Information from the Pepco - Conectiv Joint Proxy Statement/Prospectus dated May 30, 2001 on pages 67 - 70.

Material U.S. Federal Income Tax Consequences

The following summary discusses the material U.S. federal income tax consequences of the transaction to U.S. Holders of Pepco stock and Conectiv stock. For purposes of this discussion, a U.S. Holder means:

a citizen or resident of the United States;
a corporation or other entity taxable as a corporation created or organized under the laws of the United States or any of its political subdivisions;
a trust, if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. fiduciaries have the authority to control all substantial decisions of the trust; or
an estate that is subject to U.S. federal income tax on its income regardless of its source.

This discussion is based upon the Internal Revenue Code of 1986, as amended, Treasury regulations, administrative rulings and judicial decisions currently in effect, all of which are subject to change, possibly with retroactive effect. The discussion assumes that Pepco stockholders hold their Pepco stock and will hold their New RC common stock, and Conectiv stockholders hold their Conectiv stock and will hold their New RC common stock, as a capital asset within the meaning of Section 1221 of the Internal Revenue Code. Further, the discussion addresses only the material U.S. federal income tax consequences of the transaction and does not consider the effect of any foreign, state, local or other tax law. Nor does the discussion address all aspects of U.S. federal income taxation that may be relevant to a particular stockholder in light of that stockholder's personal investment circumstances, or to stockholders subject to special treatment under the U.S. federal income tax laws, including:

insurance companies;
tax-exempt organizations;
financial institutions;
broker-dealers;
persons who have elected to use the mark-to-market method of accounting with respect to their securities holdings;
persons that hold their Pepco stock or Conectiv stock as part of a straddle, a hedge against currency risk or a constructive sale or conversion transaction;
persons that have a functional currency other than the U.S. dollar;
investors in pass-through entities;
persons under the jurisdiction of a court in a Title 11 or similar case;
a person other than a U.S. Holder that beneficially owns or has owned directly or indirectly more that 5% of the Pepco stock or Conectiv stock during the 5-year period prior to the transaction to which Section 897, among other provisions, of the Internal Revenue Code may apply;
persons who acquired their Pepco stock or Conectiv stock through the exercise of employee stock options or otherwis e as compensation or through a tax-qualified retirement plan; or
holders of options granted under any Pepco or Conectiv benefit plan.

Holders of Pepco stock and Conectiv stock should consult their own tax advisors regarding the specific tax consequences to them of the transaction, including the applicability and effect of federal, state, local and foreign income and other tax laws in their particular circumstances.

Consequences of the Transaction to U.S. Holders

Based on representations contained in representation letters provided by New RC, Pepco and Conectiv, all of which must continue to be true and accurate in all material respects as of the effective time, and customary limitations and assumptions set forth in the confirming opinions filed as exhibits to this registration statement/prospectus, it is the opinion of Simpson Thacher & Bartlett, counsel to Conectiv, and LeBoeuf, Lamb, Greene & MacRae, L.L.P., counsel to Pepco, that the material United States federal income tax consequences of the transaction to the U.S. Holders of Pepco stock and Conectiv stock are as follows:

the Pepco Merger and the Conectiv Merger, taken together, will be treated for U.S. federal income tax purposes as a transaction described in Section 351 of the Internal Revenue Code;
with respect to U.S. Holders of Pepco common stock:
- no gain or loss will be recognized on the exchange of Pepco common stock solely for New RC common stock pursuant to the Pepco Merger;
- the aggregate adjusted basis of the New RC common stock received in the Pepco Merger (including any fractional shares of New RC common stock received) will be equal to the aggregate adjusted tax basis of the Pepco common stock exchanged for that New RC common stock;
- the holding period of the New RC common stock received in the Pepco Merger will include the holding period of the Pepco common stock exchanged for that New RC common stock;
with respect to U.S. Holders of Conectiv stock:
- no gain or loss will be recognized on the exchange of Conectiv stock solely for New RC common stock pursuant to the Conectiv Merger, except with respect to cash received instead of fractional shares of New RC common stock;
- gain or loss will be recognized on the exchange of Conectiv stock solely for cash pursuant to the Conectiv Merger in an amount equal to the difference between the amount of cash received and the U.S. Holder's adjusted tax basis in those shares of Conectiv stock;
- gain (but not loss) will be recognized on the exchange of Conectiv stock for a combination of cash and New RC common stock pursuant to the Conectiv Merger equal to the difference between:
  - the sum of the cash (excluding any cash received instead of fractional shares of New RC common stock) and the fair market value of the New RC common stock received (including any fractional shares of New RC common stock deemed received and exchanged for cash), and
  - the U.S. Holder's adjusted tax basis in those shares of Conectiv stock, but not in excess of the cash received by such U.S. Holder in the Conectiv Merger;
- the aggregate adjusted basis of the New RC common stock received in the Conectiv Merger (including any fractional shares of New RC common stock deemed received and exchanged for cash) will be equal to the aggregate adjusted tax basis of the Conectiv stock exchanged in the Conectiv Merger, increased by the amount of gain, if any, recognized by such U.S. Holder and decreased by the amount of cash received;
- the holding period of the New RC common stock received in the Conectiv Merger will include the holding period of the Conectiv stock exchanged for that New RC common stock; and
with respect to U.S. Holders of Pepco preferred stock, no gain or loss will be recognized by a U.S. Holder who retains Pepco preferred stock in connection with the Pepco Merger.

