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For Immediate Release

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Pepco Remains Committed to Providing Safe, Reliable Service And Pursuing Proper Recovery of Investments

WASHINGTON, D.C. - Pepco remains committed to doing what is necessary to meet customers' expectations for safe and reliable electricity and to meet regulatory requirements after the Maryland Public Service Commission's (PSC) decision Friday on the company's request for a rate adjustment.

"The Commission rejected our proposals aimed at timely cost recovery and authorized a return on equity for Pepco that is among the lowest in the country," said Thomas H. Graham, president, Pepco region. "We are very disappointed that the order does not take into account the fact that Pepco's shareholders absorbed over $130 million in reliability investment and expenses in 2010 and 2011, and that Pepco has not sought and will not seek to recover those millions of dollars from its customers. "

Pepco had filed a request Dec. 16, 2011, for a rate adjustment of $68 million to pay for the company's ongoing efforts to maintain safe and reliable service, provide enhanced customer service technology and support the additional resources that were needed to restore service to customers after Hurricane Irene in August.

The company also had proposed an innovative new rate recovery method that would allow for quicker recovery of infrastructure investments and save the PSC, customers and stakeholders time and expense by reducing the number of rate case proceedings.

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Maryland Rate Case

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The PSC's order Friday approved an $18 million annual increase in electric distribution base rates based on a 9.31 percent return on equity. It also authorized lower depreciation rates that will result in an annual reduction of depreciation expense of approximately $27 million. It rejected the new rate recovery method.

Graham said that Pepco will have to find cuts in other spending categories and questioned the sustainability of the investments in reliability with the level of recovery the PSC has allowed.

"We will continue to move forward with our reliability enhancement program, but this decision is counterproductive to our goals to improve our customer experience," Graham said.

Pepco is replacing and upgrading electric system infrastructure, trimming trees that threaten power lines, and installing advanced technologies as part of a five-year, $910 million reliability enhancement program, which it began in 2010.

The adjustment the PSC passed will mean a monthly increase of about $2 on a typical Maryland residential customer's monthly bill, effective immediately. The monthly bill for a residential Standard Offer Service customer using 1,000 kilowatt-hours a month would increase from $137.46 to just under $140 per month. The impact on commercial and industrial customers would vary by usage. Pepco serves more than 530,000 customers in Maryland.

For more information and updates, visit www.pepco.com, follow us on Facebook and Twitter at PepcoConnect and download our mobile app at www.pepco.com/mobileapp.

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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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