UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C.  20549

                                   FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934

    For the quarterly period ended September 30, 2001
                                   ------------------

                                      OR

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934


                        Commission file number  1-3559

                        Atlantic City Electric Company
                        ------------------------------
            (Exact name of registrant as specified in its charter)

             New Jersey                                       21-0398280
             ----------                                       ----------
     (State of incorporation)                              (I.R.S. Employer
                                                           Identification No.)

     800 King Street, P.O. Box 231, Wilmington, Delaware        19899
     ---------------------------------------------------        -----
           (Address of principal executive offices)           (Zip Code)

     Registrant's telephone number, including area code      302-429-3018
                                                             ------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                              Yes    X   No ____
                                    ---

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:

All 18,320,937 issued and outstanding shares of Atlantic City Electric Company
common stock, $3 per share par value, are owned by Conectiv.


                        Atlantic City Electric Company
                        ------------------------------

                               Table of Contents
                               -----------------



                                                                                 Page
                                                                                 ----
                                                                              
Part I.  Financial Information:

   Item 1. Financial Statements

           Consolidated Statements of Income for the three and nine months
           ended September 30, 2001, and September 30, 2000...................      1

           Consolidated Balance Sheets as of September 30, 2001 and
           December 31, 2000..................................................    2-3

           Consolidated Statements of Cash Flows for the nine months
           ended September 30, 2001, and September 30, 2000...................      4

           Notes to Consolidated Financial Statements.........................   5-10

   Item 2. Management's Discussion and Analysis of Financial
           Condition and Results of Operations................................  11-17

   Item 3. Quantitative and Qualitative Disclosures About Market Risk..........    17

Part II. Other Information

   Item 1. Legal Proceedings..................................................     18

   Item 6. Exhibits and Reports on Form 8-K...................................     18

Signature.....................................................................     18


                                       i


                         Part 1. FINANCIAL INFORMATION

                         Item 1. Financial Statements


                        ATLANTIC CITY ELECTRIC COMPANY
                        ------------------------------
                       CONSOLIDATED STATEMENTS OF INCOME
                            (Dollars in Thousands)
                                  (Unaudited)



                                                                Three Months Ended               Nine Months Ended
                                                                   September 30,                    September 30,
                                                           ----------------------------     ----------------------------
                                                              2001              2000           2001               2000
                                                           ----------        ----------     ----------        ----------
                                                                                                  
OPERATING REVENUES                                         $  404,876        $  282,966     $  936,291        $  728,101
                                                           ----------        ----------     ----------        ----------

OPERATING EXPENSES
  Electric fuel and purchased energy and capacity             246,905           122,692        507,052           317,827
  Operation and maintenance                                    63,056            59,922        186,278           181,474
  Depreciation and amortization                                21,869            24,360         65,417            75,667
  Taxes other than income taxes                                10,747             9,869         28,635            27,919
                                                           ----------        ----------     ----------        ----------
                                                              342,577           216,843        787,382           602,887
                                                           ----------        ----------     ----------        ----------
OPERATING INCOME                                               62,299            66,123        148,909           125,214
                                                           ----------        ----------     ----------        ----------

OTHER INCOME                                                    2,361             2,422          8,103             5,438
                                                           ----------        ----------     ----------        ----------

INTEREST EXPENSE
  Interest charges                                             15,423            18,683         47,693            57,520
  Allowance for borrowed funds used during
     construction and capitalized interest                       (216)             (185)          (477)             (544)
                                                           ----------        ----------     ----------        ----------
                                                               15,207            18,498         47,216            56,976
                                                           ----------        ----------     ----------        ----------

PREFERRED DIVIDEND REQUIREMENTS ON
  PREFERRED SECURITIES OF SUBSIDIARY TRUSTS                     1,905             1,905          5,714             5,714
                                                           ----------        ----------     ----------        ----------

INCOME BEFORE INCOME TAXES                                     47,548            48,142        104,082            67,962

INCOME TAXES                                                   19,841            19,987         43,746            24,121
                                                           ----------        ----------     ----------        ----------

NET INCOME                                                     27,707            28,155         60,336            43,841

DIVIDENDS ON PREFERRED STOCK                                      308               534          1,374             1,599
                                                           ----------        ----------     ----------        ----------

EARNINGS APPLICABLE TO COMMON STOCK                        $   27,399        $   27,621     $   58,962        $   42,242
                                                           ==========        ==========     ==========        ==========


See accompanying Notes to Consolidated Financial Statements.

                                      -1-


                        ATLANTIC CITY ELECTRIC COMPANY
                        -----------------------------
                          CONSOLIDATED BALANCE SHEETS
                            (Dollars in Thousands)
                                  (Unaudited)



                                                                 September 30,     December 31,
                                                                     2001             2000
                                                                 -------------     ------------
                                                                             
ASSETS

Current Assets
   Cash and cash equivalents                                       $    16,676      $   156,071
   Accounts receivable, net of allowances
      of $6,826 and $4,423, respectively                               184,262          140,785
   Inventories, at average cost                                         18,382           13,604
   Deferred income taxes, net                                            2,971           15,750
   Prepayments                                                          18,432            1,738
                                                                 -------------     ------------
                                                                       240,723          327,948
                                                                 -------------     ------------

Investments                                                            119,289          112,501
                                                                 -------------     ------------
Property, Plant and Equipment
   Electric generation                                                 142,382          142,243
   Electric transmission and distribution                            1,276,579        1,255,184
   Other electric facilities                                           116,724          119,782
   Other property, plant, and equipment                                  5,772            5,772
                                                                 -------------     ------------
                                                                     1,541,457        1,522,981
   Less: Accumulated depreciation                                      678,488          640,103
                                                                 -------------     ------------
   Net plant in service                                                862,969          882,878
   Construction work-in-progress                                        74,375           50,247
   Leased nuclear fuel, at amortized cost                               19,549           28,352
                                                                 -------------     ------------
                                                                       956,893          961,477
                                                                 -------------     ------------

Deferred Charges and Other Assets
   Recoverable stranded costs                                          937,175          958,883
   Deferred energy supply costs                                         93,205                -
   Unrecovered purchased power costs                                    12,989           14,487
   Deferred recoverable income taxes                                    12,630           13,978
   Unrecovered New Jersey state excise taxes                               588           10,360
   Deferred debt refinancing costs                                      11,681           12,409
   Deferred other postretirement benefit costs                          28,107           29,981
   Unamortized debt expense                                             12,623           12,842
   Other                                                                33,522           26,516
                                                                 -------------     ------------
                                                                     1,142,520        1,079,456
                                                                 -------------     ------------

Total Assets                                                       $ 2,459,425      $ 2,481,382
                                                                 =============     ============


See accompanying Notes to Consolidated Financial Statements.

