Pepco Reports First-Quarter 2001 Earnings and Declares Dividends

Apr 24, 2001, 01:00 ET from Potomac Electric Power Company

    WASHINGTON, April 24 /PRNewswire Interactive News Release/ -- Potomac
 Electric Power Company (NYSE:   POM) today reported consolidated earnings for
 the first quarter ended March 31, 2001, of $63.7 million, or 58 cents per
 share on operating revenues of $611 million, compared with $8.3 million, or 7
 cents per share on revenues of $525.1 million, for the same period in 2000.
 This year's first-quarter results included a one-time, after-tax gain of $22.4
 million, or 20 cents per share, primarily as a result of the close on the
 previously reported sale of the Company's share in a Pennsylvania generating
 plant.
     This year's first-quarter earnings also included the favorable effect of
 13 cents per share from the low-cost energy buyback contract with Mirant
 Corp., compared with Pepco's own production costs in 2000.  Additionally,
 earnings included 11 cents primarily related to interest income from the
 investment of proceeds from the $2.74 billion sale of Pepco's generating
 assets in December 2000.  The positive effect of debt reduction and stock
 buyback programs as well as increases in revenues from higher kilowatt-hour
 sales also contributed to the increase in first-quarter earnings.
     Contributions to consolidated earnings per share from the operations of
 Pepco's non-regulated competitive subsidiary, Pepco Holdings, Inc. (PHI), were
 1 cent for the first-quarter 2001 compared with 5 cents for the same period in
 2000.  The year-ago period included a one-time gain of 12 cents per share from
 the sale of the subsidiary's 50-percent interest in the Cove Point, Md.,
 natural gas storage facility.  Pepco Energy Services, Inc., the Company's
 unregulated energy services subsidiary, achieved earnings of 2 cents per share
 on revenues of $135.2 million, reflecting continued significant growth in the
 energy services business.
     "This has been a strong quarter for Pepco," said Andrew W. Williams,
 Senior Vice President and Chief Financial Officer.  "When we sold the bulk of
 our generating assets, we also signed a favorable energy buyback contract to
 supply electricity to our customers who do not choose a competitive supplier.
 As a result, Pepco's earnings for the first time reflect the margin we are
 realizing on this contract.  The contract has created a leveling of Pepco's
 traditional pattern of quarterly earnings. While the summer will continue to
 be important, we will no longer see the vast majority of our earnings in the
 third quarter, but more evenly spread throughout the year."
 
     Dividends
     Pepco's board of directors declared a quarterly dividend on common stock
 of 25 cents per share payable June 29, 2001, to shareholders of record on June
 11, 2001.  Dividends on preferred stock were declared payable June 1, 2001, to
 shareholders of record on May 7, 2001.
      Pepco announced in February 2001, a reduction in its annual dividend to
 $1 per share of common stock from $1.66 per share, effective with the June
 2001 dividend.  The action was taken to make Pepco's dividend payout ratio
 comparable to other energy delivery companies and to provide for investment in
 the growth of the company.  Pepco's annual dividend rate on its common stock
 is determined by its board of directors on a quarterly basis.
 
     Conference Call on Pepco's Financial Results
     Pepco will host a conference call to discuss first-quarter results on
 Wednesday, April 25, at 9 a.m. EDT.  The conference call will be available to
 the general public at 212-896-6088 and broadcast live on the company's Web
 site at www.pepco.com.  An audio archive of the call will be available on the
 Web site following the call and can be accessed for replay by dialing 800-633-
 8284; passcode is 18624232.
 
     About Pepco:  Pepco is an investor-owned utility that delivers electricity
 in Washington, D.C., and the Maryland suburbs to more than 700,000 customers.
 Through its family of subsidiaries, Pepco also operates in the mid-Atlantic
 region in the competitive arenas of diversified energy products and services
 and telecommunications.
 
