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Delmarva Power Seeks Annual Natural Gas Cost Rate Adjustment

Tuesday, August 31, 2010

Average residential winter bill would increase by 0.1 percent effective Nov. 1

WILMINGTON, Del. – Delmarva Power today asked state regulators to authorize a 0.1 percent increase in the rate it charges customers for natural gas. The request was included in the company’s annual gas cost rate filing. The gas cost rate is a dollar-for-dollar pass-through to the customer. Delmarva Power is permitted to recover the costs it incurs to buy gas for customers, but not earn a profit on the purchase of the fuel.

Under Delmarva Power’s proposal, the winter bill for a residential customer using 120 centi-cubic feet (ccf) per month would increase from $169.18 to $169.28 starting Nov. 1. If approved, the proposed rate increase would be from 93.959¢ to 94.042¢ per ccf. Commercial and industrial customers’ rates will see little or no change. The rate changes are subject to review and approval by the PSC.

Because of warmer-than-expected weather and lower-than-expected demand resulting from weakness in the economy, customers used less gas last year than forecasted and the company was unable to fully recover its costs. These include costs for the purchase of fuel when the prevailing market price was higher than today. As a result, the company is carrying an estimated $25 million under recovery into the upcoming winter heating season. To mitigate the impact on customers, the company proposes in its filing to extend the recovery of those costs over two years, starting Nov. 1.

The natural gas market is volatile and subject to sudden and sharp price spikes and dips depending upon supply and demand. The company files each year at this time to reflect the changing cost of the commodity. Delmarva Power’s purchasing, which is overseen by the Delaware Public Service Commission and includes the cost of natural gas as well as transportation of the gas to this region, is designed to minimize the impact that severe price swings can have on customers.

Delmarva Power encourages customers to visit www.delmarva.com for information on saving energy and money in their home or business. The company also offers customers Budget Billing, a fixed payment plan based on the customer’s 12-month average bill. Customers can enroll online or by calling 1-800-375-7117.

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Delmarva Power, a public utility owned by Pepco Holdings, Inc. (NYSE: POM), provides safe and reliable energy to nearly 498,000 electric delivery customers in Delaware and Maryland and over 123,000 natural gas delivery customers in northern Delaware.