                                      -2-


                         ATLANTIC CITY ELECTRIC COMPANY
                         ------------------------------
                           CONSOLIDATED BALANCE SHEETS
                             (Dollars in Thousands)
                                   (Unaudited)



                                                                                          September 30,         December 31,
                                                                                              2001                  2000
                                                                                          -------------         ------------
                                                                                                          
CAPITALIZATION AND LIABILITIES

Current Liabilities
     Short-term debt                                                                      $      24,445         $          -
     Long-term debt due within one year                                                         107,200               97,200
     Variable rate demand bonds                                                                  22,600               22,600
     Accounts payable                                                                            58,046               50,744
     Taxes accrued                                                                                    -               10,243
     Interest accrued                                                                            11,094               18,193
     Dividends payable                                                                            6,302               17,871
     Current capital lease obligation                                                            15,480               15,480
     Deferred energy supply costs                                                                     -               34,650
     Above-market purchased energy contracts
        and other electric restructuring liabilities                                              7,263                7,586
     Other                                                                                       27,384               30,268
                                                                                          -------------         ------------
                                                                                                279,814              304,835
                                                                                          -------------         ------------

Deferred Credits and Other Liabilities
     Deferred income taxes, net                                                                 445,214              405,385
     Regulatory liability for New Jersey income tax benefit                                      49,262               49,262
     Above-market purchased energy contracts
        and other electric restructuring liabilities                                             16,676               16,744
     Deferred investment tax credits                                                             33,966               35,851
     Long-term capital lease obligation                                                           4,069               12,872
     Pension benefit obligation                                                                  29,695               26,948
     Other postretirement benefit obligation                                                     35,118               37,614
     Other                                                                                       32,465               28,918
                                                                                          -------------         ------------
                                                                                                646,465              613,594
                                                                                          -------------         ------------

Capitalization
     Common stock, $3 par value; shares authorized:
        25,000,000; shares outstanding: 18,320,937                                               54,963               54,963
     Additional paid-in capital                                                                 410,194              410,194
     Retained earnings                                                                          146,580              114,962
                                                                                          -------------         ------------
        Total common stockholder's equity                                                       611,737              580,119
     Preferred stock not subject to mandatory redemption                                          6,231                6,231
     Preferred stock subject to mandatory redemption                                             12,450               23,950
     Preferred securities of subsidiary trusts subject to mandatory
        redemption                                                                               95,000               95,000
     Long-term debt                                                                             807,728              857,653
                                                                                          -------------         ------------
                                                                                              1,533,146            1,562,953
                                                                                          -------------         ------------
     Commitments and Contingencies (Note 8)
                                                                                          -------------         ------------
Total Capitalization and Liabilities                                                      $   2,459,425         $  2,481,382
                                                                                          =============         ============


See accompanying Notes to Consolidated Financial Statements.

                                      -3-


                        ATLANTIC CITY ELECTRIC COMPANY
                        ------------------------------
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (Dollars in Thousands)
                                  (Unaudited)



                                                                             Nine Months Ended
                                                                               September 30,
                                                                      ------------------------------
                                                                          2001             2000
                                                                      -------------    -------------
                                                                                 
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                                         $      60,336    $      43,841
   Adjustments to reconcile net income to
    net cash provided by operating activities:
      Depreciation and amortization                                          74,251           85,134
      Investment tax credit adjustments, net                                 (1,885)          (2,529)
      Deferred income taxes, net                                             53,956           (2,610)
      Deferred energy supply costs                                         (127,855)          (1,392)
      Net change in:
         Accounts receivable                                                (44,541)         (16,234)
         Inventories                                                         (4,778)           3,342
         Prepaid New Jersey sales & excise taxes                             (3,215)         (15,672)
         Accounts payable                                                     7,302          (10,410)
         Taxes accrued                                                      (18,674)          88,483
         Other current assets and liabilities (1)                           (15,031)           6,011
   Other, net                                                                10,973            7,091
                                                                      -------------    -------------
   Net cash (used) / provided by operating activities                        (9,161)         185,055
                                                                      -------------    -------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Capital expenditures                                                     (50,383)         (40,465)
   Deposits to nuclear decommissioning trust funds                             (825)            (405)
   Other, net                                                                (2,421)          (2,236)
                                                                      -------------    -------------
   Net cash used by investing activities                                    (53,629)         (43,106)
                                                                      -------------    -------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Dividends paid on common stock                                           (38,913)         (50,482)
   Dividends paid on preferred stock                                         (1,374)          (1,799)
   Long-term debt redeemed                                                  (40,000)         (46,000)
   Preferred stock redeemed                                                 (11,500)               -
   Principal portion of capital lease payments                               (8,835)          (9,467)
   Net change in short-term debt                                             24,445          (30,000)
   Other, net                                                                  (428)               -
                                                                      -------------    -------------
   Net cash used by financing activities                                    (76,605)        (137,748)
                                                                      -------------    -------------
   Net change in cash and cash equivalents                                 (139,395)           4,201
   Cash and cash equivalents at beginning of period                         156,071           81,456
                                                                      -------------    -------------
   Cash and cash equivalents at end of period                         $      16,676    $      85,657
                                                                      =============    =============



   (1) Other than debt and deferred income taxes classified as current.

   See accompanying Notes to Consolidated Financial Statements.



                                      -4-


                         ATLANTIC CITY ELECTRIC COMPANY
                         ------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                  (Unaudited)


Note 1.  Financial Statement Presentation
- -------  --------------------------------

The consolidated condensed interim financial statements contained herein include
the accounts of Atlantic City Electric Company (ACE) and its wholly owned
subsidiaries and reflect all adjustments, consisting of only normal recurring
adjustments, necessary in the opinion of management for a fair presentation of
interim results.  In accordance with regulations of the Securities and Exchange
Commission (SEC), disclosures that would substantially duplicate the disclosures
in ACE's 2000 Annual Report on Form 10-K have been omitted.  Accordingly, ACE's
consolidated condensed interim financial statements contained herein should be
read in conjunction with ACE's 2000 Annual Report on Form 10-K.