     Forward-Looking Statements: Except for historical statements and
 discussions, the statements in this news release constitute "forward-looking
 statements" within the meaning of federal securities law.  These statements
 contain management's beliefs based on information currently available to
 management and on various assumptions concerning future events.  Forward-
 looking statements are not a guarantee of future performance or events.  They
 are subject to a number of uncertainties and other factors, many of which are
 outside the Company's control.  Factors that could cause actual results to
 differ materially from those in the forward-looking statements herein include
 general economic, business and financing conditions; weather conditions;
 competition; governmental actions; and other presently unknown or unforeseen
 factors.  These uncertainties and factors could cause actual results to differ
 materially from such statements.  Pepco disclaims any intention or obligation
 to update or revise any forward-looking statements, whether as a result of new
 information, future events or otherwise.  This information is presented solely
 to provide additional information to further understand the results and
 prospects of Pepco.
 
  Detailed Summary of Earnings Per Share, Quarterly Results and Charts Follow
 
                           Detailed Earnings Analysis
 
     Earnings per Share Detail
                                                         Three Months Ended
                                                              March 31,
                                                         2001           2000
 
     Basic Earnings Per Share
 
     Recurring Utility Operations                        $.37           $.02
     Gain on Divestiture of Generation Assets             .20              -
       Total Utility Operations                           .57            .02
 
     PHI Operations
       PCI Operations                                    (.01)           .07
       Pepco Energy Services Operations                   .02           (.02)
         Total PHI Operations                             .01            .05
 
     Pepco Consolidated Earnings                        $ .58          $ .07
 
     Basic Average Common Shares
      Outstanding                                 110,500,000    118,515,000
 
     Diluted Earnings Per Share
 
     Pepco Consolidated Earnings                         $.57          $ .07
 
     Diluted Average Common Shares
      Outstanding                                 111,631,000    118,515,000
 
 
     Consolidated Quarterly Results
     Pepco today reported consolidated earnings for the quarter ended March 31,
 2001, of 38 cents per share, excluding the non-recurring impact of 20 cents
 per share during the quarter from the gain on the divestiture of its 9.72-
 percent interest in the Conemaugh Generating Station (discussed below).  The
 consolidated 38 cents per share is comprised of 37 cents from Utility
 operations (excluding the 20 cents from the divestiture) and a 1-cent per
 share contribution from the operations of the Utility's wholly owned,
 competitive subsidiary, PHI.  For the corresponding quarter in 2000, Pepco
 earned 7 cents per share, which is comprised of a contribution of 2 cents per
 share from Utility operations and 5 cents per share from PHI operations.
     The divestiture of Conemaugh resulted in a contribution of 20 cents to
 Utility earnings per share for the quarter ended March 31, 2001.  Conemaugh is
 located near Johnstown, Pa., and consists of two generating units totaling
 approximately 1,700 megawatts of capacity.  The Conemaugh sale closed on Jan.
 8, 2001, and resulted in the recognition of a pre-tax gain of approximately
 $50.2 million ($22.4 million after tax) during the first quarter of 2001.
 
     Utility Results of Operations
     There was a 35 cents per share increase in earnings per share from
 recurring Utility operations for the quarter ended March 31, 2001, compared to
 the corresponding quarter in 2000 (37 cents per share, excluding the 20 cents
 from the divestiture, versus 2 cents per share).  This 35-cent increase in the
 first quarter earnings reflects a substantial leveling of the Company's
 quarterly earnings pattern.  The results include:
 
     -- an increase of about 13 cents per share attributable to the margin
        achieved on energy sales to Pepco customers who did not choose another
        supplier, compared to the costs that would have been incurred if the
        Company still operated its generating stations, which were divested to
        Mirant Corp. on December 19, 2000;
     -- an increase of about 11 cents per share resulting primarily from
        interest earned on the proceeds received from the divestiture of the
        Company's generating assets;
     -- an increase of about 6 cents per share from reduced capital costs as a
        result of the stock buyback program and the retirement of about $525
        million in long-term debt using proceeds from the divestiture of
        Pepco's generating assets; and
     -- an increase of about 5 cents per share due to an increase in kilowatt-
        hour sales and lower operating costs.
 
     While the summer will continue to be important for Company earnings, the
 quarterly earnings pattern will be more evenly spread throughout the year than
 historically.
 
