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For Immediate Release

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Pepco and Conectiv Announce Preliminary Merger Consideration Election Results of Conectiv Shareholders

For Immediate Release
July 31, 2002

Potomac Electric Power Company (Pepco) (NYSE: POM) and Conectiv (NYSE: CIV; CIVA) today announced preliminary tabulations and calculations regarding their merger. This information was submitted by Mellon Investor Services LLC, the exchange agent:

  • The holders of approximately 37,600,043 shares of Conectiv common stock and approximately 1,868,612 shares of Conectiv Class A common stock have elected to receive cash in exchange for their Conectiv shares; and
  • The holders of approximately 31,532,716 shares of Conectiv common stock and approximately 2,428,834 shares of Conectiv Class A common stock have elected to exchange their shares for shares of Pepco Holdings common stock.
  • The holders of all other outstanding shares of Conectiv common stock and Class A common stock failed to make a valid election.

Under the terms of the merger agreement, the holders of Conectiv common stock are entitled to elect to receive in exchange for each share either $25 in cash or 1.28205 shares of Pepco Holdings common stock. The holders of Conectiv Class A common stock are entitled to elect to receive in exchange for each share either $21.69 in cash or 1.11227 shares of Pepco Holdings common stock. The election deadline was 5:00 p.m., New York City time, on July 30, 2002.

Based on these preliminary results, all shares of Conectiv common stock and Class A common stock that are the subject of a valid cash election or a valid Pepco Holdings common stock election will be exchanged as requested. All shares of Conectiv common stock and Class A common stock for which no valid election was made will receive both cash and shares of Pepco Holdings common stock in a proportion designed to satisfy the requirement of the merger agreement that 50 percent of the aggregate merger consideration is to be paid in cash and 50 percent is to be paid in shares of Pepco Holdings common stock. In accordance with the preliminary tabulation and calculation, which includes elections accompanied by a Notice of Guaranteed Delivery, holders of each share of Conectiv common stock for which no valid election is made would receive 0.88039 of a share of Pepco Holdings common stock and $7.83240 in cash and holders of each share of Conectiv Class A common stock for which no valid election is made would receive 0.76380 of a share of Pepco Holdings common stock and $6.79539 in cash.

Final election results are expected to be announced on or about August 16, 2002. Questions concerning the exchange of Conectiv shares for the merger consideration should be directed to the exchange agent at 1-800-774-5469.

Pepco Holdings, headquartered in Washington, D.C., the public utility holding company formed by the merger, is the largest electricity delivery company in the mid-Atlantic region with a transmission network serving 1.8 million customers in a 10,000-square-mile area. Pepco, based in Washington, D.C., and Conectiv, based in Wilmington, Delaware, will continue to operate as separate companies. Pepco Holdings common stock is listed on the New York Stock Exchange and trades under the symbol "POM."

Pepco delivers electricity to more than 700,000 customers in Washington, D.C., and the Maryland suburbs. Conectiv is focused on two core energy businesses. Conectiv Power Delivery provides energy to more than one million customers in New Jersey, Delaware, Maryland and Virginia. Conectiv Energy manages a growing portfolio of "mid-merit" power plants that can respond quickly to changes in the demand for power with the PJM power pool.

Forward Looking Statements: Except for historical statements and discussions, the statements in this press release constitute "forward-looking statements" within the meaning of the federal securities laws. These statements contain managements` beliefs based on information currently available to them 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 companies` control. In connection with the transaction, additional important factors that could cause actual results to differ materially from those in the forward-looking statements herein include risks and uncertainties relating to delays in obtaining or adverse conditions contained in, related regulatory approvals, changes in economic conditions, availability and cost of capital, changes in weather patterns, changes in laws, regulations or regulatory policies, developments in legal or public policy doctrines and other presently unknown or unforeseen factors. These uncertainties and factors could cause actual results to differ materially from such statements. The companies disclaim 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 the companies.

Contacts for Pepco

Contacts for Conectiv

Investors: Ernie Bourscheid

Investors: Bob Marshall

(202) 872-2797

(302) 429-3164

Media: Makini Street

Media: Tim Brown

(202) 872-2680

(302) 283-5803

Point of Contact:
Makini Street

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