On July 20, 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 141, "Business
Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets."  SFAS
No. 141 requires that business combinations initiated after June 30, 2001 be
accounted for under the purchase method of accounting and does not permit the
use of the pooling of interests method of accounting for business combinations.
Under SFAS No. 142, goodwill that has not been included in the rates of a
regulated utility subject to SFAS No. 71, "Accounting for the Effects of Certain
Types of Regulation," will no longer be amortized.  Intangible assets other than
goodwill which have finite useful lives will continue to be amortized under SFAS
No. 142.  Goodwill and other intangible assets will be tested periodically for
impairment.  If an impairment occurs, then a charge to earnings would result.
SFAS No. 142 will be effective January 1, 2002 for companies with a calendar
fiscal year, including ACE.  Since no goodwill or intangible assets are on ACE's
balance sheet, the adoption of SFAS No. 141 and SFAS No. 142 is not expected to
immediately effect ACE's financial statements.

On August 9, 2001, the FASB issued SFAS No. 143, "Accounting For Asset
Retirement Obligations," which establishes the accounting requirements for asset
retirement obligations (ARO) associated with tangible long-lived assets.  If a
legal obligation for an ARO exists, then SFAS No. 143 requires recognition of a
liability, capitalization of the cost associated with the ARO, and allocation of
the capitalized cost to expense.  The initial measurement of an ARO is based on
the fair value of the obligation, which may result in a gain or loss upon the
settlement of the ARO.  If the requirements of SFAS No. 71 are met, a regulated
entity shall also recognize a regulatory asset or liability for timing
differences between financial reporting and rate-making in the recognition of
the period costs associated with an ARO.  SFAS No. 143 will be effective January
1, 2003 for companies with a calendar fiscal year, including ACE.  Upon adoption
of SFAS No. 143, the difference between the net amount recognized in the balance
sheet under SFAS No. 143 and the net amount previously recognized in the balance
sheet will be recognized as the cumulative effect of a change in accounting
principle.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" which requires that one accounting model be used
for long-lived assets to be disposed of by sale and broadens discontinued
operations to include more disposal transactions.  Under SFAS No. 144, operating
losses of discontinued operations are recognized in the period in which they
occur, instead of accruing future operating losses before they occur.  SFAS No.
144 will become effective on January 1, 2002.

                                      -5-


ACE is currently evaluating SFAS No. 141, 142, 143, and 144 and cannot predict
the impact that these standards may have on its financial position or results of
operations; however, any such impact could be material.


Note 2.  Supplemental Cash Flow Information
- -------  ----------------------------------

                                          Nine Months Ended
                                            September 30,
                                       ----------------------
                                          2001           2000
                                       -------       --------
                                       (Dollars in thousands)
Cash paid (received) for:
 Interest, net of amounts capitalized  $53,684       $ 60,024
 Income taxes, net of refunds          $10,425       $(68,444)

For the nine months ended September 30, 2000, ACE received federal and state
income tax refunds of $79.3 million and made estimated tax payments of $10.9
million, resulting in $68.4 million of net income tax refunds received.  The
income tax refund was related to the tax benefit associated with ACE's payment
of $228.5 million on December 28, 1999 to terminate ACE's purchase of
electricity under a contract with the Pedricktown Co-generation Limited
Partnership (Pedricktown).  For additional information concerning the contract
termination, see Note 8 to the Consolidated Financial Statements included in
Item 8 of Part II of ACE's 2000 Annual Report on Form 10-K.


Note 3.  Income Taxes
- -------  ------------

The amount computed by multiplying "Income before income taxes" by the federal
statutory rate is reconciled in the table below to income tax expense.





                              Three Months Ended September 30,      Nine Months Ended September 30,
                            -----------------------------------   -----------------------------------
                                 2001               2000               2001               2000
                            ----------------   ----------------   ----------------   ---------------
                             Amount     Rate    Amount     Rate    Amount     Rate    Amount    Rate
                            --------   -----   --------   -----   --------   -----   --------   ----
                                                       (Dollars in Thousands)
                                                                        
Statutory federal income
 tax expense                 $16,642      35%   $16,850      35%   $36,429      35%   $23,787     35%
State income taxes, net
 of federal benefit            3,175       7      3,178       7      7,095       7      4,972      7
Depreciation                     704       1        625       1      2,112       1      1,875      3
Investment tax credit
 amortization                   (628)     (1)      (628)     (1)    (1,885)     (1)    (2,529)    (4)
Resolution of income
 tax matters *                     -       -          -       -          -       -     (4,554)    (7)
Other, net                       (52)               (38)                (5)               570      1
                            --------   -----   --------   -----   --------   -----   --------   ----
                            $ 19,841      42%  $ 19,987      42%  $ 43,746      42%  $ 24,121     35%
                            ========   =====   ========   =====   ========   =====   ========   ====

*  Reflects a change in estimate of previously accrued income taxes due to
resolution of uncertainties.

                                      -6-


Note 4.  Regulatory Matters
- -------  ------------------

An update to the information previously reported in Note 7 to the Consolidated
Financial Statements included in Item 8 of Part II of ACE's 2000 Annual Report
on Form 10-K is presented below.

New Jersey Electric Utility Industry Restructuring

Final Decision and Order

As previously disclosed, the New Jersey Board of Public Utilities (NJBPU) issued
a Summary Order to ACE in July 1999 concerning restructuring ACE's electricity
supply business and indicated that a more detailed order would be issued at a
later time.  The Final Decision and Order of the NJBPU, dated March 30, 2001,
for ACE was publicly posted on the NJBPU's internet website in mid-May 2001.
Management believes that the substantive provisions of the Final Decision and
Order are not materially different from the substantive provisions of the
Summary Order filed with and discussed in ACE's Form 8-K filing dated July 15,
1999.

Petition for Securitization of Stranded Costs

As previously disclosed in Note 7 to the Consolidated Financial Statements
included in Item 8 of Part II of ACE's 2000 Annual Report on Form 10-K, New
Jersey's Electric Discount and Energy Competition Act (the New Jersey Act)
permits securitization of stranded costs through the issuance of transition
bonds.  On June 25, 2001, ACE filed a petition with the NJBPU, seeking the
authority to: (i) issue through a special purpose entity up to $2 billion in
transition bonds in one or more series; (ii) collect from ACE's customers a non-
bypassable, per kilowatt-hour (kWh) delivered, transition bond charge (TBC)
sufficient to fund principal and interest payments on the bonds and related
expenses and fees; (iii) collect from ACE's customers a separate non-bypassable,
per kWh delivered, charge for recovery of the income tax expense associated with
the revenues from the TBC; and (iv) sell "bondable transition property," which
is the irrevocable right to collect TBC, to a special purpose financing entity.

