Washington, D.C. - Pepco today proposed an ambitious program for its Maryland customers that will combine traditional energy efficiency programs with innovative technologies to help customers manage their energy use and reduce the total cost of energy.

"Energy efficiency is the lowest cost and the cleanest way to address future energy needs," said Dennis Wraase, Chairman of the Board, President and Chief Executive Officer, Pepco Holdings, Inc., the parent company of Pepco.

"If we can provide tools for PHI's nearly two million customers to reduce their electricity usage, we can make a measurable contribution to meeting the nation's environmental challenges and at the same time help customers keep their electric bills affordable," Wraase added.

New technology will lead the way toward energy independence in Pepco's comprehensive plan. The proposal includes Demand Side Management efforts, such as rebates or other incentives for residential customers to update inefficient appliances with Energy Star replacements. Customers could also receive credits on their bills for allowing Pepco to control, or intermittently turn off, their central air conditioning or heat pumps when wholesale electricity prices are high.

Business customers would receive financial incentives for using energy efficient equipment such as improved lighting and HVAC systems, and would be rewarded for reducing use during periods of peak demand.

Last year Pepco invested in web based, energy auditing software. That investment is already paying off for Pepco customers who may monitor their own energy use and learn what changes might lower their costs. Today's filing with the Maryland Public Service Commission outlining Pepco's comprehensive complement of energy efficiency and demand side management programs is the next step and represents the future in energy efficiency.

These environmental initiatives build on actions the company is taking at the corporate-wide level. PHI currently is using biodiesel and ethanol blends to fuel a portion of its 2,000 vehicle fleet and is testing electric hybrid technology in Maryland, the District of Columbia and New Jersey. PHI plans to continue to evaluate these and other technologies to increase the number of alternative fueled vehicles in its fleet. PHI also is joining the National Action Plan on Energy Efficiency Coalition, a broad based group of utilities, environmental advocacy groups, State Utility Commissions and others working together on environmental issues.

Pepco also proposed to install "smart meters" in the first phase of an effort designed to improve reliability and, ultimately, give customers options for lowering usage and cost. The smart meters, which the company proposes to install in the homes of all Maryland customers over the next three to four years, would give Pepco the ability to remotely identify the location of outages without customers calling in. When combined with additional investments in technologies planned by the company, smart meters can give customers the information and options they need to manage their demand when electricity prices are high.

A recent study sponsored by PJM and mid-Atlantic public utility commissions--including the Maryland Public Service Commission--estimates that programs such as those advanced in Pepco's blueprint for the future could save Pepco customers $10.6 million per year, depending on how the programs are structured and how many customers participate.

As part of the filing, Pepco recommended ways to fund the proposed programs and offered to work with the Maryland Public Service Commission to determine the most appropriate mechanisms to permit full and timely recovery of the company's investments.

Pepco Regional President Thomas H. Graham said, "We want our customers to know that we are doing everything we can to provide reliable service and help them deal with higher energy prices. While we are aware that Maryland's energy issues cannot be solved by any one group, this plan can help customers save money, clean the environment, and make us more energy independent."

The Maryland Public Service Commission will review Pepco's proposals and will decide whether these plans will be implemented. In the near future, Pepco plans to make similar proposals for its District of Columbia customers.

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Editors Note: refer to Pepco's website (www.pepco.com) for information on electrical safety, energy saving tips, bill payment options and power outage updates. 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.