     PHI Results of Operations
     There was a 4-cent per share decrease in the contribution to earnings per
 share from PHI for the quarter ended March 31, 2001, compared to the
 corresponding quarter in 2000 (1 cent per share versus 5 cents per share).
 PHI's contribution results from the operations of its wholly owned competitive
 subsidiaries, Potomac Capital Investment Corp. (PCI) and Pepco Energy
 Services. This 4-cent decrease is comprised of an 8-cent decrease in earnings
 per share from PCI from the corresponding period last year (1-cent loss versus
 7-cent contribution per share) and a 4-cent increase in earnings per share
 from Pepco Energy Services (2-cent contribution per share versus 2-cent loss
 per share).
 
     PCI
     An 8-cent decrease in PCI's contribution to earnings per share for the
 2001 quarter resulted mainly from the fact that in January 2000, PCI sold its
 50-percent interest in the FERC-regulated Cove Point, Md., liquefied natural
 gas storage facility and pipeline.  This sale resulted in a contribution of
 12 cents per share during the quarter ended March 31, 2000.  The favorable
 impact of the Cove Point sale was partially offset by a 4-cent reduction to
 earnings per share related to the sale of four aircraft during the first
 quarter of 2000.
 
     Pepco Energy Services
     The 4-cent increase in Pepco Energy Services' contribution to Pepco's
 earnings per share for the first quarter 2001 resulted primarily from
 continued revenue growth and reduced start-up costs.  In addition, in December
 2000, Pepco transferred Benning and Buzzard Point Generating Stations to Pepco
 Energy Services.  Favorable operations at these facilities also contributed to
 the subsidiary's per-share earnings.
 
     About Pepco
     Pepco's business lines consist of:
     1) regulated electric utility transmission and distribution services in
        the Washington, D.C., area;
     2) telecommunications services including local and long distance
        telephone, high-speed Internet and cable television; and
     3) energy products and services in competitive retail markets.
 
     Pepco's competitive telecommunications and energy businesses are provided
 through its wholly owned competitive subsidiary PHI, which was formed in 1999
 as the parent company for its two wholly owned subsidiaries, PCI and Pepco
 Energy Services.  Additionally, the Company has a wholly owned, Delaware
 statutory business trust (Potomac Electric Power Company Trust I) and a
 Delaware Investment Holding Company (Edison Capital Reserves Corporation),
 which is wholly owned.
 
     Significant First Quarter 2001 Events
 
     Acquisition of Conectiv
     On Feb.12, 2001, Pepco and Conectiv announced that each company's board of
 directors approved an agreement for a strategic transaction whereby Pepco will
 effectively acquire Conectiv for a combination of cash and stock valued at
 approximately $2.2 billion.  Both companies will become subsidiaries of a new
 holding company to be named at a later date.  The combination will be
 accounted for as a purchase that the Company expects to complete in the next
 12 months.  Completion of the acquisition is subject to customary closing
 conditions, including stockholder approval by both companies, receipt of all
 regulatory approvals, and making all necessary governmental filings.
 
     Common Stock
     On Feb.12, 2001, Pepco announced its plan to repurchase up to $450 million
 of its common stock in the open market or in privately negotiated transactions
 over the next 12 months.  The actual amount of stock to be repurchased will be
 determined by management depending on market conditions.  As of March 31,
 2001, Pepco had acquired 1,852,800 shares in connection with this repurchase
 plan at a cost of approximately $41.5 million. By Dec. 31, 2000, Pepco had
 7,792,907 shares held in treasury at a cost of approximately $200 million in
 connection with a previous stock repurchase plan.
 
     For additional information, refer to the Company's Form 10-Q for the
 quarter ended March 31, 2001, that is expected to be filed with the Securities
 and Exchange Commission on May 2, 2001.
 
