FOR IMMEDIATE RELEASE

Media Contact: Nancy S. Moses

Jan. 26, 1999, 202-872-2680

Investor Relations: Ernie Bourcheid

202-872-2797

                        Pepco Subsidiary Wins Contract to Supply Power

                           To Southern Maryland Electric Cooperative

Pepco Services Inc., the energy services subsidiary of Potomac Electric Power Company (NYSE: POM), has signed a contract to sell about 600 megawatts of electricity to Southern Maryland Electric Cooperative (SMECO) for a four-year period starting Jan.1, 2001.

Pepco Services was the winning bidder among a field of nine other energy suppliers in response to SMECO's call for proposals last summer for a full requirements provider of electricity.

SMECO is one of the 10 largest non-generating cooperatives and among the fastest growing in the country. SMECO serves 115,000 customers in a 1,150-square-mile service territory in southern Maryland.

Pepco Services sells electricity and natural gas and also provides energy services to commercial and industrial customers in the mid-Atlantic region. The new SMECO contract represents the first wholesale contract Pepco Services has secured.

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