The transition bonds are expected to be issued after the NJBPU issues a bondable
stranded costs rate order (Financing Order) establishing "bondable transition
property," as provided for in the New Jersey Act.  To facilitate the issuance of
transition bonds, ACE formed Atlantic City Electric Transition Funding LLC (ACE
Transition Funding) on March 28, 2001.  Assuming that the NJBPU issues a
Financing Order containing terms and conditions satisfactory to ACE, subsequent
to issuance of such order, ACE Transition Funding is expected to issue
transition bonds and use the proceeds to purchase the bondable transition
property from ACE.  The New Jersey Act requires utilities, including ACE, to use
the proceeds from the sale of bondable transition property to redeem debt or
equity or both, restructure purchased power contracts with non-utility
generators, or otherwise reduce costs in order to decrease regulated electricity
rates.

NJBPU Order On Stranded Costs For Nuclear Electric Generating Units

On September 17, 2001, the NJBPU issued a Decision and Order concerning the
stranded costs associated with ACE's ownership interests in nuclear electric
generating plants.  The NJBPU determined the amount of such stranded costs
eligible for recovery by ACE to be approximately $298 million, after income
taxes, (or $504 million before income taxes) as of December 31, 1999, subject to
further adjustments.  The NJBPU also found that ACE shall have the opportunity
to recover the eligible stranded costs through its market transition charge, in
a time frame and manner to be determined by NJBPU.

                                      -7-


Basic Generation Service

The New Jersey Act requires electric utilities to supply electricity to Basic
Generation Service (BGS) customers for at least the first three years from the
start of customer choice of electricity suppliers, or until July 31, 2002.  On
June 29, 2001, New Jersey electric utilities, including ACE, filed with the
NJBPU a proposal to use an auction process to procure electricity supply for BGS
customers.  ACE and the other New Jersey electric utilities proposed that the
BGS supply period, which would be subject to the auction, be the final year of
the transition period provided for in the New Jersey Act (August 1, 2002-July
31, 2003).  Under the proposal, ACE, as agent for its BGS customers, would pay
for electricity from the suppliers selected by the auction process and the costs
associated with this supply would be subject to the regulated cost-based, rate-
recovery mechanism for BGS.    ACE would continue to collect BGS revenues.


Note 5.  Agreements for the Sale of Electric Generating Plants
- -------  -----------------------------------------------------

For information concerning agreements for the sale of the electric generating
plants of ACE, see Note 11 to the Consolidated Financial Statements included in
Item 8 of Part II of ACE's 2000 Annual Report on Form 10-K.

For information about the sale of ACE's interests in nuclear electric generating
plants after September 30, 2001, see Note 10 to the Consolidated Financial
Statements.

As of September 30, 2001, ACE's fossil fuel-fired electric generating plants
(Deepwater Station, Conemaugh and Keystone Stations and B.L. England Station)
that are under agreements for sale to NRG Energy, Inc. (NRG) had an agreed upon
total sales price of approximately $178 million (before certain adjustments and
expenses), a net book value of approximately $116 million and electric
generating capacity of 740 MW.   Any gain that may be realized on the sale of
these plants is expected to reduce the amount of stranded costs to be recovered
from ACE's utility customers.

Effective June 22, 2001, ACE and NRG agreed to amendments to the agreements for
the sale of fossil fuel-fired electric generating plants of ACE, including
extension of the termination dates of the sale agreements.

On October 25, 2001, the NJBPU re-opened the record for additional proceedings
concerning the sale of ACE's fossil fuel-fired electric generating plants.  The
focus of the supplementary proceedings will be to supplement and update the
record as to whether the proposed sale price of the fossil fuel-fired electric
generating plants reflects the current market price of the assets and other
related issues.  The supplementary proceedings are scheduled to conclude in the
first quarter of 2002, and the sale, if approved on terms satisfactory to ACE
and NRG, would be expected to close within a reasonable time thereafter.  ACE
cannot predict the outcome of these proceedings.


Note 6.  Redemption of Preferred Stock
- -------  -----------------------------

Under mandatory redemption provisions, ACE redeemed 115,000 shares of its $7.80
annual dividend rate preferred stock on May 1, 2001 at the $100 per share stated
value or $11.5 million in total.

                                      -8-


Note 7.  Debt
- -------  ----

The $24.4 million balance of short-term debt outstanding as of September 30,
2001 had a 3.2% interest rate.

On May 15, 2001, ACE redeemed $10 million of 7.0%, Medium Term Notes at
maturity.

On August 1, 2001, ACE redeemed $30 million of 6.81% Medium Term Notes at
maturity.


Note 8.  Contingencies
- -------  -------------

Environmental Matters

ACE is subject to regulation with respect to the environmental effects of its
operations, including air and water quality control, solid and hazardous waste
disposal, and limitation on land use by various federal, regional, state, and
local authorities.  Costs may be incurred to clean up facilities found to be
contaminated due to past disposal practices.  Federal and state statutes
authorize governmental agencies to compel responsible parties to clean up
certain abandoned or uncontrolled hazardous waste sites.  ACE is a potentially
responsible party at a state superfund site and has agreed, along with other
responsible parties, to remediate the site pursuant to an Administrative Consent
Order with the New Jersey Department of Environmental Protection (NJDEP).  ACE
is also a defendant in an action to recover costs at a federal superfund site in
Gloucester County, New Jersey.  ACE's liability for clean-up costs is affected
by the activities of these governmental agencies and private land-owners, the
nature of past disposal practices, the activities of others (including whether
they are able to contribute to clean-up costs), and the scientific and other
complexities involved in resolving clean-up related issues (including whether
ACE or a corporate predecessor is responsible for conditions on a particular
parcel).  There is $4.0 million included in ACE's current liabilities as of
September 30, 2001 ($1.0 million as of December 31, 2000) for remediation
activities at these sites.  ACE does not expect such future costs to have a
material effect on its financial position or results of operations.