                                 CHART FOLLOWS
 
                  Selected Consolidated Financial Information
 
                                        Three Months Ended March 31, 2001
 
                                     Utility     PCI    Pepco Energy    Pepco
                                                         Services   Consolidated
                                                 (Millions of Dollars)
     Operating Revenue               $446.9(A)   $28.9    $135.2       $611.0(A)
     Operating Expenses               327.2       20.5     130.5        478.2
     Operating Income                 119.7        8.4       4.7        132.8
     Other (Expense) Income,
      net                              (6.1)     (13.0)       .1        (19.0)(B)
     Distributions on Preferred
      Securities of Subsidiary Trust    2.3          -         -          2.3
     Income Tax Expense (Benefit)      47.5       (3.1)      2.2         46.6
     Net Income (Loss)                 63.8       (1.5)      2.6         64.9
     Dividends on Preferred Stock       1.2          -         -          1.2
     Earnings (Loss) Available
      for Common Stock                $62.6(C)   $(1.5)     $2.6        $63.7(C)
 
                                         Three Months Ended March 31, 2000
 
                                     Utility     PCI    Pepco Energy    Pepco
                                                         Services   Consolidated
                                                 (Millions of Dollars)
     Operating Revenue               $440.1      $41.3(A)  $43.7       $525.1(A)
     Operating Expenses               396.8       13.2      47.0        457.0
     Operating Income (Loss)           43.3       28.1      (3.3)        68.1
     Other Expense, net               (35.8)     (15.3)      (.4)       (51.5)(B)
     Distributions on Preferred
      Securities of Subsidiary Trust    2.3          -         -          2.3
     Income Tax Expense (Benefit)       1.9        4.0      (1.3)         4.6
     Net Income (Loss)                  3.3        8.8      (2.4)         9.7
     Dividends on Preferred Stock       1.4          -         -          1.4
     Earnings (Loss) Available
      for Common Stock                 $1.9       $8.8(C)  $(2.4)       $ 8.3(C)
 
 
     (A) Includes pre-tax gains of $50.2 million and $19.7 million from the
         divestiture of Conemaugh in 2001 and the sale of Cove Point by PCI in
         2000, respectively.
     (B) Includes the "Loss from Equity Investments, principally
         Telecommunication Entities" of $6.3 million and $3.9 million (recorded
         by PCI and Pepco Energy Services) at March 31, 2001 and 2000
         respectively.
     (C) Includes after-tax gains of $22.4 million and $11.8 million from the
         divestiture of Conemaugh in 2001 and the sale of Cove Point by PCI in
         2000, respectively.  Also, see (A) above.
 
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SOURCE Potomac Electric Power Company
    WASHINGTON, April 24 /PRNewswire Interactive News Release/ -- Potomac
 Electric Power Company (NYSE:   POM) today reported consolidated earnings for
 the first quarter ended March 31, 2001, of $63.7 million, or 58 cents per
 share on operating revenues of $611 million, compared with $8.3 million, or 7
 cents per share on revenues of $525.1 million, for the same period in 2000.
 This year's first-quarter results included a one-time, after-tax gain of $22.4
 million, or 20 cents per share, primarily as a result of the close on the
 previously reported sale of the Company's share in a Pennsylvania generating
 plant.
     This year's first-quarter earnings also included the favorable effect of
 13 cents per share from the low-cost energy buyback contract with Mirant
 Corp., compared with Pepco's own production costs in 2000.  Additionally,
 earnings included 11 cents primarily related to interest income from the
 investment of proceeds from the $2.74 billion sale of Pepco's generating
 assets in December 2000.  The positive effect of debt reduction and stock
 buyback programs as well as increases in revenues from higher kilowatt-hour
 sales also contributed to the increase in first-quarter earnings.
     Contributions to consolidated earnings per share from the operations of
 Pepco's non-regulated competitive subsidiary, Pepco Holdings, Inc. (PHI), were
 1 cent for the first-quarter 2001 compared with 5 cents for the same period in
 2000.  The year-ago period included a one-time gain of 12 cents per share from
 the sale of the subsidiary's 50-percent interest in the Cove Point, Md.,
 natural gas storage facility.  Pepco Energy Services, Inc., the Company's
 unregulated energy services subsidiary, achieved earnings of 2 cents per share
 on revenues of $135.2 million, reflecting continued significant growth in the
 energy services business.
     "This has been a strong quarter for Pepco," said Andrew W. Williams,
 Senior Vice President and Chief Financial Officer.  "When we sold the bulk of
 our generating assets, we also signed a favorable energy buyback contract to
 supply electricity to our customers who do not choose a competitive supplier.
 As a result, Pepco's earnings for the first time reflect the margin we are
 realizing on this contract.  The contract has created a leveling of Pepco's
 traditional pattern of quarterly earnings. While the summer will continue to
 be important, we will no longer see the vast majority of our earnings in the
 third quarter, but more evenly spread throughout the year."
 
