Pepco 8-K Regulation FD Disclosure

Investor Meetings

August 2008

B U I L D I N GV A L U E

1

Safe Harbor Statement	2
Company Overview	3
Power Delivery	6
Conectiv Energy	13
Pepco Energy Services	20
Cross-Border Leases Status	24
Financial Overview	25
Summary	28

Topic

Beginning Page

Table of Contents

Some of the statements contained in today’s presentation are forward-looking statements within the meaning of Section 21E
of the Securities Exchange Act of 1934 and are subject to the safe harbor created by the Private Securities Litigation Reform
Act of 1995. These statements include all financial projections and any declarations regarding management’s intents, beliefs
or current expectations. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,”
“should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of such
terms or other comparable terminology. Any forward-looking statements are not guarantees of future performance, and
actual results could differ materially from those indicated by the forward-looking statements. Forward-looking statements
involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause actual results,
levels of activity, performance or achievements to be materially different from any future results, levels of activity,
performance or achievements expressed or implied by such forward-looking statements. Each forward-looking statement
speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, future events or otherwise. A number of factors could
cause actual results or outcomes to differ materially from those indicated by the forward-looking statements contained in this
presentation. These factors include, but are not limited to, prevailing governmental policies and regulatory actions affecting
the energy industry, including with respect to allowed rates of return, industry and rate structure, acquisition and disposal of
assets and facilities, operation and construction of plant facilities, recovery of purchased power expenses, and present or
prospective wholesale and retail competition; changes in and compliance with environmental and safety laws and policies;
weather conditions; population growth rates and demographic patterns; competition for retail and wholesale customers;
general economic conditions, including potential negative impacts resulting from an economic downturn; growth in demand,
sales and capacity to fulfill demand; changes in tax rates or policies or in rates of inflation; rules and changes in accounting
standards or practices; changes in project costs; unanticipated changes in operating expenses and capital expenditures; the
ability to obtain funding in the capital markets on favorable terms; restrictions imposed by Federal and/or state regulatory
commissions, PJM and other regional transmission organizations (NY ISO, ISO New England), the North American Electric
Reliability Council and other applicable electric reliability organizations; legal and administrative proceedings (whether civil or
criminal) and settlements that affect our business and profitability; pace of entry into new markets; volatility in market
demand and prices for energy, capacity and fuel; interest rate fluctuations and credit market concerns; and effects of
geopolitical events, including the threat of domestic terrorism.Readers are referred to the most recent reports filed with the
Securities and Exchange Commission.

2

Safe Harbor Statement

Transmission & Distribution

Competitive Energy / Other

Forecast

Business Mix(1)

60 - - 70%

30 - - 40%

Note:See Safe Harbor Statement at the beginning of today’s presentation.

—Stable earnings and cash flow

—Strong growth potential

—Secure dividend

… offers an

—Attractive total return

Company Overview

(1) Percentages based on operating income.

PHI Investments

3

Recent Financial Performance

GAAP Earnings Per Share
Six Months Ended June 30,
2008	2007
$0.61	$0.41
0.34	0.11
0.12	0.07
(0.37)	0.14
(0.13)	(0.17)
$0.57	$0.56

Earnings Per Share excluding Special Items*
Six Months Ended June 30,
2008	2007	Change
$0.61	$0.41	$0.20
0.34	0.11	0.23
0.12	0.07	0.05
0.09	0.14	(0.05)
(0.13)	(0.17)	0.04
$1.03	$0.56	$0.47

Power Delivery

Conectiv Energy

Pepco Energy Services

Other Non-Regulated

Corporate & Other

Total PHI

* The 2008 Earnings Per Share excluding Special Items for the Other Non-Regulated Business segment excludes the following charges for
the Cross-Border Energy leases.Equity value adjustment of $0.43 per share and interest accrued of $0.03 per share. See PHI’s form 10Q
filed August 11, 2008 for additional information. Management believes the special items are not representative of the Company’s ongoing
business operations.

Operating Segments

4

2007 Earnings Per Share$0.56

2008 Earnings Per Share* $1.03

5

Earnings per Share excludingspecial items for the six months ended June 30, 2008 compared to six months ended June 30, 2007

*

Year-to-Date Earnings Drivers

Power Delivery

•Revenue - - Rate Order Impacts0.10

•Income tax adjustments0.07

•Network Transmission Revenue0.06

•Depreciation/Amortization - - Rate Order Impacts0.04

•Weather(0.04)

•Operation and Maintenance Expense(0.04)

•Other, net0.01

Conectiv Energy

•Merchant Generation & Load Service 0.26

•Operating costs, net(0.03)

Pepco Energy Services

•Retail Energy Supply0.07

•Other, net(0.02)

Other Non-Regulated

•Financial investment portfolio(0.06)

•Other, net0.01

Corporate & Other, net0.04

Commercial 47%

Diversified Customer Mix*

Residential 35%

Government 10%

Industrial 8%

* Based on 2007 MWh Sales; excludes Virginia operations sold on 1/2/08.