On July 11, 2001, the NJDEP denied ACE's request to renew a permit variance,
effective through July 30, 2001, that authorized Unit 1 at the B.L. England
station to burn coal containing greater than 1% sulfur.  ACE has appealed the
denial.  The NJDEP has issued a stay of the denial to authorize ACE to operate
Unit 1 with the current fuel until February 28, 2002 and an addendum to the
permit/certificate to operate authorizing a trial burn of coal with a sulfur
content less than 2.6%.  Management is not able to predict the outcome of ACE's
appeal.

Nuclear Insurance

As discussed in Note 10 to the Consolidated Financial Statements, on October 18,
2001, ACE sold its ownership interests in nuclear electric generating plants and
the related nuclear fuel to PSEG Nuclear LLC (as assignee of PSEG Power LLC) and
Exelon Generation Company, LLC (as assignee of PECO Energy Company).

In conjunction with the ownership interests of ACE in Peach Bottom Atomic Power
Station (Peach Bottom), Salem Nuclear Generating Station (Salem), and Hope Creek
Nuclear Generating Station (Hope Creek), ACE could be assessed for a portion of
any third-party claims associated with an incident at any commercial nuclear
power plant in the United States which occurred before the sales of ACE's
ownership interests in nuclear electric generating plants on October 18, 2001.
Under the provisions of the Price Anderson Act, if third-party claims relating
to such an incident exceed $200 million (the amount of primary insurance), ACE
could be assessed up to $30.7 million on an aggregate basis for such third-party
claims.

                                      -9-


The co-owners of Peach Bottom, Salem, and Hope Creek maintain property insurance
coverage of approximately $1.8 billion for each unit for loss or damage to the
units, including coverage for decontamination expense and premature
decommissioning.  An industry mutual insurance company (NEIL) provides
replacement power cost coverage to members in the event of a major accidental
outage at a nuclear power plant.  Under these coverages, ACE is subject to
potential retrospective loss experience assessments of up to $1.9 million on an
aggregate basis for events that occurred before the sales of ACE's ownership
interests in nuclear electric generating plants on October 18, 2001.

Other

On October 24, 2000, the City of Vineland, New Jersey, filed an action in a New
Jersey Superior Court to acquire ACE electric distribution facilities located
within the City limits by eminent domain.  The City has offered approximately
$11 million for these assets, including the right to provide electric service in
this area.  ACE believes that, properly evaluated, the assets sought by the City
are worth approximately $40 million.  The City's Superior Court action has been
dismissed, based on the failure to hold a referendum, and the City has appealed
this decision.  On November 6, 2001, the City held a referendum and City
residents voted to approve the City's proposal to acquire ACE electric
distribution facilities located within the City limits. Management cannot
predict the outcome of this matter.


Note 9.  Business Segments
- -------  -----------------

Conectiv's organizational structure and management reporting information is
aligned with Conectiv's business segments, irrespective of the subsidiary, or
subsidiaries, through which a business is conducted.  Businesses are managed
based on lines of business, not legal entity.  Business segment information is
not produced, or reported, on a subsidiary by subsidiary basis.  Thus, as a
Conectiv subsidiary, no business segment information (as defined by SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information") is
available for ACE on a stand-alone basis.  However, ACE's principal business is
expected to be the transmission and distribution of electricity upon completion
of the sale of the electric generating plants of ACE. The transfer of the
combustion turbines to Conectiv effective July 1, 2000, resulted in electricity
transmission and distribution representing a greater proportion of ACE's
business.


Note 10.  Subsequent Event
- --------  ----------------

On October 18, 2001, ACE sold its ownership interests in nuclear electric
generating plants and the related nuclear fuel to PSEG Nuclear LLC (as assignee
of PSEG Power LLC) and Exelon Generation Company, LLC (as assignee of PECO
Energy Company) for approximately $30 million, subject to additional adjustment.
ACE's interests in the nuclear units that were sold included a 7.51% (164 MW)
interest in Peach Bottom, a 7.41% interest (167 MW) in Salem and a 5.0% interest
(52 MW) in Hope Creek.  Subsequent to the sale, ACE used approximately $21
million of the proceeds to repay the lease obligations related to the nuclear
fuel.  In accordance with the sales agreements, ACE transferred its nuclear
decommissioning funds and related obligation for decommissioning to the
purchasers.

                                      -10-


                 ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements
- --------------------------

The Private Securities Litigation Reform Act of 1995 (Litigation Reform Act)
provides a "safe harbor" for forward-looking statements to encourage such
disclosures without the threat of litigation, provided those statements are
identified as forward-looking and are accompanied by meaningful, cautionary
statements identifying important factors that could cause the actual results to
differ materially from those projected in the statement.  Forward-looking
statements have been made in this report.  Such statements are based on
management's beliefs as well as assumptions made by and information currently
available to management.  When used herein, the words "intend," "will,"
"anticipate," "estimate," "expect," "believe," and similar expressions are
intended to identify forward-looking statements.  In addition to any assumptions
and other factors referred to specifically in connection with such forward-
looking statements, factors that could cause actual results to differ materially
from those contemplated in any forward-looking statements include, among others,
the following: the effects of deregulation of energy supply and the unbundling
of delivery services; the ability to enter into purchased power agreements on
acceptable terms; market demand and prices for energy, capacity, and fuel;
weather variations affecting energy usage; operating performance of power
plants; an increasingly competitive marketplace; results of any asset
dispositions; sales retention and growth; federal and state regulatory actions;
future litigation results; costs of construction; operating restrictions;
increased costs and construction delays attributable to environmental
regulations; and credit market concerns. ACE undertakes no obligation to
publicly update or revise any forward- looking statements, whether as a result
of new information, future events or otherwise. The foregoing list of factors
pursuant to the Litigation Reform Act should not be construed as exhaustive or
as any admission regarding the adequacy of disclosures made prior to the
effective date of the Litigation Reform Act.

Earnings Results Summary
- ------------------------

Earnings applicable to common stock were $27.4 million for the third quarter of
2001, compared to $27.6 million for the third quarter of 2000.  More electricity
was purchased during the third quarter of 2001 than in the third quarter of
2000, primarily due to ACE's "Wholesale Transaction Confirmation Letter
Agreements" (Letter Agreements), under which ACE sold its interest in the kWh
output of nuclear electric generating plants to the companies that operate the
plants.  Although ACE incurred higher costs in supplying its BGS customers as a
result of purchasing more power, ACE's earnings were not affected because ACE's
revenues reflect BGS costs, due to the regulated cost-based, rate-recovery
mechanism for BGS (as discussed in Notes 1 and 7 to the Consolidated Financial
Statements included in Item 8 of Part II of ACE's 2000 Annual Report on Form 10-
K).

