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Delmarva Power Seeks Change in Maryland Delivery Rates

Friday, November 17, 2006

SALISBURY, Md. -- Delmarva Power today asked the Maryland Public Service Commission (PSC) to authorize an increase in distribution rates in Maryland, the first delivery rate increase in more than a decade. If approved, the change would add about 3.4 percent to monthly residential electric bills and the typical bill for a Standard Offer Service residential customer using 1,000 kilowatt-hours a month would increase $4.48 from $131.95 to $136.43.
 
The proposed $20.3 million increase reflects ever increasing costs since the mid-1990s to maintain the poles, wires and critical high-tech equipment of the electric distribution system. The increase also would be used to improve reliability and support investment in new technology to keep pace with growth and increasing customer demand for power. At the proposed rate levels, Delmarva’s distribution rates still will be below 1998 levels in inflation-adjusted terms.

Delmarva Power’s customers have benefited from stable electric delivery rates for more than a decade while Delmarva Power’s costs to provide safe and reliable service have continued to increase and the Consumer Price Index has recorded inflation of over 40 percent. In just the last three years, for example, the cost of transformers has more than doubled, and the cost of electric cable jumped 85 percent.

“While Delmarva Power remains committed to controlling its operation and maintenance costs, we know that our customers do not want us to sacrifice reliability in the name of keeping delivery rates flat,” says Gary Stockbridge, President, Delmarva Power Region. “We recognize the strain that the higher supply costs have put on our customers in recent years and are doing all we can to keep our distribution rates as low as possible. The relatively modest rate increase we are seeking will help us maintain and improve our electric delivery system so that we can ensure the continued, reliable flow of electricity to our customers.”

Distribution rates are separate from electric supply rates. Supply rates adjust annually to reflect the cost of power that Delmarva Power buys on behalf of its Maryland customers who do not contract with an alternative supplier. Customers who buy their electricity from a competing supplier will see the same increase in distribution rates, but their new total monthly bill will depend on the per-kilowatt-hour price charged by their supplier.

Supply costs are driven primarily by the cost of fuel to make electricity and were largely responsible for the increase in supply rates earlier this year for Maryland customers. 

If approved by the PSC, the new delivery rate for Maryland customers would become effective in the middle of June 2007.

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Delmarva Power, a public utility owned by Pepco Holdings, Inc. (NYSE: POM), provides safe and reliable energy to more than 500,000 electric delivery customers in Delaware, Maryland and Virginia and over 118,000 natural gas delivery customers in northern Delaware.

About PHI:  Pepco Holdings, Inc. is a diversified energy company with headquarters in Washington, D.C.  Its principal operations consist of PHI Power Delivery, which delivers 50,000 gigawatt-hours of power to more than 1.7 million customers in Washington, D.C., Delaware, Maryland, New Jersey and Virginia. PHI engages in regulated utility operations by delivering electricity and natural gas, and provides competitive energy and energy products and services to residential and commercial customers.  

Forward-Looking Statements: Except for historical statements and discussions, the statements in this news release constitute "forward-looking statements" within the meaning of federal securities law.  These statements contain management's beliefs based on information currently available to management and on various assumptions concerning future events.  Forward-looking statements are not a guarantee of future performance or events.  They are subject to a number of uncertainties and other factors, many of which are outside the company's control.  Factors that could cause actual results to differ materially from those in the forward-looking statements herein include general economic, business and financing conditions; availability and cost of capital; changes in laws, regulations or regulatory policies; weather conditions; competition; governmental actions; and other presently unknown or unforeseen factors.  These uncertainties and factors could cause actual results to differ materially from such statements.  PHI disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.  This information is presented solely to provide additional information to further understand the results and prospects of PHI.