Schedule I, Condensed Financial Information of Parent Company is submitted below.

PEPCO HOLDINGS, INC. (Parent Company)

STATEMENTS OF INCOME (LOSS)


	For the Year Ended December 31,
	2014			2013			2012
	*(millions of dollars, except share data)*
Operating Revenue	$	—		$	—		$	—

Operating Expenses
Other operation and maintenance		31			1			1

Total operating expenses		31			1			1

Operating Loss		(31	)		(1	)		(1	)
Other Income (Expenses)
Interest expense		(43	)		(42	)		(33	)
Income from equity investments		291			204			237

Total other income		248			162			204

Income from Continuing Operations Before Income Tax		217			161			203
Income Tax (Benefit) Expense Related to Continuing Operations		(25	)		51			(15	)

Net Income from Continuing Operations		242			110			218
(Loss) Income from Discontinued Operations, net of Income Taxes		—			(322	)		67

Net Income (Loss)	$	242		$	(212	)	$	285

Comprehensive Income (Loss)	$	230		$	(198	)	$	300

Earnings Per Share
Basic earnings per share of common stock from Continuing Operations	$	0.96		$	0.45		$	0.95
Basic (loss) earnings per share of common stock from Discontinued Operations		—			(1.31	)		0.30

Basic earnings (loss) per share of common stock	$	0.96		$	(0.86	)	$	1.25

Diluted earnings per share of common stock from Continuing Operations	$	0.96		$	0.45		$	0.95
Diluted (loss) earnings per share of common stock from Discontinued Operations		—			(1.31	)		0.29

Diluted earnings (loss) per share of common stock	$	0.96		$	(0.86	)	$	1.24

The accompanying Notes are an integral part of these Financial Statements.

PEPCO HOLDINGS, INC. (Parent Company)

BALANCE SHEETS


	As of December 31,
	2014			2013
	*(millions of dollars, except share data)*
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	65		$	—
Prepayments of income taxes		152			151
Accounts receivable and other		9			28

Total Current Assets		226			179

INVESTMENTS AND OTHER ASSETS
Goodwill		1,398			1,398
Investment in consolidated companies		4,256			3,935
Other		84			37

Total Investments and Other Assets		5,738			5,370

TOTAL ASSETS	$	5,964		$	5,549

LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term debt	$	287		$	24
Current portion of long-term debt		250			—
Interest and taxes accrued		9			10
Accounts payable due to associated companies		13			1

Total Current Liabilities		559			35

DEFERRED CREDITS
Notes payable due to subsidiary companies		494			491
Liabilities and accrued interest related to uncertain tax positions		4			3

Total Deferred Credits		498			494

LONG-TERM DEBT		456			705

COMMITMENTS AND CONTINGENCIES (NOTE 4)
PREFERRED STOCK
Series A preferred stock, $.01 par value, 18,000 shares authorized, 12,600 and zero shares outstanding, respectively		129			—

EQUITY
Common stock, $.01 par value—400,000,000 shares authorized, 252,728,684 and 250,324,898 shares outstanding, respectively		3			3
Premium on stock and other capital contributions		3,800			3,751
Accumulated other comprehensive loss		(46	)		(34	)
Retained earnings		565			595

Total Equity		4,322			4,315

TOTAL LIABILITIES AND EQUITY	$	5,964		$	5,549

The accompanying Notes are an integral part of these Financial Statements.

PEPCO HOLDINGS, INC. (Parent Company)

STATEMENTS OF CASH FLOWS


	For the Year Ended December 31,
	2014			2013			2012
	*(millions of dollars)*
OPERATING ACTIVITIES
Net income (loss)	$	242		$	(212	)	$	285
Loss (income) from discontinued operations, net of income taxes		—			322			(67	)
Adjustments to reconcile net income to net cash from operating activities:
Distributions from related parties less than earnings		(149	)		(127	)		(52	)
Deferred income taxes		(5	)		(7	)		(31	)
Other		18			—			—
Changes in:
Prepaid and other		13			2			(23	)
Accounts payable		1			6			6
Interest and taxes		—			(141	)		39
Other assets and liabilities		1			3			4