Earnings applicable to common stock increased by $16.7 million to $58.9 million
for the nine months ended September 30, 2001, from $42.2 million for the nine
months ended September 30, 2000.  The $16.7 million earnings increase was mainly
due to higher volumes of regulated electricity sales and deliveries, reflecting
higher electricity usage related to weather and growth in the number of
customers.  Due to increased volumes of purchased power, ACE incurred higher
average energy costs in serving its BGS customers, but earnings were not
affected because additional revenues were recognized pursuant to the rate-
recovery mechanism for BGS.  The earnings increase also reflects higher other
income, lower depreciation and amortization expenses and lower interest expense.
The variances that positively affected earnings were partly offset by the
effects of a higher effective income tax rate and the transfer of the combustion
turbine electric generating units to Conectiv on July 1, 2000.

                                      -11-


New Jersey Electric Utility Industry Restructuring
- --------------------------------------------------

Final Decision and Order

As previously disclosed, the New Jersey Board of Public Utilities (NJBPU) issued
a Summary Order to ACE in July 1999 concerning restructuring ACE's electricity
supply business and indicated that a more detailed order would be issued at a
later time.  The Final Decision and Order of the NJBPU, dated March 30, 2001,
for ACE was publicly posted on the NJBPU's internet website in mid-May 2001.
Management believes that the substantive provisions of the Final Decision and
Order are not materially different from the substantive provisions of the
Summary Order filed with and discussed in ACE's Form 8-K filing dated July 15,
1999.

Petition for Securitization of Stranded Costs

As previously disclosed in Note 7 to the Consolidated Financial Statements
included in Item 8 of Part II of ACE's 2000 Annual Report on Form 10-K, New
Jersey's Electric Discount and Energy Competition Act (the New Jersey Act)
permits securitization of stranded costs through the issuance of transition
bonds.  On June 25, 2001, ACE filed a petition with the NJBPU, seeking the
authority to: (i) issue through a special purpose entity up to $2 billion in
transition bonds in one or more series; (ii) collect from ACE's customers a non-
bypassable, per kilowatt-hour (kWh) delivered, transition bond charge (TBC)
sufficient to fund principal and interest payments on the bonds and related
expenses and fees; (iii) collect from ACE's customers a separate non-bypassable,
per kWh delivered, charge for recovery of the income tax expense associated with
the revenues from the TBC; and (iv) sell "bondable transition property," which
is the irrevocable right to collect TBC, to a special purpose financing entity.

The transition bonds are expected to be issued after the NJBPU issues a bondable
stranded costs rate order (Financing Order) establishing "bondable transition
property," as provided for in the New Jersey Act.  To facilitate the issuance of
transition bonds, ACE formed Atlantic City Electric Transition Funding LLC (ACE
Transition Funding) on March 28, 2001.  Assuming that the NJBPU issues a
Financing Order containing terms and conditions satisfactory to ACE, subsequent
to issuance of such order, ACE Transition Funding is expected to issue
transition bonds and use the proceeds to purchase the bondable transition
property from ACE.  The New Jersey Act requires utilities, including ACE, to use
the proceeds from the sale of bondable transition property to redeem debt or
equity or both, restructure purchased power contracts with non-utility
generators, or otherwise reduce costs in order to decrease regulated electricity
rates.

NJBPU Order On Stranded Costs For Nuclear Electric Generating Units

On September 17, 2001, the NJBPU issued a Decision and Order concerning the
stranded costs associated with ACE's ownership interests in nuclear electric
generating plants.  The NJBPU determined the amount of such stranded costs
eligible for recovery by ACE to be approximately $298 million, after income
taxes, (or $504 million before income taxes) as of December 31, 1999, subject to
further adjustments.  The NJBPU also found that ACE shall have the opportunity
to recover the eligible stranded costs through its market transition charge, in
a time frame and manner to be determined by NJBPU.

                                      -12-


Basic Generation Service

The New Jersey Act requires electric utilities to supply electricity to BGS
customers for at least the first three years from the start of customer choice
of electricity suppliers, or until July 31, 2002.  On June 29, 2001, New Jersey
electric utilities, including ACE, filed with the NJBPU a proposal to use an
auction process to procure electricity supply for BGS customers.  ACE and the
other New Jersey electric utilities proposed that the BGS supply period, which
would be subject to the auction, be the final year of the transition period
provided for in the New Jersey Act (August 1, 2002-July 31, 2003).  Under the
proposal, ACE, as agent for its BGS customers, would pay for electricity from
the suppliers selected by the auction process and the costs associated with this
supply would be subject to the regulated cost-based, rate-recovery mechanism for
BGS.    ACE would continue to collect BGS revenues.

Agreements for the Sale of Electric Generating Plants
- -----------------------------------------------------

For information concerning agreements for the sale of the electric generating
plants of ACE, see Note 11 to the Consolidated Financial Statements included in
Item 8 of Part II of ACE's 2000 Annual Report on Form 10-K.

Fossil fuel-fired Electric Generating Plants

As of September 30, 2001, ACE's fossil fuel-fired plants (Deepwater Station,
Conemaugh and Keystone Stations and B.L. England Station) that are under
agreements for sale to NRG Energy, Inc. (NRG) had an agreed upon total sales
price of approximately $178 million (before certain adjustments and expenses), a
net book value of approximately $116 million and electric generating capacity of
740 MW.   Any gain that may be realized on the sale of these plants is expected
to reduce the amount of stranded costs to be recovered from ACE's utility
customers.

Effective June 22, 2001, ACE and NRG agreed to amendments to the sale agreements
including extension of the termination dates of the sale agreements.

On October 25, 2001, the NJBPU re-opened the record for additional proceedings
concerning the sale of ACE's fossil fuel-fired plants.  The focus of the
supplementary proceedings will be to supplement and update the record as to
whether the proposed sale price of the fossil generating plants reflects the
current market price of the assets and other related issues.  The supplementary
proceedings are scheduled to conclude in the first quarter of 2002 and the sale,
if approved on terms satisfactory to ACE and NRG, would be expected to close
within a reasonable time thereafter.  ACE cannot predict the outcome of these
proceedings.