     Dividends
     Pepco's board of directors declared a quarterly dividend on common stock
 of 25 cents per share payable June 29, 2001, to shareholders of record on June
 11, 2001.  Dividends on preferred stock were declared payable June 1, 2001, to
 shareholders of record on May 7, 2001.
      Pepco announced in February 2001, a reduction in its annual dividend to
 $1 per share of common stock from $1.66 per share, effective with the June
 2001 dividend.  The action was taken to make Pepco's dividend payout ratio
 comparable to other energy delivery companies and to provide for investment in
 the growth of the company.  Pepco's annual dividend rate on its common stock
 is determined by its board of directors on a quarterly basis.
 
     Conference Call on Pepco's Financial Results
     Pepco will host a conference call to discuss first-quarter results on
 Wednesday, April 25, at 9 a.m. EDT.  The conference call will be available to
 the general public at 212-896-6088 and broadcast live on the company's Web
 site at www.pepco.com.  An audio archive of the call will be available on the
 Web site following the call and can be accessed for replay by dialing 800-633-
 8284; passcode is 18624232.
 
     About Pepco:  Pepco is an investor-owned utility that delivers electricity
 in Washington, D.C., and the Maryland suburbs to more than 700,000 customers.
 Through its family of subsidiaries, Pepco also operates in the mid-Atlantic
 region in the competitive arenas of diversified energy products and services
 and telecommunications.
 
     Forward-Looking Statements: Except for historical statements and
 discussions, the statements in this news release constitute "forward-looking
 statements" within the meaning of federal securities law.  These statements
 contain management's beliefs based on information currently available to
 management and on various assumptions concerning future events.  Forward-
 looking statements are not a guarantee of future performance or events.  They
 are subject to a number of uncertainties and other factors, many of which are
 outside the Company's control.  Factors that could cause actual results to
 differ materially from those in the forward-looking statements herein include
 general economic, business and financing conditions; weather conditions;
 competition; governmental actions; and other presently unknown or unforeseen
 factors.  These uncertainties and factors could cause actual results to differ
 materially from such statements.  Pepco disclaims any intention or obligation
 to update or revise any forward-looking statements, whether as a result of new
 information, future events or otherwise.  This information is presented solely
 to provide additional information to further understand the results and
 prospects of Pepco.
 
  Detailed Summary of Earnings Per Share, Quarterly Results and Charts Follow
 
                           Detailed Earnings Analysis
 
     Earnings per Share Detail
                                                         Three Months Ended
                                                              March 31,
                                                         2001           2000
 
     Basic Earnings Per Share
 
     Recurring Utility Operations                        $.37           $.02
     Gain on Divestiture of Generation Assets             .20              -
       Total Utility Operations                           .57            .02
 
     PHI Operations
       PCI Operations                                    (.01)           .07
       Pepco Energy Services Operations                   .02           (.02)
         Total PHI Operations                             .01            .05
 
     Pepco Consolidated Earnings                        $ .58          $ .07
 
     Basic Average Common Shares
      Outstanding                                 110,500,000    118,515,000
 
     Diluted Earnings Per Share
 
     Pepco Consolidated Earnings                         $.57          $ .07
 
     Diluted Average Common Shares
      Outstanding                                 111,631,000    118,515,000
 
 
     Consolidated Quarterly Results
     Pepco today reported consolidated earnings for the quarter ended March 31,
 2001, of 38 cents per share, excluding the non-recurring impact of 20 cents
 per share during the quarter from the gain on the divestiture of its 9.72-
 percent interest in the Conemaugh Generating Station (discussed below).  The
 consolidated 38 cents per share is comprised of 37 cents from Utility
 operations (excluding the 20 cents from the divestiture) and a 1-cent per
 share contribution from the operations of the Utility's wholly owned,
 competitive subsidiary, PHI.  For the corresponding quarter in 2000, Pepco
 earned 7 cents per share, which is comprised of a contribution of 2 cents per
 share from Utility operations and 5 cents per share from PHI operations.
     The divestiture of Conemaugh resulted in a contribution of 20 cents to
 Utility earnings per share for the quarter ended March 31, 2001.  Conemaugh is
 located near Johnstown, Pa., and consists of two generating units totaling
 approximately 1,700 megawatts of capacity.  The Conemaugh sale closed on Jan.
 8, 2001, and resulted in the recognition of a pre-tax gain of approximately
 $50.2 million ($22.4 million after tax) during the first quarter of 2001.
 
