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Pepco Seeks to Reward Customers Who Lower Energy Use

Pricing Discounts Proposed for Lower Energy Use During High-Demand Periods

WASHINGTON - Pepco has asked the D.C. Public Service Commission for permission to implement a discount pricing plan for its District of Columbia customers beginning in 2012. The plan would reward Pepco's Standard Offer Service (SOS) customers for lowering their energy use during those times when energy demand and, consequently, the cost of supplying electricity are exceedingly high. Pepco is the default energy supplier for approximately 238,000 District homes and businesses.

The proposed discount pricing rate design and plan were formulated from the experience gained from the District of Columbia's award-winning PowerCentsDCTM smart meter pilot program.

"Price matters. If we can use a financial reward to prompt customers to conserve energy during periods when it is most expensive to supply, we will lower overall energy prices for the region," said Thomas H. Graham, President, Pepco Region.

Upon approval by the D.C. Public Service Commission, the plan would establish two new SOS rate structures with charges based on when electricity is used. They include:

· Rewarding customers with a rebate for reducing energy use during peak-demand events, times when both energy demand and prices are high. Pepco customers choosing the rebate plan could save $1.25 per kWh during such peak periods.

· Rewarding customers with a discount rate for reducing their energy use during non-peak hours in addition to the savings they would get for reducing energy use during peak-demand events.

Pepco defines a peak-demand event as occurring between 2 p.m. and 6 p.m. from June to October. There could be up to 15 peak-demand events a year. Pepco customers who prefer to remain on their existing rate will have that option.

Under Pepco's proposal, peak-demand events will occur on hot summer days when electricity demand and wholesale hourly energy prices are substantially higher. Pepco will notify customers of each anticipated peak-demand event by 8 p.m. of the day prior to an event; although it is possible that unexpected same-day emergency events may occur.

Customers would have a choice as to how they want to be notified by Pepco of a peak-demand event - either by a phone call, email or text message.

Pepco's proposed discount pricing plan is subject to the review and approval of the D.C. Public Service Commission. Pepco has also asked the Public Service Commission to establish a customer education working group to help familiarize customers with their rate options and to develop customer education materials.

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Pepco, a subsidiary of Pepco Holdings, Inc. (NYSE: POM), delivers safe, reliable and affordable electric service to more than 750,000 customers in Maryland and the District of Columbia.

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