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PEPCO FILES FOR RATE INCREASE IN MARYLAND

PEPCO FILES FOR RATE INCREASE IN MARYLAND

Potomac Electric Power Company today filed with the Maryland Public Service Commission (PSC) to increase rates for its Maryland customers. The Company has requested to increase annual revenues by 6 percent ( $56.3 million).

The increase would raise the monthly bill of a typical Maryland residential customer who uses 749 kilowatt-hours a month by $6, to about $73.58. That`s an increase of about 20 cents a day.

"Even with the proposed rate increase, on an inflation-adjusted basis, PEPCO`s Maryland customers have experienced a 5 percent decrease in electricity prices in the past five years," said Dennis Wraase, PEPCO Senior Vice President and Chief Financial Officer.

During this time period, PEPCO`s operating and maintenance expenses have been held flat, construction expenditures have decreased 41 percent, employee levels have decreased 18 percent and refinancing of debt has reduced interest expense by $12 million annually.

Wraase said that despite these stringent cost containment efforts, the rate request is necessary to cover increased costs of providing reliable service to customers. These include the scheduled increases of long-term power purchase contracts with other companies that the Public Service Commission approved and the modification of the Company`s systems and operations to handle Year 2000 computer issues. The increase also is necessary to recover costs of the Company`s 1998 employee voluntary severance program.

More than half of PEPCO`s proposed rate request, or $30.3 million, will be used for the scheduled cost increases of the Company`s power purchase contracts with Ohio Edison Company and Panda-Brandywine, L.P., to provide 450 megawatts and 230 megawatts of power capacity, respectively. These agreements were entered into when analysis demonstrated that they would provide the needed power at a lower cost than if PEPCO built power plants itself. The combined agreements for 680 megawatts of power represent about 10 percent of PEPCO`s overall power capacity.

PEPCO`s Maryland requests would apply to the Company`s 424,458 residential and 44,723 commercial customers in Maryland (244,626 residential and 24,586 commercial customers in Montgomery County; 179,832 residential and 20,137 commercial customers in Prince George`s County).

If the PSC approves PEPCO`s request, the rate increase would occur Jan. 1, 1999.

Point of Contact:
Camille Smith

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