Note: See Safe Harbor Statement at the beginning of today’s presentation.

—Attractive Service Territory

–Less susceptible to economic downturns

–Diverse government and private sectors

–Regulatory diversity

—Constructive Regulatory Relationships

—Significant Investment Opportunities

–Capital expenditures of ~$1 billion per year

Power Delivery - Business Overview

Combined Service Territory

6

Note: See Safe Harbor Statement at the beginning of today’s presentation.

(Dollars in Millions)

Projected Net Plant

Electric Distribution

Transmission

Gas Distribution

Rate base to nearly double over next 5 years

Power Delivery - Rate Base Growth

7

·230 mile, 500kV line originating in northern Virginia, crossing Maryland, traveling up the
Delmarva Peninsula and into southern New Jersey

·Construction of southern Maryland portion of the line expected to begin in fourth quarter 2009

·Preliminary cost estimate - $1.05 billion; including Direct Current crossing $1.45 billion,
currently being evaluated by PJM; project completion by 2013

MAPP Incentive Filing

Note:See Safe Harbor Statement at the beginning of today’s presentation.

Mid-Atlantic Power Pathway
(MAPP) Project

8

·Incentive filing made with FERC on
August 18, 2008 requesting:

·Full forward year CWIP in rate base

·150 basis point ROE adder due to
large, regional-benefit upgrades
and technical complexity of project

·100% recovery of prudently
incurred costs in case of project
cancellation

Blueprint for the Future

•Responsive to customer expectations:

“Win - - Win - Win”

–Managing energy costs

–Improving customer service

–Enhancing reliability

–Protecting the environment

•Includes significant investment:

–Advanced metering infrastructure (AMI)

–Demand side management applications

•Programs will provide the tools customers
need to move into the future:

–Energy Efficiency

–Demand Response

–Renewable Energy

•Filed in DE, MD, DC and NJ in 2007

•Multi-year effort across PHI service territory

•Regulatory support is essential

Blueprint Estimated Capital Cost 2008-2012

Total Investment: $539 million

Note:See Safe Harbor Statement at the beginning of today’s presentation.

9

Recent Delaware Commission Decisions

Delaware Public Service Commission met on Delmarva Power’s Blueprint for the Future and
Decoupling proceedings on August 19 and voted to approve the following:

Blueprint

•Authorized Delmarva Power to move forward on the Advanced Metering Infrastructure (AMI) program

•Installation of “smart meters” will begin for Delaware customers

•Demand Side Management programs approved to move forward

•Delmarva Power will work with the Commission and interested parties to determine the final
programs to be approved

•Regulatory asset will be created for AMI-related costs

•Costs will be reviewed in base rate cases

Decoupling

•Approved electric and gas decoupling rate design concept

•Commission approved adoption of a modified fixed variable rate design

•Implementation will begin with the next base rate case filing in Delaware

Final order expected in two weeks

Note:See Safe Harbor Statement at the beginning of today’s presentation.

10

Note:See Safe Harbor Statement at the beginning of today’s presentation.

11

Distribution Summary

Note:See Safe Harbor Statement at the beginning of today’s presentation.

12

Transmission Summary

2007 Capacity (4,235 MW)

An Eastern PJM, mid-merit focused
business.

Financial

Property, Plant & Equipment-12/31/07$1,250M

Construction Work in Process-12/31/07$106M

2007 Earnings$73M

Year-to-date 2008 Earnings$69M

Total Inter-Company Debt - 12/31/07$650M

Note:Excludes units under development.

«Committed new projects (645 MW)

Conectiv Energy Generating Facilities

«

Delta

Cumberland

«

Existing sites

13

Note:See Safe Harbor Statement at the beginning of today’s presentation.

Total Conectiv Energy Gross Margin - Forecast Range

(including Merchant Generation and Load Service, and Energy Marketing)

$215

$206

$308

$265

$285

$335

$380

$435

$400

$460

$550

$259

$255

$319

* Based on 2007 actual and mid-point of 2010 range.

14

Gross Margin - Forecast Range

Delta Project

•545 MW dual fuel combined cycle plant located in Peach
Bottom Township, PA. (East MAAC LDA for RPM capacity
auctions)

•6 year tolling agreement (June 1, 2011 - May 31, 2017) with
Constellation Energy Commodities Group provides
stable/predictable earnings profile

•Projected net income of $24 - $28 million per year

•Project Cost:$470 million (including owner’s costs)

•Project Status

–Land options and major permits acquired

–Minimal transmission system upgrades (PJM Queue P04)

–Major equipment ordered/delivery confirmed to meet
commercial operation date

–Commercial operation date - June 2011

•Permits and infrastructure allow for expansion (additional 545
MW block)

Note:See Safe Harbor Statement at the beginning of today’s presentation.

