For Immediate Release
July 22,  1999

Potomac Electric Power Company today reported consolidated earnings per share of 62 cents for the three months ended June 30, 1999, compared with earnings per share of 47 cents for the same period in 1998. For the six- and 12-month periods ended June 30, 1999, consolidated earnings per share were 82 cents and $2.08, respectively, compared with earnings per share of 50 cents and $1.35 for the corresponding periods in 1998.

Consolidated earnings per share for the six- and 12-month periods ended June 30, 1999, include 12 cents as the net effect of a contract termination fee to be received from the Southern Maryland Electric Cooperative, Inc. in January 2001 related to its new full-requirements agreement with the Company that 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 three-, six-, and 12-month periods ended June 30, 1998, include a 6-cent 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). The three-, six-, and 12-month periods ended June 30, 1998, also include a 2-cent reduction associated with the Company's targeted employee severance plan.

Additionally, consolidated 1998 earnings per share for the 12-month period ended June 30, 1998, included 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 six- and 12- months ended June 30, 1999, were affected by increases of 2.6 and 2.7 percent in kilowatt-hour sales, respectively, compared with the corresponding periods in 1998. The increases in sales reflect temperatures in the first quarter of 1999 that were 15 percent colder, as measured in heating degree days, than the corresponding period in 1998. Temperatures during each quarter of the 12-month period ended June 30, 1999, remained milder than their corresponding 20-year averages.

Utility results in 1999 also reflect increases in capacity purchase payments which are reflected in rates in the District of Columbia through a fuel adjustment clause on a dollar-for-dollar basis, and in Maryland through a rate settlement in December 1998. The Maryland rates, however, are seasonal, which results in lower recovery in the winter and higher recovery in the summer.

Consolidated earnings for the three-, six-, and 12-month periods ended June 30, 1999, reflect contributions of 16, 20, and 22 cents per share, respectively, from Pepco's wholly-owned, nonutility subsidiary, Pepco Holdings, Inc., formerly Potomac Capital Investment Corporation. In the corresponding periods in 1998, subsidiary earnings contributed 5, 10, and 12 cents per share, respectively. The differences in the subsidiary contributions were mainly due to the timing of transactions.

The Company's Board of Directors today declared a quarterly dividend on common stock of 41 ½ cents per share payable September 30, 1999, to shareholders of record on September 10, 1999. Dividends on preferred stock were declared payable September 1, 1999, to shareholders of record on August 2, 1999.