For Immediate Release

Addressing Potomac Electric Power Company's Annual Meeting of Shareholders today, President and Chief Executive Officer John M. Derrick, Jr. announced consolidated earnings per share of 20 cents for the three months ended March 31, 1999, compared with earnings per share of 3 cents for the same period in 1998. Consolidated earnings per share for the 12 months ended March 31, 1999, were $1.93 compared with earnings per share of $1.26 for the same period in 1998.

Consolidated earnings per share for both the three- and 12-month periods ended March 31, 1999, include 12 cents as the net effect of a contract termination fee to be received from Southern Maryland Electric Cooperative, Inc. in January 2001 related to its new full-requirements agreement with the Company, which became effective Jan. 1, 1999. The contract termination fee compensates the Company for future earnings that would have been received under the previous 10-year full-service power supply requirements contract.

Consolidated earnings per share for the 12-month period ended March 31, 1999, also include a 4 cent per share reduction associated with the Company's targeted employee severance plan and a 6 cent per share reduction for premiums paid in connection with the June 1, 1998, redemption of 2.3 million shares of serial preferred stock. The redemption was funded through issuance of Trust Originated Preferred Securities that will result in an annual after-tax cost reduction of approximately $3 million (3 cents per share).

Additionally, consolidated 1998 earnings per share for the 12 months ended March 31, 1998, include the effects of a one-time write-off of 28 cents per share for costs related to the proposed merger with Baltimore Gas and Electric Company that was canceled in December 1997.

Utility results for the three and 12 months ended March 31, 1999, were affected by a 4.7 and 3.9 percent increase in kilowatt-hour sales, respectively, compared with the corresponding periods in 1998. Although temperatures in the first quarter, as measured in heating degree days, were 15 percent colder than the corresponding period in 1998, they were still 3 percent warmer than the 20-year average. Summer temperatures in the 12 months ended March 31, 1999, as measured in cooling degree hours, were 15 percent warmer than the corresponding period ended March 31, 1998, yet remained approximately 7 percent cooler than the 20-year average.

Consolidated earnings for the three and 12 months ended March 31, 1999, reflect contributions of 4 and 11 cents per share, respectively, from Pepco's wholly owned, nonutility subsidiary, Potomac Capital Investment Corporation (PCI). In the corresponding periods in 1998, PCI contributed 5 and 8 cents per share, respectively. The differences in the subsidiary contributions were due to the timing of transactions.