«

Existing Sites

Committed New Project

15

Cumberland Project

Note:See Safe Harbor Statement at the beginning of today’s presentation.

«

Existing Sites

Committed New Project

16

•100 MW dual fuel combustion turbine - flexible and
efficient GE LMS 100 technology.

•Projected net income of $4 - $7 million per year

•Existing CT site (Cumberland, NJ)

–Land available for expansion (additional 100 MW
unit)

–Natural gas at site

–Minimal transmission system upgrades (PJM Queue
P06)

–Other infrastructure and resources on site

•Project Cost:$75 million (including owner’s costs)

•Project Status

–Draft air permit and all local permits received

–Major equipment ordered

–Engineering substantially completed

–Construction started in April

Note:See Safe Harbor Statement at the beginning of today’s presentation.

17

Marketing Expansion into New England
and New York

Expansion into new markets consistent with Conectiv Energy's strategy

–Opportunity for additional margins in power pools that operate similarly to PJM

–Leverage existing asset management and hedging capabilities

–Low capital requirements - focused on marketing and asset management opportunities

Activities to date

–Utility default supply contracts with various New England utilities:

YearPeak Load (MWs)Annual Energy (GWhs)

20081,2005,000

20094001,600

20104001,600

–Generation assets under management in NY ISO

–38MW municipal solid waste plant

–82MW natural gas combined cycle plant; 50% owned by CE (ESNE Project)

–Electric Transmission into NY

–25MW firm transmission agreement from PJM into NYC starting in 2010

–Renewable Energy Credits

–Investigating ways to generate and utilize Renewable Energy Credits in New England

Gross Margin and EBITDA Forecast

Note:See Safe Harbor Statement at the beginning of today’s presentation.

	Energy, Hedges & Other	Capacity	Energy Marketing	Total Gross Margin	Hedge* Impact (as of 12/31/07)	Unhedged (Open) Gross Margin	O&M (+ 5%)	Unhedged (Open) EBITDA
2008	$280 - $315	$70 - $75	$30 - $45	$380 - $435	$105	$485-$540	($147)	$338-$393
2009	$213 - $268	$157 - $162	$30 - $45	$400 - $475	$80	$480-$555	($145)	$335-$410
2010	$222 - $292	$203 - $208	$35 - $50	$460 - $550	$25	$485-$575	($152)	$333-$423

(Dollars in millions)

* Hedges include all load and fuel hedges (e.g., forward power contracts, utility load auctions, capacity sales, fuel inventory, forward fuel contracts).

18

Note:See Safe Harbor Statement at the beginning of today’s presentation.

19

Impact of RGGI

•RGGI is expected to have a neutral to slightly positive impact on
Conectiv Energy's margins.

–At current fuel prices, combined cycle units will not dispatch ahead of
coal until CO2 prices approach $55/ton.

–Since RGGI is regional, energy imports from non-RGGI states will tend
to keep price increases lower.

–Gas-fired combined cycles have the smallest CO2 footprint of all fossil
units; therefore, margins will increase during periods that coal and oil-
fired units (with their higher CO2 costs) are setting LMP.

–Coal margins will decrease during on-peak hours when gas units are
setting the LMP.

•Conectiv Energy is well positioned to manage the impact of RGGI
due to its largely gas fired generation portfolio, its renewable energy
contracts, and its Pennsylvania plants.

Core PJM Markets

Expansion Markets

MA

NJ

DE

MD

DC

IL

NY

PA

Key Metrics2007YTD 08

Earnings ($ in millions)$38.4$24.9

Period-End Load Served (MW)4,2944,224

MWh Delivered (in millions)19.09.6

PES Retail Electric Supply Markets

TX

20

Business Overview

•PES provides retail energy supply and
services to large energy users

•Primary business driver: retail electric supply

–80% of business in Core PJM markets

•PES also provides:

–Retail natural gas supply

–Energy efficiency services

•Performance contracting

•Cogeneration, thermal energy supply

•While not part of its strategy, PES also owns

–790 MW SWMAAC peaking generation

–Retirement in 2012

•PES replenished its backlog while
delivering a record 19 million MWh in
2007

•Deliveries have grown at a 33%
compounded annual growth rate since
2004

•Contract signings in the first half of 2008
off last year’s pace

–Many customers have delayed
decisions to sign longer term contracts
due to the run up in energy prices