Nuclear Electric Generating Plants

On October 18, 2001, ACE sold its ownership interests in nuclear electric
generating plants and the related nuclear fuel to PSEG Nuclear LLC (as assignee
of PSEG Power LLC) and Exelon Generation Company, LLC (as assignee of PECO
Energy Company) for approximately $30 million, subject to additional adjustment.
ACE's interests in the nuclear units that were sold included a 7.51% (164 MW)
interest in Peach Bottom, a 7.41% interest (167 MW) in Salem and a 5.0% interest
(52 MW) in Hope Creek.  Subsequent to the sale, ACE used approximately $21
million of the proceeds to repay the lease obligations related to the nuclear
fuel.  In accordance with the sales agreements, ACE transferred its nuclear
decommissioning funds and related obligation for decommissioning to the
purchasers.

                                      -13-


Operating Revenues
- ------------------

                                    Three Months Ended      Nine Months Ended
                                       September 30,          September 30,
                                   --------------------    -------------------
                                     2001         2000      2001         2000
                                    ------       ------    ------       ------
                                              (Dollars in millions)
Regulated electric revenues         $401.8       $273.0    $923.3       $685.1
Non-regulated electric revenues        2.0          5.8       8.7         34.1
Other revenues                         1.1          4.2       4.3          8.9
                                    ------       ------    ------       ------
Total operating revenues            $404.9       $283.0    $936.3       $728.1
                                    ======       ======    ======       ======

The table above shows the amounts of electric revenues earned that are subject
to price regulation (regulated) and that are not subject to price regulation
(non-regulated).  "Regulated electric revenues" include revenues for delivery
(transmission and distribution) service and BGS.

"Regulated electric revenues" increased by $128.8 million for the three months
ended September 30, 2001 and $238.2 million for the nine months ended September
30, 2001 due to the following factors:



                                                           Increase (Decrease) in
                                                         Regulated Electric Revenues
                                                        -----------------------------
                                                        Three Months      Nine Months
                                                        ------------      -----------
                                                            (Dollars in Millions)
                                                                   
  Additional revenues recognized under the regulated
   cost-based rate-recovery mechanism for BGS             $   71.2          $ 120.9
  Increased retail and interchange sales and other *          57.6            117.3
                                                        ------------      -----------
                                                          $  128.8          $ 238.2
                                                        ============      ===========


  *  These increases were primarily due to higher volumes of regulated
     electricity sales and deliveries attributed to growth in the number of
     customers, higher electricity usage from warmer summer weather and colder
     winter weather, and revenues from electricity supplied to customers that
     switched back to ACE from other electricity suppliers.

"Non-regulated electric revenues" decreased by approximately $25.4 million for
the nine months ended September 30, 2001 mainly due to the transfer of the
combustion turbine electric generating units to Conectiv on July 1, 2000.

Operating Expenses
- ------------------

Electric Fuel and Purchased Energy and Capacity

"Electric fuel and purchased energy and capacity" increased $124.2 million and
$189.2 million for the three months and nine months ended September 30, 2001,
respectively, mainly due to increased volumes of electricity purchased,
primarily due to ACE's Letter Agreements, under which ACE sold its interest in
the kWh output of nuclear electric generating plants to the companies that
operate the plants.  For more information concerning the letter agreements, see
Note 12 to the Consolidated Financial Statements in Item 8 of Part II of ACE's
2000 Annual Report on Form 10-K.

                                      -14-


Operation and Maintenance Expenses

Operation and maintenance expenses increased $3.1 million and $4.8 million for
the three months and nine months ended September 30, 2001, respectively, mainly
due to increasing the allowance for uncollectible accounts receivable.

Depreciation and amortization

Depreciation and amortization expenses decreased $2.5 million and $10.3 million
for the three months and nine months ended September 30, 2001, respectively,
mainly due to expiration of the amortization of a regulatory asset for purchased
capacity costs.

Other Income
- ------------

Other income increased $2.7 million for the nine months ended September 30, 2001
primarily due to a higher average investment balance in Conectiv's money pool,
and also due to interest income accrued on the regulatory asset for deferred BGS
costs, which represents amounts to be recovered from customers in the future.  A
portion of ACE's BGS costs were not recovered from customers during 2001 due to
customer rate levels, which caused the balance for the deferred energy supply
costs to change from a liability to an asset, during the second quarter of 2001.

Interest Expense
- ----------------

Interest expense, net of amounts capitalized, decreased $3.2 million and $9.8
million for the three months and nine months ended September 30, 2001,
respectively, due to less interest expense attributed to deferred energy supply
costs, lower interest rates on ACE's $228.5 million loan associated with the
Pedricktown contract buyout, the redemption of $10.0 million and $30.0 million
of 6.81%-7.0% Medium Term Notes on May 15, 2001 and August 1, 2001,
respectively, and other miscellaneous decreases.

Income Taxes
- ------------

Income taxes increased $19.6 million for the nine months ended September 30,
2001 mainly due to higher income before income taxes and also because the
effective income tax rate for the same period last year had been decreased by a
change in estimate of previously accrued income taxes due to resolution of
uncertainties.

Liquidity and Capital Resources
- --------------------------------

Due to $9.2 million of cash used by operating activities, $53.6 million of cash
used by investing activities, and $76.6 million of cash used by financing
activities, cash and cash equivalents decreased by $139.4 million during the
nine months ended September 30, 2001.

Net cash from operating activities decreased by $194.2 million, to $9.2 million
of cash used by operations for the nine months ended September 30, 2001, from
$185.0 million of cash provided by operations for the nine months ended
September 30, 2000.  The decrease in net cash from operating activities was
primarily due to higher amounts of electricity purchased during the nine months
ended September 30, 2001 and income tax refunds received during the nine months
ended September 30, 2000.

                                      -15-


Investing activities used $53.6 million of net cash during the nine months
ended September 30, 2001 primarily due to $50.4 million of capital expenditures,
which were primarily for the electric transmission and distribution systems of
ACE.

Cash Flows From Financing Activities for the nine months ended September 30,
2001 used $76.6 million of cash mainly due to the following: $38.9 million of
dividends paid on ACE's common stock held by Conectiv; the redemptions of $40.0
million of 6.81%-7.0% Medium Term Notes and $11.5 million of preferred stock
($7.80 annual dividend rate per each $100 share), $8.8 million of capital lease
principal payments, and $24.4 million of cash provided from issuing short-term
debt.

