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For Immediate Release


Atlantic City Electric Receives Approval for Base Rate Adjustment

Adjustment of 2.8 percent Helps Cover Cost to Upgrade Infrastructure

MAYS LANDING, N.J. - The New Jersey Board of Public Utilities (BPU) on Friday announced its approval of a stipulation of settlement in the Atlantic City Electric (ACE) base rate case authorizing ACE to increase its electric distribution rates by $25.5 million. The new rates will go into effect July 1, 2013.

Under the new rates, a typical bill for a residential customer using 1,000 kilowatt hours per month will increase by $4.44 or from $159.41 to $163.85 per month, a 2.8 percent increase over rates currently in effect.

"Atlantic City Electric strives to keep costs to a minimum. However, in order to continue providing quality service, it's important to invest in new infrastructure and upgrade existing electrical systems," said Vince Maione, Atlantic City Electric Region President. "The distribution rate adjustment will help enable us to continue our ongoing reliability improvement programs to meet our customers' expectations. "

The $25.5 million base rate adjustment also includes system restoration costs of approximately $70 million associated with the Derecho in June 2012 and Hurricane Sandy in October 2012 which will be partially recovered over a three-year period.

ACE has been committed to investing in its system and over the past five years has invested approximately $850 million into its electric system in NJ. ACE reinvested 100 percent of its earnings during this period back into the system, plus ACE's parent company, Pepco Holdings Inc., provided $87 million of additional equity. Because of these investments, the company has seen improvements in the duration and frequency of power outages.

The $25.5 million base rate adjustment is 36 percent of the original request filed Dec. 11, 2012, for a

base r ate adjustment of approximately $70.4 million to help pay for reliability investments already made.

ACE's current plans were to invest approximately $934 million in capital to our distribution system and operations over the next five years ($784 million in distribution plant and $150 million in other plant supporting our distribution operations). However, the level of rate recovery, even with the increase provided for in the settlement, is not sufficient to maintain that level of capital spending. As a result, ACE has proposed reducing its capital expenditures by approximately $150 million, or approximately 30 percent, between now and 2015.

"While we are disappointed to have to scale back our capital investments, we fully recognize our obligation to serve our customers and will continue to meet all reliability requirements as set forth by the BPU," Maione said. "We will still continue to make significant infrastructure investments over the next five years to further improve service reliability for our customers, including building new and upgrading existing infrastructure, building new substations, and, where warranted, replacing wooden utility poles with steel poles to improve resiliency."

Distribution rates cover the cost of delivering power, not the cost of the power itself. Customers who buy energy from a competitive supplier continue to receive distribution service from Atlantic City Electric and therefore will be affected by this requested rate adjustment. The new total monthly bill for customers who shop for their energy will vary according to the price charged by the customer's supplier.

Customers with questions regarding billing and/or the rate adjustment can contact the Atlantic City Electric Customer Care Center at 1-800-642-3780.

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Atlantic City Electric, a public utility owned by Pepco Holdings, Inc. (NYSE: POM), provides safe, reliable and affordable regulated electric delivery services to more than 545,000 customers in southern New Jersey.

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