Revision

For Immediate Release
April 28, 2004

Pepco's Maryland residential customers will see their annual average electric bill increase by about 15 percent starting July 1, as a result of a competitive bidding process conducted by Pepco under the supervision of the Maryland Public Service Commission.  Pepco's Maryland residential base rates have not increased since 1998; they were reduced 7 percent in 2000.

Electricity continues to be a good value in comparison to other energy commodities.  Prices for other energy products have increased significantly over the past four years, including natural gas, up 46 percent; oil, up nearly 70 percent; gasoline, up almost 60 percent, and coal up more than 82 percent.  Several of these fuels are used to produce electricity and none of these increases have been reflected in customers' bills to date.

On average, beginning July 1, the annual total bill for electricity (including supply and delivery) will increase an average of about 15 percent a year, or about $12.63 per month, for Pepco's Maryland residential customers.  Each customer's bill is based on individual use, so the effects will vary with different customers.  Also, because rates are currently lower in the winter than in the summer, many customers will see most of the increase in their winter bills.  In fact, most will see only modest increases beginning in July, but will notice that their bills decrease significantly less with the start of winter rates in November than they have in previous years.

Pepco President Bill Sim said, "When you consider the increases in the cost of the fuels used to generate electricity, these increases are within a reasonable range. Nonetheless, we understand that any price increase is difficult for our customers.  We will work with customers to help lessen the impact by referring them to programs for eligible low-income customers, spreading out the increases through the average payment plan and offering conservation tips."

The new Pepco rates were established following a competitive bidding process with the objective of obtaining the best available price for Standard Offer Service, the supply rate for customers who do not choose an alternate electricity provider.  Several other Maryland utilities also procured supply through this process.

Deregulation brought a 7 percent reduction of Pepco's residential base rates in Maryland in July 2000.  Rates were capped for four years to ensure an orderly transition to competition; from the outset, these caps were set to expire on July 1, 2004. 

Since 2000, Maryland customers have been free to select alternative electricity suppliers.  In fact, nearly 65,000 Pepco customers already do so. Pepco continues to deliver the electricity to all customers whether or not they choose another supplier.  A cap on the rate to deliver electricity, also implemented in 2000, will continue for another three years.

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Pepco, a subsidiary of Pepco Holdings, Inc. (NYSE: POM), delivers electricity to 725,000 customers in the District of Columbia and suburban Montgomery and Prince George's counties in Maryland.