Utility to spend $318 Million over Next Five Years to Improve Service

WASHINGTON - Today, Pepco announces its Comprehensive Reliability Enhancement Plan for the District of Columbia, which the utility filed with the District of Columbia Public Service Commission on Sept. 30, 2010. The six-point reliability plan advances work on existing programs and initiates new activities for customers in the District of Columbia.

These programs are intended to increase substantially the reliability of the distribution system across the District by reducing both the frequency and duration of outages for our customers.

The total cost of this work over the next five years is estimated to exceed a quarter billion dollars and increases company expenditures by $90 million over the next five years.

"Improving the reliability of the electric system is critically important to everyone at Pepco," said Pepco Region President Thomas H. Graham. "We will continue to improve our performance and work with our customers to address their concerns."

The table below provides a breakout of the six main initiatives and associated costs.

Summary - Pepco District of Columbia

Data is in millions

1. Enhanced Vegetation Management

Enhanced vegetation management includes tree trimming along public rights of way to obtain increased clearance between the overhead electric wires and existing trees. In addition to tree trimming, Pepco also will work with counties, communities and homeowners to remove trees that are dead, in poor health or would damage the distribution system if they were to fall.

2. Priority Feeders

Each year, Pepco selects feeders across the District of Columbia that we determine are the least performing feeders. We perform detailed investigations to determine the cause of outages and necessary corrective actions to reduce the number of outages. A feeder is one electric distribution line that supplies electric power to up to 1,100 customers within a specific geographic area.

3. Load Growth

Each year, Pepco evaluates the need to add or upgrade feeders in order to reliably supply new customers and support increased usage required by existing customers. This program is part of our long-established system planning process that ensures the continued availability of safe and reliable power for our customers.

4. Distribution Automation

Distribution automation involves installing advanced control systems across the distribution system to allow the electric system to identify faults and perform switching automatically. These technologies will automatically isolate the failed pieces of equipment and restore most of the affected customers within minutes of the failure. Pepco was awarded a $15 million U.S. Department of Energy Smart Grid Investment Grant to help fund the advancement of this technology.

5. Feeder Improvement

Feeder improvement is focused on addressing equipment, vegetation, weather and animal-related interruptions which negatively impact reliability performance. This effort concentrates on feeders not included in the Priority Feeder Program and includes minimizing the impacts of faults and addressing issues which cause multiple interruptions.

6. Selective Undergrounding

As Pepco evaluates the performance of individual feeders, the need to perform more aggressive modification to the system is identified. This approach to improving reliability has obtained significant benefits, but, in some cases, still has not achieved the needed level of reliability. In these limited areas that traditional modifications on the overhead system have not produced desired results, we will evaluate the possibility of selectively replacing the overhead system with an underground system.

WHY IS PEPCO IMPLEMENTING THESE PROGRAMS?

• Despite the generally positive results that we have had reducing outage duration times (CAIDI); we have not had the same result reducing outage frequency. These programs will further reduce both the frequency and duration of outages.
• While there are state regulations specifically governing tree trimming and removal along public rights of way, we are confident that by working with state, county and community leaders we will obtain the required permission to perform more aggressive trimming and selective removal.
• Pepco applies engineering best practices and economic principles to sighting and line design according to the characteristics of each project situation.
• This plan will result in substantial improvements over the next five years, and we will continue to make adjustments as necessary, as we implement the plan.

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Pepco, a subsidiary of Pepco Holdings, Inc. (NYSE: POM), delivers safe, reliable and affordable electric service to more than 778,000 customers in Maryland and the District of Columbia.