     Utility Results of Operations
     There was a 35 cents per share increase in earnings per share from
 recurring Utility operations for the quarter ended March 31, 2001, compared to
 the corresponding quarter in 2000 (37 cents per share, excluding the 20 cents
 from the divestiture, versus 2 cents per share).  This 35-cent increase in the
 first quarter earnings reflects a substantial leveling of the Company's
 quarterly earnings pattern.  The results include:
 
     -- an increase of about 13 cents per share attributable to the margin
        achieved on energy sales to Pepco customers who did not choose another
        supplier, compared to the costs that would have been incurred if the
        Company still operated its generating stations, which were divested to
        Mirant Corp. on December 19, 2000;
     -- an increase of about 11 cents per share resulting primarily from
        interest earned on the proceeds received from the divestiture of the
        Company's generating assets;
     -- an increase of about 6 cents per share from reduced capital costs as a
        result of the stock buyback program and the retirement of about $525
        million in long-term debt using proceeds from the divestiture of
        Pepco's generating assets; and
     -- an increase of about 5 cents per share due to an increase in kilowatt-
        hour sales and lower operating costs.
 
     While the summer will continue to be important for Company earnings, the
 quarterly earnings pattern will be more evenly spread throughout the year than
 historically.
 
     PHI Results of Operations
     There was a 4-cent per share decrease in the contribution to earnings per
 share from PHI for the quarter ended March 31, 2001, compared to the
 corresponding quarter in 2000 (1 cent per share versus 5 cents per share).
 PHI's contribution results from the operations of its wholly owned competitive
 subsidiaries, Potomac Capital Investment Corp. (PCI) and Pepco Energy
 Services. This 4-cent decrease is comprised of an 8-cent decrease in earnings
 per share from PCI from the corresponding period last year (1-cent loss versus
 7-cent contribution per share) and a 4-cent increase in earnings per share
 from Pepco Energy Services (2-cent contribution per share versus 2-cent loss
 per share).
 
     PCI
     An 8-cent decrease in PCI's contribution to earnings per share for the
 2001 quarter resulted mainly from the fact that in January 2000, PCI sold its
 50-percent interest in the FERC-regulated Cove Point, Md., liquefied natural
 gas storage facility and pipeline.  This sale resulted in a contribution of
 12 cents per share during the quarter ended March 31, 2000.  The favorable
 impact of the Cove Point sale was partially offset by a 4-cent reduction to
 earnings per share related to the sale of four aircraft during the first
 quarter of 2000.
 
     Pepco Energy Services
     The 4-cent increase in Pepco Energy Services' contribution to Pepco's
 earnings per share for the first quarter 2001 resulted primarily from
 continued revenue growth and reduced start-up costs.  In addition, in December
 2000, Pepco transferred Benning and Buzzard Point Generating Stations to Pepco
 Energy Services.  Favorable operations at these facilities also contributed to
 the subsidiary's per-share earnings.
 
     About Pepco
     Pepco's business lines consist of:
     1) regulated electric utility transmission and distribution services in
        the Washington, D.C., area;
     2) telecommunications services including local and long distance
        telephone, high-speed Internet and cable television; and
     3) energy products and services in competitive retail markets.
 
     Pepco's competitive telecommunications and energy businesses are provided
 through its wholly owned competitive subsidiary PHI, which was formed in 1999
 as the parent company for its two wholly owned subsidiaries, PCI and Pepco
 Energy Services.  Additionally, the Company has a wholly owned, Delaware
 statutory business trust (Potomac Electric Power Company Trust I) and a
 Delaware Investment Holding Company (Edison Capital Reserves Corporation),
 which is wholly owned.
 
