WASHINGTON - Pepco today asked the Maryland Public Service Commission (PSC) to authorize an increase in distribution rates in Maryland, only the third delivery rate increase in more than 12 years. If approved, the change would add about 2.5 percent to monthly residential electric bills. The typical bill for a Standard Offer Service residential customer using 1,000 kilowatt-hours a month would increase by $3.76, raising the average monthly bill from $151.78 to $155.54.

The proposed $40 million rate increase would enable Pepco to recover construction and operating expenses needed to maintain and enhance the reliability of its electric distribution system in Maryland.

"Pepco is controlling its operational and maintenance costs, with the reliability of the electric system as its top priority," said Thomas Graham, Pepco Region President. "We believe this is a reasonable request that reflects the company's needs and will help Pepco to continue providing customers with safe and reliable service."

Distribution or delivery rates cover the cost of the poles and wires that carry electricity to customers' homes and businesses and are separate from supply rates. Supply rates represent nearly 75 percent of a Maryland customer's bill. They are determined by the wholesale energy markets and reflect the cost of power that Pepco purchases on behalf of its Maryland customers who do not buy power from an alternate supplier.

Supply costs are driven primarily by the cost of fuel to make electricity. Customers who buy electricity from a competing supplier will see the same increase in their distribution rates.

If approved by the PSC, the new delivery rate for Pepco Maryland customers would become effective approximately in July 2010.

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Pepco, a subsidiary of Pepco Holdings, Inc. (NYSE: POM), delivers safe, reliable and affordable electric service to more than 750,000 customers in Maryland and the District of Columbia.