For Immediate Release
August 3, 2000

Potomac Electric Power Company (NYSE: POM) today announced contracts with two firms to build an Internet-based, cross-industry purchasing hub for businesses and non-profit institutions in the Baltimore-Washington market. Pepco will retain a majority ownership and operate the venture.

The electronic marketplace will offer a faster and more efficient business-to-business procurement option by organizing information about products and services, such as maintenance supplies and office equipment commonly used by most businesses. The hub also would facilitate the purchasing process and provide value- added business services from providers, such as shippers, banks and insurers.

Pepco began work on the venture this past spring by evaluating software and other required components to launch the business by December.

Commerce One was selected to provide the software and associated services that will serve as the "platform" on which the electronic marketplace will run. The Pleasanton, Calif.-based company has been an innovator and worldwide industry leader in the establishment of e-marketplaces, also known as portals. Andersen Consulting, one of the world's leading management and technology consultancies, was selected to complete the systems integration effort to link buyers and sellers to the hub. Andersen Consulting has established itself as one of the premier firms for building Internet-based markets in industries such as energy, chemicals, paper products and automotive.

"With our extensive knowledge of the regional business community, Pepco's goal is to facilitate e-commerce in the region, help local businesses lower their operating costs and make our region more competitive," said Pepco's Jay Demarest, who is serving as interim chief executive officer of the new venture. Demarest said the power of group procurement practices would drive down purchase prices and reduce transaction and supply chain costs for participants through the efficiency of electronic procurement.

Pepco (www.pepco.com) is an investor-owned utility that provides electricity in Washington, D.C. and the Maryland suburbs, serving more than 700,000 customers. Through its family of subsidiaries, Pepco also operates in the competitive arenas of telecommunications and energy products and services in the Mid-Atlantic region.

Information contained in this press release may include forward-looking statements, which should be considered in light of the risks inherent in the company's business, as discussed in the company's public documents filed with the Securities and Exchange Commission.