For Immediate Release
October 25, 2001

Potomac Electric Power Company (NYSE: POM) today reported third-quarter consolidated earnings of $68.7 million on operating revenues of $766.5 million for the three-month period ended Sept. 30, or 74 cents per share, excluding the non-recurring impact of a 10- cents-per-share loss that resulted from a settlement of certain disputes with Mirant Corporation in connection with the previously reported gain on the sale of Pepco`s generating plants. This compared with consolidated earnings of $119.5 million, or $1.07 per share on operating revenues of $824.7 million during the same period in 2000.

The 74 cents earned in this year`s third quarter included 66 cents from recurring utility operations and an 8-cents- per-share contribution from the utility`s wholly owned subsidiary, PHI. For the corresponding quarter in 2000, Pepco earned $1.08 per share from recurring utility operations against a loss of 1cent per share from PHI.

Consolidated earnings for the nine months ended Sept. 30, 2001 were $1.55 per share, excluding the non-recurring impact of 11 cents per share from the gain on the sale of the company`s generating plants. Consolidated earnings for the period totaled $180.6 million on revenue of $1.99 billion, compared with consolidated earnings of $184.4 million on revenue of $1.99 billion for the nine-month period in 2000.

Dividend Declared
Pepco`s Board of Directors today declared a dividend on common stock of 25 cents per share payable Dec. 31, 2001, to shareholders of record on Dec. 10, 2001. Dividends on preferred stock were declared payable Dec. 1, 2001, to shareholders of record on Nov. 5, 2001.

Conference Call for Investors
Pepco will host a conference call to discuss third-quarter and nine-month results on Friday, Oct. 26, at 10 a.m. EDT. The call will be available to the general public at (212) 346-6400 and broadcast live on the company`s Web site at www.pepco.com. An audio archive of the call will be available on the Web site following the call and can be accessed for replay by dialing 1-800-633-8284; pass code is 19852137.

About Pepco: Pepco is an investor-owned utility that delivers electricity in Washington, D.C., and the Maryland suburbs to more than 700,000 customers. Through its family of subsidiaries, Pepco also operates in the mid-Atlantic region in the competitive arenas of diversified energy products and services and telecommunications.

Forward-Looking Statements: Except for historical statements and discussions, the statements in this news release constitute "forward-looking statements" within the meaning of federal securities law. These statements contain management`s beliefs based on information currently available to management and on various assumptions concerning future events. Forward-looking statements are not a guarantee of future performance or events. They are subject to a number of uncertainties and other factors, many of which are outside the Company`s control. Factors that could cause actual results to differ materially from those in the forward-looking statements herein include general economic, business and financing conditions; weather conditions; competition; governmental actions; and other presently unknown or unforeseen factors. These uncertainties and factors could cause actual results to differ materially from such statements. Pepco disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This information is presented solely to provide additional information to further understand the results and prospects of Pepco.

For Detailed Summary of Earnings, Quarterly and Year-to-Date Results, and Charts click here.