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For Immediate Release


PEPCO Offers $125 Million of Trust Originated Preferred Securities

PEPCO Offers $125 Million of Trust Originated Preferred Securities

        Potomac Electric Power Company announced the public offering today of an aggregate amount of $125 million of $25 par value Trust Originated Preferred Stock (TOPrS.) The TOPrS are preferred securities of Potomac Electric Power Company Trust I, a statutory business trust formed under the laws of the state of Delaware. All of the common securities of the Trust are owned by PEPCO.

        The Trust exists for the sole purpose of issuing the TOPrS and investing the proceeds in an equivalent amount of 7-3/8% Junior Subordinated Deferrable Interest Debentures due 2038. The Junior Subordinated Debentures will be unsecured obligations of PEPCO. The payment of distributions by the Trust to the holders of the TOPrS is guaranteed by PEPCO.

        The shares are being offered by a group of underwriters led by Merrill Lynch & Co. at $25 per preferred security, resulting in a current yield to investors of 7-3/8%.

        Proceeds from the sale will be used to redeem three series of the Company`s serial preferred stock on June 1, 1998, as previously announced. On an after-tax basis, the TOPrS issue will reduce annual net cost by approximately $3 million.         Potomac Electric Power Company is the electric utility serving Washington, D.C., and the Maryland suburbs.

        This material is not intended for use in the connection with any sale or offer to sell or solicitation of an offer to buy any securities.

Point of Contact:
Makini Street

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