Pepco Holdings Reports First-Quarter 2005 Results; Conference Call Scheduled

Monday, May 09, 2005

Pepco Holdings, Inc. (NYSE: POM) today reported first-quarter 2005 consolidated earnings of $55.5 million, or 29 cents per share, compared to $51.2 million or 30 cents per share in the first quarter 2004. Excluding special items(as described below), earnings for the first quarter 2005 would have been $50.4 million, or 26 cents per share, compared to $38.0 million, or 23 cents per share, for the corresponding period a year ago. The weighted average shares outstanding in the first quarter 2005 were 188.4 million compared with 171.8 million for the first quarter 2004, which resulted in 3 cents per share of dilution in consolidated results quarter over quarter.

"We are pleased with our first-quarter performance across all of our businesses led by higher earnings in Power Delivery," said Dennis R. Wraase, Chairman, President and Chief Executive Officer. "Higher gross margins in Power Delivery along with lower operating and maintenance expenses more than offset the impact of slightly milder weather during the quarter." Wraase noted that the non-regulated businesses continue to perform well in challenging market conditions.

"Year to date there are several key developments that I am pleased to report on. On April 19, 2005, Atlantic City Electric Company reached an agreement with parties on the base rate case in New Jersey, the effects of which are reflected in our first quarter results. The settlement will be essentially revenue neutral, but will have a positive annual pre-tax earnings impact of approximately $20 million. In early April, the District of Columbia PSC approved the settlement of our distribution rate case which maintains our current rates in D.C. A federal court order resulted in a payment from Mirant Corp. in the amount of $57.5 million which we received in mid-April," Wraase concluded. "It is still early in the year, but we believe we have established a solid base to build on in 2005."

Further details regarding the change in consolidated earnings between 2005 and 2004 can be found in the following schedules. Additional information regarding financial results and recent regulatory events can be found in the Pepco Holdings, Inc. Form 10-Q for the quarter ended March 31, 2005 which is available at www.pepcoholdings.com.

Special Items

Generally Accepted Accounting Principles (GAAP) earnings for the first quarter 2005 included the following special item which management believes is not representative of the company's core business operations (referred to herein as a "special item"):

  • After-tax earnings of $5.1 million or 3 cents per share, related to the Atlantic City Electric base rate proceedings settlement in New Jersey.

GAAP earnings for the first quarter 2004 included the following special item:

  • After-tax earnings of $13.2 million, or 7 cents per share, related to the impact of changes in local tax regulations that were retroactive to 2001.

CONFERENCE CALL FOR INVESTORS

Pepco Holdings, Inc. will host a conference call to discuss first-quarter results on Wednesday, May 11 at 10 a.m. E.D.T. Investors, members of the media and other interested persons may access the conference call on the Internet at http://www.pepcoholdings.com/investorsor by calling 1-866-800-8651 before 9:55 a.m. The pass code for the call is 19719247.  International callers may access the call by dialing 1-617-614-2704, using the same pass code, 19719247. An on-demand replay will be available for seven days following the call. To hear the replay, dial 1-888-286-8010 and enter pass code 79183987. International callers may access the replay by dialing 1-617-801-6888 and enter the same pass code 79183987. An audioarchive will be available at PHI''s Web site, http://www.pepcoholdings.com/investors/index_financialrelease.html.

    Note: If any non-GAAP financial information (as defined by the Securities and Exchange Commission in Regulation G) is used during the quarterly earnings conference call, a presentation of the most directly comparable GAAP measure and a reconciliation of the differences will be available at http://www.pepcoholdings.com/investors/index_financialrelease.html.

    Complete press release with selected financial information.
    Adobe Acrobat Format.

    Media Contact: Robert Dobkin (202) 872-2680
    Investor Contact: Anthony Kamerick (202) 872-2056

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    About PHI:

    Pepco Holdings, Inc. is a diversified energy company with headquarters in Washington,D.C. Its principal operations consist of PHI Power Delivery, which delivers 50,000 gigawatt-hours of power to more than 1.8 million customers in Washington,D.C., Delaware, Maryland, New Jersey and Virginia. PHI engages in regulated utility operations by delivering electricity and natural gas, and provides competitive energy and energy products and services to residential and commercial customers.

    Forward-Looking Statements:

    Except for historical statements and discussions, the statements in this news release constitute "forward-looking statements" within the meaningof federal securities law. These statements contain management''s beliefsbased 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 numbe rof 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 updateor 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 prospectsof PHI.