     Significant First Quarter 2001 Events
 
     Acquisition of Conectiv
     On Feb.12, 2001, Pepco and Conectiv announced that each company's board of
 directors approved an agreement for a strategic transaction whereby Pepco will
 effectively acquire Conectiv for a combination of cash and stock valued at
 approximately $2.2 billion.  Both companies will become subsidiaries of a new
 holding company to be named at a later date.  The combination will be
 accounted for as a purchase that the Company expects to complete in the next
 12 months.  Completion of the acquisition is subject to customary closing
 conditions, including stockholder approval by both companies, receipt of all
 regulatory approvals, and making all necessary governmental filings.
 
     Common Stock
     On Feb.12, 2001, Pepco announced its plan to repurchase up to $450 million
 of its common stock in the open market or in privately negotiated transactions
 over the next 12 months.  The actual amount of stock to be repurchased will be
 determined by management depending on market conditions.  As of March 31,
 2001, Pepco had acquired 1,852,800 shares in connection with this repurchase
 plan at a cost of approximately $41.5 million. By Dec. 31, 2000, Pepco had
 7,792,907 shares held in treasury at a cost of approximately $200 million in
 connection with a previous stock repurchase plan.
 
     For additional information, refer to the Company's Form 10-Q for the
 quarter ended March 31, 2001, that is expected to be filed with the Securities
 and Exchange Commission on May 2, 2001.
 
                                 CHART FOLLOWS
 
                  Selected Consolidated Financial Information
 
                                        Three Months Ended March 31, 2001
 
                                     Utility     PCI    Pepco Energy    Pepco
                                                         Services   Consolidated
                                                 (Millions of Dollars)
     Operating Revenue               $446.9(A)   $28.9    $135.2       $611.0(A)
     Operating Expenses               327.2       20.5     130.5        478.2
     Operating Income                 119.7        8.4       4.7        132.8
     Other (Expense) Income,
      net                              (6.1)     (13.0)       .1        (19.0)(B)
     Distributions on Preferred
      Securities of Subsidiary Trust    2.3          -         -          2.3
     Income Tax Expense (Benefit)      47.5       (3.1)      2.2         46.6
     Net Income (Loss)                 63.8       (1.5)      2.6         64.9
     Dividends on Preferred Stock       1.2          -         -          1.2
     Earnings (Loss) Available
      for Common Stock                $62.6(C)   $(1.5)     $2.6        $63.7(C)
 
                                         Three Months Ended March 31, 2000
 
                                     Utility     PCI    Pepco Energy    Pepco
                                                         Services   Consolidated
                                                 (Millions of Dollars)
     Operating Revenue               $440.1      $41.3(A)  $43.7       $525.1(A)
     Operating Expenses               396.8       13.2      47.0        457.0
     Operating Income (Loss)           43.3       28.1      (3.3)        68.1
     Other Expense, net               (35.8)     (15.3)      (.4)       (51.5)(B)
     Distributions on Preferred
      Securities of Subsidiary Trust    2.3          -         -          2.3
     Income Tax Expense (Benefit)       1.9        4.0      (1.3)         4.6
     Net Income (Loss)                  3.3        8.8      (2.4)         9.7
     Dividends on Preferred Stock       1.4          -         -          1.4
     Earnings (Loss) Available
      for Common Stock                 $1.9       $8.8(C)  $(2.4)       $ 8.3(C)
 
 
     (A) Includes pre-tax gains of $50.2 million and $19.7 million from the
         divestiture of Conemaugh in 2001 and the sale of Cove Point by PCI in
         2000, respectively.
     (B) Includes the "Loss from Equity Investments, principally
         Telecommunication Entities" of $6.3 million and $3.9 million (recorded
         by PCI and Pepco Energy Services) at March 31, 2001 and 2000
         respectively.
     (C) Includes after-tax gains of $22.4 million and $11.8 million from the
         divestiture of Conemaugh in 2001 and the sale of Cove Point by PCI in
         2000, respectively.  Also, see (A) above.
 
                     MAKE YOUR OPINION COUNT -  Click Here
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 SOURCE  Potomac Electric Power Company