Property, Plant And Equipment

12 Months Ended

Dec. 31, 2012

(9) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is comprised of the following:


	Original Cost		Accumulated Depreciation		Net Book Value
	*(millions of dollars)*
At December 31, 2012
Generation	$	107	$	97	$	10
Distribution		8,320		2,954		5,366
Transmission		2,783		866		1,917
Gas		458		137		321
Construction work in progress		692		—		692
Non-operating and other property		1,265		725		540

Total	$	13,625	$	4,779	$	8,846

At December 31, 2011
Generation	$	108	$	82	$	26
Distribution		7,832		2,848		4,984
Transmission		2,462		834		1,628
Gas		429		133		296
Construction work in progress		742		—		742
Non-operating and other property		1,282		738		544

Total	$	12,855	$	4,635	$	8,220

The non-operating and other property amounts include balances for general plant, intangible plant, distribution plant and transmission plant held for future use as well as other property held by non-utility subsidiaries. Utility plant is generally subject to a first mortgage lien.

Pepco Holdings’ utility subsidiaries use separate depreciation rates for each electric plant account. The rates vary from jurisdiction to jurisdiction.

Jointly Owned Plant

PHI’s consolidated balance sheets include its proportionate share of assets and liabilities related to jointly owned plant. At December 31, 2012 and 2011, PHI’s subsidiaries had a net book value ownership interest of $13 million in transmission and other facilities in which various parties also have ownership interests. PHI’s share of the operating and maintenance expenses of the jointly-owned plant is included in the corresponding expenses in the consolidated statements of income. PHI is responsible for providing its share of the financing for the above jointly-owned facilities.

Deactivation of Pepco Energy Services’ Generating Facilities

During 2012, Pepco Energy Services deactivated its Buzzard Point and Benning Road oil-fired generation facilities. The facilities were located in Washington, D.C. and had a generating capacity of approximately 790 megawatts. During the years ended December 31, 2012 and 2011, PHI has recorded decommissioning costs of $3 million and $2 million, respectively, related to these generating facilities.

Long-Lived Asset Impairment

At December 31, 2012, PHI recorded impairment losses of $12 million ($7 million after-tax) at Pepco Energy Services associated primarily with its investments in landfill gas-fired electric generation facilities and the reduction in the estimated net realizable value of the combustion turbines at Buzzard Point. PHI performed a long-lived asset impairment test on the landfill generation facilities of Pepco Energy Services as a result of a sustained decline in energy prices. The asset value of the facilities was written down to their estimated fair value because the future expected cash flows of the facilities were not sufficient to provide recovery of the facilities’ carrying value. PHI estimated the fair value of the facilities by calculating the present value of expected future cash flows using an appropriate discount rate. Both the expected future cash flows and the discount rate used primarily unobservable inputs.

Asset Retirement Obligations

PHI recognizes liabilities related to the retirement of long-lived assets in accordance with ASC 410. In connection with Pepco Energy Services’ decommissioning of the Buzzard Point and Benning Road generation facilities, PHI has recorded an asset retirement obligation of $9 million as of December 31, 2012 on its consolidated balance sheet.

The sale of the Conectiv Energy wholesale power generation business to Calpine did not include a coal ash landfill site located at the Edge Moor generating facility, which PHI intends to close. The preliminary estimate of the costs to PHI to close the coal ash landfill ranges from approximately $2 million to $3 million, plus annual post-closure operations, maintenance and monitoring costs for 30 years. PHI has recorded an asset retirement obligation of $6 million on its consolidated balance sheet related to the Edge Moor landfill.

Potomac Electric Power Co [Member]

Property, Plant And Equipment

(8) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is comprised of the following:


	Original Cost		Accumulated Depreciation		Net Book Value
	*(millions of dollars)*
At December 31, 2012
Distribution	$	4,949	$	1,995	$	2,954
Transmission		1,166		419		747
Construction work in progress		303		—		303
Non-operating and other property		432		291		141

Total	$	6,850	$	2,705	$	4,145

At December 31, 2011
Distribution	$	4,661	$	1,960	$	2,701
Transmission		986		398		588
Construction work in progress		438		—		438
Non-operating and other property		493		346		147

Total	$	6,578	$	2,704	$	3,874

The non-operating and other property amounts include balances for general plant, distribution plant and transmission plant held for future use, intangible plant and non-utility property. Utility plant is generally subject to a first mortgage lien.

Delmarva Power & Light Co/De [Member]

Property, Plant And Equipment

(9) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is comprised of the following:


	Original Cost		Accumulated Depreciation		Net Book Value
	*(millions of dollars)*
At December 31, 2012
Distribution	$	1,664	$	498	$	1,166
Transmission		877		233		644
Gas		458		137		321
Construction work in progress		206		—		206
Non-operating and other property		217		132		85

Total	$	3,422	$	1,000	$	2,422

At December 31, 2011
Distribution	$	1,580	$	435	$	1,145
Transmission		788		230		558
Gas		429		133		296
Construction work in progress		151		—		151
Non-operating and other property		240		128		112

Total	$	3,188	$	926	$	2,262

The non-operating and other property amounts include balances for general plant, plant held for future use, intangible plant and non-utility property. Utility plant is generally subject to a first mortgage lien.

Atlantic City Electric Co [Member]

Property, Plant And Equipment

(8) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is comprised of the following:


	Original Cost		Accumulated Depreciation		Net Book Value
	*(millions of dollars)*
At December 31, 2012
Generation	$	10	$	9	$	1
Distribution		1,707		461		1,246
Transmission		740		214		526
Construction work in progress		133		—		133
Non-operating and other property		181		103		78

Total	$	2,771	$	787	$	1,984

At December 31, 2011
Generation	$	10	$	9	$	1
Distribution		1,591		453		1,138
Transmission		688		206		482
Construction work in progress		87		—		87
Non-operating and other property		172		98		74

Total	$	2,548	$	766	$	1,782

Jointly Owned Plant

ACE’s consolidated balance sheets include its proportionate share of assets and liabilities related to jointly owned plant. At December 31, 2012 and 2011, ACE’s subsidiaries had a net book value ownership interest of $8 million in transmission and other facilities in which various parties also have ownership interests. ACE’s share of the operating and maintenance expenses of the jointly-owned plant is included in the corresponding expenses in the consolidated statements of income. ACE is responsible for providing its share of the financing for the above jointly-owned facilities.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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