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Pepco Invests $521 Million in Infrastructure Improvements in 2011

Reliability Work Beginning to Produce Tangible Results for Customers

WASHINGTON D.C. - Pepco, a utility affiliate of Pepco Holdings, Inc. (PHI), today announced it invested more than a half billion dollars in infrastructure improvements in 2011, completing the first full year of a comprehensive multi-year effort to improve electric service to customers. In 2011, Pepco invested $521 million in capital improvements, an increase of 45 percent compared to one year ago when capital expenditures were $359 million. These investments, along with Pepco's 2011 operations and maintenance expense of $420 million, an increase of 19 percent compared to 2010, are beginning to produce tangible improvements for our customers in electric system reliability, restoration and customer service. Pepco plans to invest an additional $2.7 billion in capital improvements over the next five years.

"Pepco's planned investment in infrastructure improvements is a multi-year, multi-billion dollar capital program with a laser focus on improving reliability. We're already seeing the reliability investments produce results on power lines and other electrical equipment we've worked on over the past year," said Thomas H. Graham, President, Pepco Region. "For example, from December 2010 through December 2011, customers served by upgraded power lines saw a 39 percent reduction in the average number of power outages and when outages did occur, they did not last as long, with the average outage duration declining by 56 percent. These tangible improvements in reliability in areas where we have performed work are translating into a better overall customer experience and our customers' level of satisfaction is gradually improving," stated Graham. "While we are making progress, we know we have more work to do."

In 2010, Pepco accelerated its comprehensive plan to improve reliability of electric service. Since then, the utility has trimmed trees along nearly 3,500 miles of power lines to prevent power outages, completed 48 expansion projects to meet growth in customer demand for electricity, upgraded more than 340 miles of aging underground lines, completed work on more than 120 overhead power lines to reduce outages and installed 125 advanced switches to automatically reroute power during outages.

As part of its commitment to enhance customer service, Pepco launched a special emergency restoration improvement plan early in 2011. The company more than doubled the number of telephone trunk lines to its Washington, D.C., regional call center, developed mobile applications for customers to report and track outages and get improved outage information, and upgraded the website to enhance communications with its customers. These improvements were in place when Hurricane Irene struck the Washington area in August 2011. At peak, more than a quarter million Pepco customers lost power due to the storm. Within a little more than two days after Irene passed, 97 percent of customers were restored. This accomplishment required mobilizing about 1,740 internal and external personnel and effectively executing the utility's recently upgraded restoration improvement plan.

In a customer satisfaction survey conducted after Hurricane Irene, Pepco's overall customer satisfaction scores rose 10 points compared to a summer survey conducted prior to Irene.

"Although we are encouraged by the improvement in reliability and customer satisfaction scores," said Graham, "we are committed to further improving our performance and meeting our customers' expectations. Our work continues."

Pepco's parent company, Pepco Holdings, Inc., earlier today reported its full-year earnings for 2011. PHI is a shareholder-owned public utility holding company. PHI's financial results are derived primarily from the operating results of its wholly owned subsidiaries - including Pepco, Atlantic City Electric, Delmarva Power and Pepco Energy Services. Pepco's 2011 financial statements were included in its Form 10-K, as filed with the Securities and Exchange Commission. Pepco's Form 10-K also is available at www.pepcoholdings.com/investors.

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Pepco, a subsidiary of Pepco Holdings, Inc. (NYSE: POM), delivers safe, reliable and affordable electric service to more than 788,000 customers in Maryland and the District of Columbia.

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