearings. Interest will continue to accumulate on the alleged tax
deficiencies.

On March 22, 1999, ComEd reached a settlement agreement with the City to end
the arbitration proceeding between ComEd and the City regarding the January 1,
1992 franchise agreement and a supplemental agreement between them. Under the
terms of the settlement agreement, the pending arbitration is to be dismissed
with prejudice and the City is to release ComEd from all claims the City may
have under the supplemental agreement. The settlement agreement was approved
by the City Council on May 12, 1999.

As part of the settlement agreement, ComEd and the City have agreed to a
revised combination of ongoing work under the franchise agreement and new
initiatives that will result in defined transmission and distribution
expenditures by ComEd to improve electric service in the City. The settlement
agreement provides that ComEd will be subject to liquidated damages if the
projects are not completed by various dates, unless it is prevented from doing
so by events beyond its reasonable control. ComEd's current construction
budget considers these projects. In addition, ComEd and the City established
an Energy Reliability and Capacity Account, into which ComEd deposited $25
million following the effectiveness of the settlement agreement and ComEd has
conditionally agreed to deposit up to $25 million at the end of each of the
years 2000, 2001 and 2002, to help ensure an adequate and reliable electric
supply for the City.

F-59

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

The 1997 Act also committed ComEd to spend at least $2 billion from 1999
through 2004 on transmission and distribution facilities outside of the City.

(23) Segment Reporting. Unicom's reportable operating segments as determined
under SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information" include its regulated electric utility and its unregulated
business operations. Unicom's reportable segments are managed separately
because of their different regulatory and operating environments. Unicom
evaluates their performance based on net income.

ComEd is an electric utility which is engaged in the generation, purchase,
transmission, distribution and sale of electric energy in Northern Illinois.
ComEd's rates and services are subject to federal and state regulations.

Unicom's unregulated business operations, including energy services and
development of new business ventures, are not subject to utility regulation by
federal or state agencies. Prior to 1999, unregulated business operations were
predominately in a developmental stage and did not meet the revenue, asset or
net income criteria for a reportable segment under SFAS 131. However, as a
result of the December 1999 fossil plant sale, as described in Note 5, the
assets of unregulated businesses exceeded 10% of Unicom's total assets and, as
such, constitute a reportable segment. The assets of the unregulated
businesses include $2.2 billion at December 31, 1999 representing special
deposits and unused cash proceeds resulting from the fossil plant sale. The
assets of the unregulated businesses also include receivables of $813 million
recorded in connection with forward share repurchase arrangements as discussed
in Note 7.

F-60

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Concluded

The accounting policies of the segments are the same as those described in
Note 1. Unicom's financial data for business segments are as follows:

Electric Unregulated Reconciliation
Utility Businesses & Elimination Total
----------- ----------- -------------- -----------
1999 (Thousands of Dollars)

Operating Revenue......... $ 6,766,892 $ 107,729 $ (26,674) $ 6,847,947
Intersegment Revenue...... $ 9,434 $ 17,240 $ (26,674) $ --
Depreciation, Amortization
and Decommissioning...... $ 836,145 $ 7,103 $ -- $ 843,248
Interest and Dividend
Income................... $ 60,231 $ 8,957 $ (10,646) $ 58,542
Interest Expense--Net..... $ 545,352 $ 28,858 $ (10,646) $ 563,564
Income Tax
Expense/(Benefit)........ $ 352,222 $ (20,107) $ -- $ 332,115
Net Income/(Loss)......... $ 622,729 $ (29,307) $ (23,756) $ 569,666
Total Assets.............. $23,160,265 $3,720,376 $(3,474,608) $23,406,033
Capital Expenditures...... $ 1,083,398 $ 120,666 $ -- $ 1,204,064

1998

Operating Revenue......... $ 7,088,542 $ 20,967 $ (6,099) $ 7,103,410
Intersegment Revenue...... $ 6,099 $ -- $ (6,099) $ --
Depreciation, Amortization
and Decommissioning...... $ 937,604 $ 5,684 $ -- $ 943,288
Interest and Dividend
Income................... $ 15,450 $ 4,755 $ (1,573) $ 18,632
Interest Expense--Net..... $ 450,162 $ 15,293 $ (1,573) $ 463,882
Income Tax
Expense/(Benefit)........ $ 378,423 $ (28,374) $ -- $ 350,049
Net Income/(Loss)......... $ 594,206 $ (27,138) $ (56,884) $ 510,184
Total Assets.............. $25,450,577 $ 389,792 $ (149,896) $25,690,473
Capital Expenditures...... $ 945,342 $ 21,152 $ -- $ 966,494