It is a condition to the closing of the transaction that each of Pepco and Conectiv receive an opinion from its tax counsel that the Pepco Merger and the Conectiv Merger, taken together, will be treated for U.S. federal income tax purposes as a transaction described in Section 351 of the Internal Revenue Code. These opinions are in addition to the opinions included in this section. These opinions will be based on updated representation letters provided by New RC, Pepco and Conectiv to be delivered at the time of closing, all of which must continue to be true and accurate in all material respects as of closing, and on customary limitations and assumptions, including that the transaction will be completed according to the terms of the merger agreement.

None of New RC, Pepco or Conectiv has requested a ruling from the United States Internal Revenue Service with respect to any of the U.S. federal income tax consequences of the transaction, and opinions of counsel are in no way binding on the Internal Revenue Service or any court. As a result, there can be no assurance that the Internal Revenue Service will not disagree with or challenge any of the conclusions described above. Moreover, any change in currently applicable law, which may or may not be retroactive, or failure of any representations or assumptions to be true, correct and complete in all material respects, could affect the continuing validity of the tax opinions.

Cash Instead of Fractional Shares

The receipt of cash instead of a fractional share of New RC common stock by a U.S. Holder of Conectiv stock will result in taxable gain or loss to such U.S. Holder for U.S. federal income tax purposes based upon the difference between the amount of cash received by such U.S. Holder and the U.S. Holder's adjusted tax basis in the fractional share (determined as described above).

Dissenters' Appraisal Rights

A U.S. Holder of Pepco stock or Conectiv stock who exercises dissenters' appraisal rights as described above under "Dissenters' Appraisal Rights" on page 64, generally will be treated as if the shares of stock subject to such rights were redeemed by Pepco or Conectiv, as applicable. In that case, the U.S. Holder generally will recognize capital gain or loss for U.S. federal income tax purposes equal to the difference between the tax basis of the stock with respect to which such rights are exercised and the amount received through the exercise of such rights, provided that such U.S. Holder does not own directly or constructively any Pepco stock following the Pepco Merger or any Conectiv stock following the Conectiv Merger. For this purpose, a U.S. Holder of Pepco stock or Conectiv stock may be treated as owning stock owned by certain related individuals and entities and stock which such U.S. Holder has the right to acquire by exercise of an option.

U.S. Holders of Pepco stock or Conectiv stock who actually or constructively own Pepco stock or Conectiv stock following the Pepco Merger or the Conectiv Merger, respectively, should consult their tax advis ors to determine the tax consequences to them resulting from the exercise of their dissenters' appraisal rights.

Taxation of Capital Gain

Gain or loss recognized by a U.S. Holder in connection with the mergers will constitute capital gain or loss and will constitute long-term capital gain or loss if the U.S. Holder's holding period is greater than one year as of the date of the mergers. For non-corporate U.S. Holders, this long-term capital gain generally will be taxed at a maximum U.S. federal income tax rate of 20%. The deductibility of capital losses is subject to limits.

Backup Withholding

Payments to certain non-corporate U.S. Holders may be subject to backup withholding at a 31% rate on cash payments received in connection with the mergers (including cash paid instead of fractional shares of New RC common stock). Backup withholding will not apply, however, to a U.S. Holder who:

furnishes a correct taxpayer identification number and certifies as to not being subject to backup withholding on IRS Form W- 9 or a substitute or successor form; or
is otherwise exempt from backup withholding.

If a U.S. Holder does not provide a correct taxpayer identification number, such U.S. Holder may be subject to penalties imposed by the Internal Revenue Service. Any amount paid as backup withholding does not constitute an additional tax and will be creditable against such U.S. Holder's U.S. federal income tax liability. U.S. Holders should consult with their own tax advisors as to their qualification for exemption from backup withholding and the procedure for obtaining the exemption.

A U.S. Holder may avoid backup withholding by completing IRS Form W- 9 or a substitute or successor form and submitting it to the paying agent for the transaction when submitting such U.S. Holder's stock certificates.

Reporting Requirements

U.S. Holders of Pepco common stock or Conectiv stock receiving New RC common stock as a result of the mergers will be required to attach to their income tax returns for the taxable year in which the closing of the transaction occurs, and maintain a permanent record of, a complete statement of all the facts relating to the exchange of stock in connection with the transaction. The facts to be disclosed by a U.S. Holder include the U.S. Holder's basis in the Pepco common stock or the Conectiv stock, as the case may be, transferred to New RC and the number of shares of New RC common stock received in the transaction.