Businessweek

Pepco Holdings, Inc., through its subsidiaries, engages in the transmission, distribution, and default supply of electricity; and the distribution and supply of natural gas. The company’s subsidiaries include Potomac Electric Power Company (Pepco); Delmarva Power & Light Company (DPL); and Atlantic City Electric Company (ACE). Businesses Power Delivery The company’s primary business is Power Delivery. Each utility comprising Power Delivery is regulated in the jurisdictions that encompass its electricity distribution service territory and is regulated by the Federal Energy Regulatory Commission (FERC) for its electricity transmission facilities. Power Delivery distributes electricity to approximately 1.8 million customers in the mid-Atlantic region and delivers natural gas to approximately 124,000 customers in Delaware. Distribution and Default Supply of Electricity: Pepco, DPL, and ACE each owns and operates a network of wires, substations, and other equipment that are classified as transmission facilities, distribution facilities, or common facilities (which are used for both transmission and distribution). Transmission facilities carry wholesale electricity into, or across, the utility’s service territory. Distribution facilities carry electricity from the transmission facilities to the end-use customers located in the utility’s service territory. Transmission of Electricity and Relationship with PJM Interconnection, LLC (PJM): The transmission facilities owned by Pepco, DPL, and ACE are interconnected with the transmission facilities of contiguous utilities and are part of an interstate power transmission grid through which electricity is transmitted throughout the mid-Atlantic portion of the United States and parts of the Midwest. Pepco, DPL, and ACE each is a member of the PJM Regional Transmission Organization (PJM RTO), the regional transmission organization designated by FERC to coordinate the movement of wholesale electricity within a region consisting of various parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and the District of Columbia. PJM, the FERC-approved independent grid operator, manages the transmission grid and the wholesale electricity market in the PJM RTO region. Subsidiaries Pepco Pepco engages in the transmission, distribution, and default supply of electricity in the District of Columbia and major portions of Prince George’s County and Montgomery County in Maryland. As of December 31, 2011, Pepco distributed electricity to 788,000 customers (of which 257,000 were located in the District of Columbia and 531,000 were located in Maryland). In 2011, Pepco distributed a total of 26,895,000 megawatt hours of electricity, of which 57% was distributed within its Maryland territory and 43% within the District of Columbia. Of this amount, 30% of the total megawatt hours were delivered to residential customers, 50% to commercial customers, and 20% to the United States and the District of Columbia government customers. Pepco provides standard offer service (SOS) in Maryland. Pursuant to orders issued by the Maryland Public Service Commission (MPSC), Pepco provides SOS to residential and small commercial customers until further action of the Maryland General Assembly, and to medium-sized commercial customers through November 2012. Pepco also provides SOS, known as Hourly Priced Service (HPS) for Maryland customers. Pepco also provides SOS in the District of Columbia. Pursuant to orders issued by the District of Columbia Public Service Commission, Pepco provides SOS to residential and small, medium-sized, and large commercial customers indefinitely. DPL DPL engages in the transmission, distribution, and default supply of electricity in Delaware and portions of Maryland. In northern Delaware, DPL also supplies and delivers natural gas to retail customers and provides transportation-only services to retail customers that purchase natural gas from another supplier. Distribution and Supply of Electricity: DPL’s electricity distribution service territory consists of the state o