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For Immediate Release

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Competitive Bid Process Nets 4.5% Bill Increase for Pepco's MD Residential Customers

For Immediate Release
March 15, 2005

Pepco's overall rates for electric service to residential customers in Maryland will increase by 4.5 percent, or $4.39 a month, beginning June 1, as a result of a competitive bidding process overseen by the Maryland Public Service Commission. The increase reflects bid prices received by Pepco for wholesale power to supply retail customers in Maryland who do not buy electricity from an alternative energy provider.

Pepco President Bill Sim said electricity remains a good value, noting that prices in Maryland have increased less than the consumer price index for power in the Southeastern region, and also less than the consumer price for natural gas and home heating oil.

"The experience of other states and the consensus of experts within the industry make clear that Maryland's competitive bid process will secure a fair market price for power while protecting Maryland customers from market volatility," Sim said.

On average, beginning June 1, the total monthly bill for electricity (including supply and distribution) for the typical Maryland residential customer will increase from $96.98 to $101.37. This will result in a total increase of about $53 a year. The rates Pepco charges for distribution have not changed. Each customer's bill is based on individual use, so the effects on customers will vary.

Further information and the new rates for commercial customers can be found on Pepco's Web site, www.pepco.com/md-rates. Pepco serves more than 500,000 customers in Montgomery and Prince George's counties.

Energy prices across the board have risen sharply in the last few years at both the wholesale and retail level. The price of coal, for example, the primary fuel to produce electricity in this region, has soared 112 percent since 2000. At retail, residential natural gas prices jumped 68 percent while home heating oil costs rose 81 percent over the past five years.

Maryland's transition to competitive, market-based electric rates began in 2000 when Pepco's rates were reduced 7 percent and capped. The cap on electric supply expired July 1, 2004 and the rate for Standard Offer Service-the power sold by Pepco to customers who do not choose an alternate supplier--rose to reflect the higher market-based price. The rates Pepco charges for delivery of electricity have not been deregulated. They are still set by the Public Service Commission and remain capped until 2007.

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About Pepco: Pepco, a subsidiary of Pepco Holdings, Inc. (NYSE: POM), delivers power to more than 725,000 customers in the District of Columbia and Montgomery County and Prince George's County, Maryland.

Point of Contact:
Robert Dobkin

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