Washington, DC--Pepco today announced the results of competitive bids to supply electricity to its Maryland Standard Offer Service (SOS) customers for one year beginning June 1, 2006. The proposed new rates must still be approved formally by the Maryland Public Service Commission (MD PSC).

Due to significant increases in the cost of fuels used to generate electricity, the average monthly electric bill for Maryland residential customers will increase by about 38.5 percent, or $39.00; residential bills will rise from an average of $101.29 today to an average of $140.29 once the June 1 price increases are fully reflected in customer bills.

Pepco's commercial customers in Maryland will see an average increase in their bills of about 55 percent; increases for small commercial customers will average 52 percent. An average dollar-amount increase for commercial customers is not meaningful, since use varies significantly among the many sizes of commercial customers.

The increases reflect bid prices received by Pepco for wholesale power to supply retail residential and commercial customers in Maryland who do not buy their electricity from an alternative supplier (SOS customers). The competitive bid process was conducted under rules issued by the MD PSC, which also oversaw the bidding and issued its own announcement of the proposed new rates earlier today.

The increases are substantially higher than those that went into effect last year for the June 1, 2005 to May 31, 2006 period, because the design of Maryland's Customer Choice program required a much larger amount of electricity supply be up for bid this year. In addition, current bidding and price increases are taking place in the context of an extremely volatile energy market, marked by dramatic increases in the price of fuels used to generate electricity. Between 1999 and 2005, natural gas prices rose a total of 400 percent; fuel oil prices rose 300 percent; and coal prices rose 150 percent. In just one year, 2005, the price of fuel oil rose 76 percent and of natural gas, 67 percent¹.

"We closely adhered to the required competitive bidding process and got the best possible prices for our customers in the context of many adverse conditions," says Tom Graham, Pepco Holdings, Inc.'s Regional President for Pepco. "We fully understand that these increases are substantial and that our Maryland customers will feel their impact.

"Although we can't do anything to change the costs of energy commodities," he continues, "we can help our customers reduce their consumption of electricity, and lessen the impact of these higher rates. We know this is easier said than done, of course. That is why we are launching "Energy Know-How," a major education and information campaign to help our customers use energy wisely.

"Helping customers manage their bills is a priority for us," says Graham. "This includes encouraging those customers who qualify to take advantage of 'Budget Billing,' so they can spread their bills evenly over the year and avoid the jumps that come with higher use in summer and winter."

Graham also expressed Pepco's concern about the impact of the new rates on low-income and other disadvantaged customers for whom the increases could present a severe challenge. Pepco will continue to actively help low-income and other eligible customers enroll in the several energy bill payment assistance programs run by the State of Maryland, Montgomery and Prince George's counties and by Pepco, while stepping up support of the efforts of the many advocacy organizations that provide valuable guidance and support to low-income customers.

Graham urges customers to visit www.pepco.com for information on energy conservation, low-income customer assistance programs and more information on rates (click on "Your Home" or "Your Business," and then on "Choices and Rates" for either residential or commercial rate information.) Customers can also call 202-833-7500 for information and assistance with registering for Budget Billing or energy assistance programs and to request any of Pepco's brochures, including "85 Ways to Save Money and Energy." Spanish-speaking customer service representatives are always available to assist Pepco's Spanish-speaking customers.

"Our Speakers Bureau can provide knowledgeable Pepco employees to visit community associations or other venues," says Graham. "We are geared up to make presentations on the new rates and on energy conservation, and are prepared to tailor the presentations and answer questions on whatever topic is requested by the local customer groups." To schedule a Pepco Speakers Bureau presentation, customers should call 202-872-2089.

In the coming weeks, Pepco will send to all 512,000 of Pepco's Maryland residential and commercial customers detailed individual notification of the new rates that will affect their account.
¹ U.S. DOE/Energy Information Agency; U.S. DOL/Bureau of Labor Statistics 
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Pepco, a subsidiary of Pepco Holdings, Inc. (NYSE: POM), delivers safe, reliable and affordable electric service to more than 745,000 customers in Maryland and the District of Columbia.