ACE's capital structure, expressed as a percentage of total capitalization, is
shown below as of September 30, 2001 and December 31, 2000.




                                                            September 30,   December 31,
                                                                2001            2000
                                                             ----------      ----------
                                                                      
Common stockholder's equity                                     36.3%           34.5%
Preferred stock and preferred trust securities                   6.7%            7.4%
Long-term debt and variable rate demand bonds                   49.2%           52.3%
Short-term debt and current maturities of long-term debt         7.8%            5.8%


ACE's ratio of earnings to fixed charges and ratio of earnings to fixed charges
and preferred stock dividends under the SEC Methods are shown below.  See
Exhibit 12-A, Ratio of Earnings to Fixed Charges, and Exhibit 12-B, Ratio of
Earnings to Fixed Charges and Preferred Dividends, for additional information.



                                              9 Months
                                                Ended        Year Ended December 31,
                                            September 30,  ----------------------------
                                                2001       2000  1999  1998  1997  1996
                                             ----------    ----  ----  ----  ----  ----
                                                                 
 Ratio of Earnings to
   Fixed Charges (SEC Method)                    2.85      2.03  2.57  1.66  2.84  2.59
 Ratio of Earnings to Fixed Charges and
  Preferred Stock Dividends (SEC Method)         2.74      1.95  2.44  1.55  2.58  2.16


New Accounting Standards
- ------------------------

On July 20, 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 141, "Business
Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets."  SFAS
No. 141 requires that business combinations initiated after June 30, 2001 be
accounted for under the purchase method of accounting and does not permit the
use of the pooling of interests method of accounting for business combinations.
Under SFAS No. 142, goodwill that has not been included in the rates of a
regulated utility subject to SFAS No. 71, "Accounting for the Effects of Certain
Types of Regulation," will no longer be amortized.  Intangible assets other than
goodwill which have finite useful lives will continue to be amortized under SFAS
No. 142.  Goodwill and other intangible assets will be tested periodically for
impairment.  If an impairment occurs, then a charge to earnings would result.
SFAS No. 142 will be effective January 1, 2002 for companies with a calendar
fiscal year, including ACE.  Since no goodwill or intangible assets are on ACE's
balance sheet, the adoption of SFAS No. 141 and SFAS No. 142 is not expected to
immediately effect ACE's financial statements.

                                      -16-


On August 9, 2001, the FASB issued SFAS No. 143, "Accounting For Asset
Retirement Obligations," which establishes the accounting requirements for asset
retirement obligations (ARO) associated with tangible long-lived assets.  If a
legal obligation for an ARO exists, then SFAS No. 143 requires recognition of a
liability, capitalization of the cost associated with the ARO, and allocation of
the capitalized cost to expense.  The initial measurement of an ARO is based on
the fair value of the obligation, which may result in a gain or loss upon the
settlement of the ARO.  If the requirements of SFAS No. 71 are met, a regulated
entity shall also recognize a regulatory asset or liability for timing
differences between financial reporting and rate-making in the recognition of
the period costs associated with an ARO.  SFAS No. 143 will be effective January
1, 2003 for companies with a calendar fiscal year, including ACE.  Upon adoption
of SFAS No. 143, the difference between the net amount recognized in the balance
sheet under SFAS No. 143 and the net amount previously recognized in the balance
sheet will be recognized as the cumulative effect of a change in accounting
principle.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" which requires that one accounting model be used
for long-lived assets to be disposed of by sale and broadens discontinued
operations to include more disposal transactions.  Under SFAS No. 144, operating
losses of discontinued operations are recognized in the period in which they
occur, instead of accruing future operating losses before they occur.  SFAS No.
144 will become effective on January 1, 2002.

ACE is currently evaluating SFAS No. 141, 142, 143, and 144 and cannot predict
the impact that these standards may have on its financial position or results of
operations; however, any such impact could be material.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk
- -------  ----------------------------------------------------------

As previously disclosed under "Quantitative and Qualitative Disclosures About
Market Risk" on page II-13 to ACE's 2000 Annual Report on Form 10-K, ACE is
subject to market risks, including interest rate risk, equity price risk, and
commodity price risk.  There were no material changes in ACE's level of market
risks as of September 30, 2001 compared to December 31, 2000.

                                      -17-


                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings
- -------  -----------------

Information reported under the heading "Other" in Note 8 to the Consolidated
Financial Statements under Item 1 in Part I herein, concerning an action filed
in a New Jersey Superior Court by the City of Vineland, is incorporated by
reference.

Item 6.  Exhibits and Reports on Form 8-K
- -------  --------------------------------

(a) Exhibits
- ------------

Exhibit 10-B, Second Amendment to the Purchase and Sale Agreement by and between
Atlantic City Electric Company and NRG Energy, Inc., dated as of October 31,
2001 (wholly owned electric generating plants) (Filed herewith).

Exhibit 10-C, Second Amendment to the Purchase and Sale Agreement by and between
Atlantic City Electric Company and NRG Energy, Inc., dated as of October 31,
2001 (jointly owned electric generating plants) (Filed herewith).

Exhibit 12-A, Ratio of Earnings to Fixed Charges (filed herewith)

Exhibit 12-B, Ratio of Earnings to Fixed Charges and Preferred Dividends (filed
herewith)

(b) Reports on Form 8-K
- -----------------------

No Current Reports on Form 8-K were filed during the third quarter of 2001.



                                   SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                   Atlantic City Electric Company
                                   --------------------------------
                                            (Registrant)



Date: November 9, 2001             /s/ John C. van Roden
      ----------------             --------------------------------------------
                                   John C. van Roden, Chief Financial Officer


                                      -18-


                                 Exhibit Index
                                 -------------

Exhibit 10-B, Second Amendment to the Purchase and Sale Agreement by and between
Atlantic City Electric Company and NRG Energy, Inc., dated as of October 31,
2001 (wholly owned electric generating plants) (Filed herewith).

Exhibit 10-C, Second Amendment to the Purchase and Sale Agreement by and between
Atlantic City Electric Company and NRG Energy, Inc., dated as of October 31,
2001 (jointly owned electric generating plants) (Filed herewith).

Exhibit 12-A, Ratio of Earnings to Fixed Charges

Exhibit 12-B, Ratio of Earnings to Fixed Charges and Preferred Dividends