Financial Release

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Atlantic City Electric Sells Generation Asset

MAYS LANDING, N.J., Aug. 17 /PRNewswire-FirstCall/ -- Pepco Holdings Inc. (NYSE: POM) today announced its subsidiary, Atlantic City Electric Company, has reached an agreement to sell the B.L. England Generating Station, located in Cape May County, N.J. to RC Cape May Holdings, LLC, an affiliate of Rockland Capital Energy Investments, LLC for $12.2 million. RC Cape May Holdings, LLC will assume certain liabilities associated with the B.L. England Generating Station, including substantially all environmental liabilities.

The purchase price is subject to adjustment based on, among other things, variances in the value of fuel and material inventories at the closing, certain capital expenditures, plant operating capacity, the value of certain benefits for transferred employees and the actual closing date.

B.L. England Generating Station, located in Beesley's Point, Upper Township, Cape May County, provides approximately 450 megawatts of generating capacity from three generating units. Two units burn coal and the third unit burns oil.

Rockland Capital Energy Investments, a private energy investment company founded in 2003, focuses on the acquisition, development and optimization of companies and projects in the North American and European energy sectors. Rockland expects to continue the operation of the facility, including making investments in the plant to improve overall environmental performance.

The sale is subject to approval by the New Jersey Board of Public Utilities, New Jersey Department of Environmental Protection and U.S. Federal Energy Regulatory Commission, as well as certain other legal conditions. Under the terms of the agreement, either party may terminate the agreement if the closing does not occur on or before March 31, 2007. The sale is expected to be completed during the first quarter of 2007.

Atlantic City Electric's generating assets were offered for sale in May 2005 though a competitive bidding process managed by Concentric Energy Advisors, Inc. (CEA) of Marlborough, Mass. Also offered in auction were Atlantic City Electric's interests in the Keystone and Conemaugh Generating Stations located in western Pennsylvania. In November 2005, Atlantic City Electric's interests in these assets were sold to Duquesne Light Holdings Inc; this sale is expected to close in early September of 2006.

Atlantic City Electric, a public utility owned by Pepco Holdings, Inc. (NYSE: POM), provides safe, reliable and affordable regulated electric delivery services to more than 500,000 customers in southern New Jersey.

Forward-Looking Statements: Except for historical statements and discussions, the statements in this news release constitute "forward-looking statements" within the meaning of federal securities law. These statements contain management's beliefs based on information currently available to management and on various assumptions concerning future events. Forward- looking statements are not a guarantee of future performance or events. They are subject to a number of uncertainties and other factors, many of which are outside the company's control. Factors that could cause actual results to differ materially from those in the forward-looking statements herein include general economic, business and financing conditions; availability and cost of capital; changes in laws, regulations or regulatory policies; weather conditions; competition; governmental actions; and other presently unknown or unforeseen factors. These uncertainties and factors could cause actual results to differ materially from such statements. PHI disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This information is presented solely to provide additional information to further understand the results and prospects of PHI.

SOURCE Pepco Holdings Inc.

CONTACT: media, Betty Kennedy, +1-609-625-5567, or investors, Donna Kinzel, +1-302-429-3004, both of Pepco Holdings Inc.