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For Immediate Release

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Pepco Files Suit to Keep Competition Fair

For Immediate Release
July 24, 2000

Potomac Electric Power Company (NYSE: POM) filed an appeal in the Circuit Court of Montgomery County today requesting a "stay" of an order issued July 1 by the Maryland Public Service Commission. The PSC order set forth rules covering the relationships between regulated electric and gas companies and their non-regulated subsidiaries, but the rules do not apply to out-of-state companies. The order, according to the company's filing, would cause Pepco "irreparable harm" by hamstringing its affiliates and, as a result, giving an unfair market advantage to other companies that are now allowed to sell electricity and other products and services in direct competition with Pepco's subsidiaries.

"We are surprised and disappointed that the PSC reversed policies it adopted in a 1998 rulemaking that we relied on when we established our new telecommunications and energy businesses," said Dennis Wraase, Pepco President. "The new rules will now limit our ability to compete fairly on a level playing field with nationally-known companies whose hands are not tied by these rules."

For example, according to Wraase, under the new rules, the subsidiaries of Washington-D.C.-based Pepco must pay an unspecified royalty for use of the Pepco name. As a result, these subsidiaries, which have been conducting business under the comprehensive rules adopted by the PSC in 1998, may not be able to offer competitively priced services in the future due to the added regulatory costs.

According to the order, these restrictions do not apply to subsidiaries of such nationally recognized, out-of-state companies as ENRON, Shell Oil Co., Bell Atlantic, Comcast and AT&T that use their corporate brand name and can sell products and services in direct competition with Pepco's energy and telecommunications subsidiaries.

On July 1, Maryland joined more than 20 other states in deregulating the electric utility industry, enabling consumers to choose who can supply their electricity while retaining their local utilities to deliver it.

Point of Contact:
Robert A. Dobkin

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