Under a settlement approved by the Maryland Public Service Commission (PSC) today, Pepco's Maryland residential customers have the option to phase in the increases in their electric bills. The phase-in option allows residential customers to soften the impact of price increases scheduled to take effect June 1, 2006 . Electricity prices throughout the region have increased due to the soaring cost of fuel used to generate electricity.

The phase-in option is identical to a plan developed with Maryland legislators during the recent Maryland legislative session. It gives residential customers the option of phasing in the rate increase, in increments of 15 percent on June 1, 2006 , 15.7 percent on March 1, 2007 and the balance (4 percent) on June 1, 2007 . Customers who choose the phase-in option will have to pay back the deferred amounts over an 18-month period beginning June 1, 2007 . Without the phase-in, residential customers will see an average annual increase of about 39 percent effective June 1, 2006 . The attached chart shows how average bills will change with and without the phase-in.

Pepco plans an extensive public education campaign to communicate directly with customers on details of the phase-in and other ways to control energy costs.

"We want to make sure customers have the information they need to make the decision that is right for them," says Thomas Graham, Pepco Regional President "Customers who put off paying the higher rates initially will have to pay significantly more later than they otherwise would. We want to make sure they are aware of this and can carefully weigh their options."

In addition to information on the deferral option, Pepco customers will receive extensive information on other opportunities to cope with the higher rates. "Helping customers learn about energy conservation and energy bill-paying support programs is a top priority for us," he continues.

Maryland residential customers will be able to sign up for the phase-in option from May 1 through May 26. Details on how to sign up will be made available shortly.

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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 .