1997

Operating Revenue......... $ 7,073,088 $ 14,331 $ (4,397) $ 7,083,022
Intersegment Revenue...... $ 4,397 $ -- $ (4,397) $ --
Depreciation, Amortization
and Decommissioning...... $ 1,001,149 $ 3,940 $ -- $ 1,005,089
Interest and Dividend
Income................... $ 4,911 $ 3,590 $ (1,002) $ 7,399
Interest Expense--Net..... $ 487,664 $ 10,505 $ (1,002) $ 497,167
Income Tax
Expense/(Benefit)........ $ 327,061 $ (20,513) $ -- $ 306,548
Net Income/(Loss)......... $ (773,773) $ (18,591) $ (60,486) $ (852,850)
Total Assets.............. $22,458,403 $ 352,161 $ (110,814) $22,699,750
Capital Expenditures...... $ 969,626 $ 73,685 $ -- $ 1,043,311

(24) Subsequent Event. In January 2000, Unicom physically settled the forward
share repurchase arrangements it had with financial institutions for the
repurchase of 26.3 million Unicom common shares. Prior to settlement, the
repurchase arrangements were recorded as a receivable on Unicom's Consolidated
Balance Sheets based on the aggregate market value of the shares under the
arrangements. In 1999, net unrealized losses of $44 million (after-tax), or
$0.20 per common share were recorded related to the arrangements. The
settlement of the arrangements in January 2000 resulted in a gain of $113
million (after-tax), which will be recorded in the first quarter of 2000. The
settlement of the arrangements will also result in a reduction in Unicom's
outstanding common shares and common stock equity, effective January 2000.

F-61

SCHEDULE II

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(Thousands of Dollars)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

Column A Column B Column C Column D Column E
- ---------------------------- --------- ----------------- ---------- --------
Additions
-----------------
Balance Charged
at to Costs Charged Balance
Beginning and to Other at End
Description of Year Expenses Accounts Deductions of Year
- ---------------------------- --------- -------- -------- ---------- --------

For the Year Ended December
31, 1997
- ----------------------------
Reserve Deducted From Assets
in Consolidated Balance
Sheet:
Provision for uncollectible
accounts.................. $ 12,893 $ 53,756 $ -- $ (49,105) $ 17,544
======== ======== ====== ========= ========
Estimated obsolete materi-
als....................... $ 12,302 $ 62,000 $ -- $ (32,559) $ 41,743
======== ======== ====== ========= ========
Other Reserves:
Estimated closing costs for
Zion Station (c).......... $ -- $194,000 $ -- $ -- $194,000
======== ======== ====== ========= ========
Estimated liabilities asso-
ciated with remediation
costs and former manufac-
tured gas plant sites..... $ 32,522 $ 2,410 $ -- $ (2,910)(a) $ 32,022
======== ======== ====== ========= ========
Accumulated provision for
injuries and damages...... $ 53,972 $ 8,565 $4,939 $ (18,213)(b) $ 49,263
======== ======== ====== ========= ========
For the Year Ended December
31, 1998
- ----------------------------
Reserve Deducted From Assets
in Consolidated Balance
Sheet:
Provision for uncollectible
accounts.................. $ 17,544 $ 62,059 $ -- $ (30,958) $ 48,645
======== ======== ====== ========= ========
Estimated obsolete materi-
als....................... $ 41,743 $ 23,945 $ -- $ (41,928) $ 23,760
======== ======== ====== ========= ========
Other Reserves:
Estimated closing costs for
Zion Station (c).......... $194,000 $ -- $ -- $(114,970) $ 79,030
======== ======== ====== ========= ========
Estimated liabilities asso-
ciated with remediation
costs and former manufac-
tured gas plant sites..... $ 32,022 $ 6,950 $ -- $ (6,950)(a) $ 32,022
======== ======== ====== ========= ========
Accumulated provision for
injuries and damages...... $ 49,263 $ 10,114 $8,875 $ (20,796)(b) $ 47,456
======== ======== ====== ========= ========
For the Year Ended December
31, 1999
- ----------------------------
Reserve Deducted From Assets
in Consolidated Balance
Sheet:
Provision for uncollectible
accounts.................. $ 48,645 $ 90,254 $ -- $ (88,085) $ 50,814
======== ======== ====== ========= ========
Estimated obsolete materi-
als....................... $ 23,760 $ 19,263 $ -- $ (15,968) $ 27,055
======== ======== ====== ========= ========
Other Reserves:
Estimated closing costs for
Zion Station (c).......... $ 79,030 $ -- $ -- $ (79,030) $ --
======== ======== ====== ========= ========
Estimated liabilities asso-
ciated with remediation
costs and former manufac-
tured gas plant sites..... $ 32,022 $ 73,729 $ -- $ (5,651)(a) $100,100
======== ======== ====== ========= ========
Accumulated provision for
injuries and damages...... $ 47,456 $ 27,868 $6,477 $ (27,204)(b) $ 54,597
======== ======== ====== ========= ========

Notes:
(a) Expenditures for site investigation and remediation costs.
(b) Payments of claims and related costs.
(c) Estimated closing costs related to the permanent cessation of nuclear
generation operations and retirement of facilities at ComEd's Zion Station.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
F-62