For Immediate Release
August 13, 2002

Pepco's 196,000 residential customers in the District of Columbia will receive a 3.3 percent reduction in the amount they pay for electricity, beginning with monthly bills issued Thursday.  This will save the average customer about $20 a year.

        The savings include an average 3 percent credit applied monthly to customer bills over the next 12 months. The credit is the result of favorable power purchases at the wholesale level that Pepco has made on behalf of its customers over the year ended Feb. 8.  Additionally, there is a 0.3 percent reduction in District residential electric rates as a result of Pepco's Aug. 1 merger with Wilmington, Del.-based Conectiv.  As part of the merger, approved by the D.C. Public Service Commission, Pepco agreed to fund a $2 million energy trust fund which had been supported by customers through a surcharge, and primarily aided low-income customers.

        Pepco's Maryland customers currently receive a purchase-power credit that is expected to increase later this year.

        The changes announced today will reduce by $1.65 the average monthly electric bill for a typical residential customer in the District, from $46.94 to $45.29. 

        As part of Pepco's deregulation plan, residential customers have already received ongoing rate reductions of more than 7 percent.  District customers also received a one-time bill credit of $75.39 in the fall of 2001, as the customers' share of the profits from Pepco's sale of its power plants.

        The new changes become effective just as customers begin receiving what for many is likely to be their highest electric bill so far this year, due to the sweltering heat and humidity in the Washington area that pushed demand for power to new records.  July usage for residential customers is up more than 10 percent from last year, and this month's usage is expected to be even greater as the hot weather continues.  About 45 percent of electricity consumption during the summer is for air conditioning.

      Pepco offers payment plans that may be helpful to customers who are having difficulty paying high summer bills.  They are:

      Time Payment Arrangement Plan, which allows customers to arrange for installment payments on their current bill or a portion of any overdue bill; and

      Extended Payment Date Plan, which allows customers dependent on assistance checks to extend their bill due date to the fifth of the following month.

      Customers can access their bill and make payments online at www.pepco.com. For questions about their bill or to make bill-paying arrangements, call Pepco's Customer Service at (202) 833-7500 during business hours.

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 Pepco, a wholly owned subsidiary of Pepco Holdings Inc.(NYSE: POM), delivers electricity at regulated rates to more than 700,000 customers in Washington and major portions of Montgomery and Prince George's counties in suburban Maryland.