•Gross margins for new business held
steady at approximately $3 per MWh

•Retention rates improved to 70% in
2007, up from 61% in 2006

21

Contract Signings and Backlog

•Gross margins consistent with PES’s
expected range of $3 per MWh

•PES manages toward a flat book and
does not engage in speculative
trading

•PES’s fundamental strategy is to serve
large energy users

•By focusing only on large customers,
PES keeps its G&A costs low

–Small commercial customers require
a significantly higher G&A to serve

•PES has built a solid and scalable
platform for growth

22

Margins and G&A expenses

C&I Market

Size

Active
Expansion
Markets

Core PJM
Markets

•Serving more than 916 MW* in New
York, Illinois, New England and Texas;
up from 618 MW prior year

•Expansion markets provide significant
growth opportunities

•Starting small and slow in Texas

•Strong competitive position

•30% competitive market share

•High retention rates

•Rate caps in rest of Pennsylvania end
starting in 2010

Switched to competition

Not yet switched; still with utility

GW

23

*As of 6/30/08

Source: KEMA, PUC websites, internal estimates

Expansion Markets Provide Growth

24

Note:See Safe Harbor Statement at the beginning of today’s presentation.

Cross-Border Leases - Status

●Current Status - IRS Audit and Cross-Border Energy Leases reassessment

†The IRS is challenging tax benefits associated with certain sale-leaseback transactions with tax-
indifferent parties. Historical annual tax benefits derived from the lease portfolio have been approximately
$74 million per year.

†On June 9, 2006, the IRS issued its final Revenue Agent’s Report (RAR) for its audit of PHI’s 2001 and
2002 income tax returns which disallows the tax benefits claimed by PHI for these tax years.

†PHI filed a protest letter in August 2006 against the proposed adjustments.We anticipate the appeals
process to continue through 2008.Final resolution of the issue could still take several years to resolve.

†In the second quarter 2008, PHI recorded a non-cash after-tax charge to earnings of $93 million due to our
reassessment of the sustainability of our tax position on the cross-border energy lease investments.
Annual tax benefits derived from the lease portfolio going forward are approximately $56 million per year.

†Based on the facts relevant to these investments, we continue to believe that the tax treatment we
applied to the lease transactions was appropriate and we intend to defend this position.

●Current Status - Proposed Tax Legislation and IRS global settlement offer

†On June 18, 2008 the Farm, Nutrition and Bio Energy Act of 2007 become law.This legislation did not
contain any provisions that would apply passive loss limitations to leases with foreign tax indifferent
parties.At this time, there is no additional legislation pending in Congress.

†PHI was included in the list of companies receiving a settlement offer letter from the IRS.We received the
letter on August 7 and have 30 days to respond.

Note:See Safe Harbor Statement at the beginning of today’s presentation.

25

Financial Objectives

●Deliver Value

†Expand investment in utility infrastructure with constructive rate case
outcomes

†Continue investment in competitive energy businesses to provide
earnings growth and diversification

†Increase dividend commensurate with utility earnings growth

● Strengthen Financial Position

†Maintain an overall equity ratio in mid to high 40% range

†Continue to improve credit metrics, with the goal of achieving a
BBB+/Baa1 rating

†Maintain liquidity position in line with growing businesses

Construction Expenditures*

Note:See Safe Harbor Statement at the beginning of today’s presentation.

$896

$1,187

$1,275

$1,210

$1,095

Construction Expenditures -

Building Long-Term Value

$623

* Projected construction expenditures as reported in 2007 Form 10-K

26

Note:See Safe Harbor Statement at the beginning of today’s presentation.

Major 2008-2012 Earnings/Cash Drivers

•$5.7 billion construction expenditure program

•Timely regulatory recovery through new distribution
rate case filings

•Incentives related to large transmission projects

•Completion of construction projects on time

•Meeting O&M targets

•Power, fuel and capacity prices

•Environmental regulation

•Anticipate issuance of $1.2-$1.5 billion in equity/equity
like securities

27

•Opportunistic in our decisions to raise capital

Building Value

Note:Dividend yield source - Thomson Financial.
See Safe Harbor Statement at the beginning of today’s presentation.

28

●Stable Earnings Base - - Derived primarily from regulated utility
business

●Earnings Growth Potential - - Driven by T&D utility infrastructure
investments, constructive regulatory outcomes and competitive
energy business growth

†Power Delivery - 10% CAGR of Net Plant (2007-2012)

–Transmission - - 17% CAGR

–Electric Distribution - 8% CAGR

†Conectiv Energy - 16% CAGR of total Gross Margin (2007-2010)

●Secure Dividend - - Power Delivery earnings growth enables steady
long-term dividend growth

†Current dividend yield as of August 21, 2008 is 4.4%