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Rate Adjustment to Impact Delmarva Power Customers

Wednesday, January 13, 2010

Residential electric bills in Delaware increase about $1.27 a month

NEWARK , Del. – Effective Jan. 9, 2010, Delmarva Power’s supply rates increased as part of the utility’s annual Reasonable Allowance for Retail Margin (RARM) filing, made Nov. 9, 2009, with the Delaware Public Service Commission (PSC). The monthly increase for the typical residential customer using 1,000 kWh is $1.27, from $149.21 to $150.48.

The increase in the annual RARM adjustment is driven by:

o An increase in the company's cash working capital requirement because PJM, the regional power grid operator for 13 states and the District of Columbia, changed from a monthly to a weekly settlement schedule. This resulted in fewer lag days for paying expenses and more upfront dollars are needed; and

o An increase in the written off dollars for uncollected payments from disconnected customers for the energy supply portion of their bills.

The RARM also reflects a recovery of the following costs:

o Administrative expenses associated with obtaining supply for Delmarva Power’s default Standard Offer Service (SOS) customers; and

o The company’s allowable profit margin for SOS.

Additionally, Delmarva Power’s delivery rates increased slightly in November for its Delaware residential and commercial customers when the company implemented an interim rate increase based off its request for an additional $27.6 million in revenue to support rising capital investment costs required to continue to provide its Delaware customers with safe and reliable electric service. For the typical residential customers, the monthly impact of the interim delivery rate increase was $0.53.

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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 and Maryland and over 121,000 natural gas delivery customers in northern Delaware.