Net Cash From (Used By) Operating Activities		121			(154	)		161

FINANCING ACTIVITIES
Dividends paid on common stock		(272	)		(270	)		(248	)
Common stock issued for the Direct Stock Purchase and Dividend Reinvestment Plan and employee-related compensation		34			50			51
Issuances of common stock		—			324			—
Issuances of Series A preferred stock		126			—			—
Capital contributions to subsidiaries, net		(210	)		(250	)		(110	)
Decrease in notes receivable from associated companies		—			—			154
Increase in notes payable due to associated companies		3			491			—
Issuances (repayments) of short-term debt, net		263			(240	)		(201	)
Issuance of term loan		—			250			200
Repayments of term loans		—			(450	)		—
Costs of issuances		—			(13	)		(2	)

Net Cash Used By Financing Activities		(56	)		(108	)		(156	)

Net Increase (Decrease) In Cash and Cash Equivalents		65			(262	)		5
Cash and Cash Equivalents at Beginning of Year		—			262			257

CASH AND CASH EQUIVALENTS AT END OF YEAR	$	65		$	—		$	262

The accompanying Notes are an integral part of these Financial Statements.

NOTES TO FINANCIAL INFORMATION

(1) BASIS OF PRESENTATION

Pepco Holdings, Inc. (Pepco Holdings or PHI) is a holding company and conducts substantially all of its business operations through its subsidiaries. These condensed financial statements and related footnotes have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X. These statements should be read in conjunction with the consolidated financial statements and notes thereto of Pepco Holdings included in Part II, Item 8 of this Form 10-K.

Pepco Holdings owns 100% of the common stock of all its significant subsidiaries.

(2) RECLASSIFICATIONS

Certain prior period amounts have been reclassified in order to conform to the current period presentation.

(3) DEBT

For information concerning Pepco Holdings’ long-term debt obligations, see Note (10), “Debt,” to the consolidated financial statements of Pepco Holdings.

(4) COMMITMENTS AND CONTINGENCIES

For information concerning Pepco Holdings’ material contingencies and guarantees, see Note (16), “Commitments and Contingencies” to the consolidated financial statements of Pepco Holdings.

Pepco Holdings guarantees the obligations of Pepco Energy Services, Inc., its wholly owned subsidiary, under certain contracts in its energy savings performance contracting businesses and underground transmission and distribution construction business. At December 31, 2014, Pepco Holdings’ guarantees of Pepco Energy Services’ obligations under these contracts totaled $336 million. PHI also guarantees the obligations of Pepco Energy Services under surety bonds obtained by Pepco Energy Services for construction projects in these businesses. These guarantees totaled $185 million at December 31, 2014.

In addition, Pepco Holdings guarantees certain obligations of Potomac Electric Power Company (Pepco), Delmarva Power & Light Company (DPL), and Atlantic City Electric Company (ACE) under surety bonds obtained by these subsidiaries, for construction projects and self-insured workers compensation matters. These guarantees totaled $53 million at December 31, 2014.

Pepco Holdings, pursuant to an intercompany guarantee agreement with Potomac Capital Investment Corporation (PCI), guarantees certain intercompany obligations of PCI to its subsidiaries. This guarantee totaled $725 million at December 31, 2014.

(5) INVESTMENT IN CONSOLIDATED COMPANIES

Pepco Holdings’ majority owned subsidiaries are recorded using the equity method of accounting. A breakout of the balance in Investment in consolidated companies is as follows:


	2014		2013
	*(millions of dollars)*
Conectiv, LLC (a)	$	1,984	$	1,730
Potomac Electric Power Company		2,087		1,922
Potomac Capital Investment Corporation		30		29
Pepco Energy Services, Inc.		153		250
PHI Service Company		2		4

Total investment in consolidated companies	$	4,256	$	3,935

(a)

Conectiv, LLC is the parent company of Delmarva Power & Light Company and Atlantic City Electric Company.

(6) DISCONTINUED OPERATIONS

During 2013, PHI completed the termination of its interest in its cross-border energy lease investments and, as a result, these investments have been accounted for as discontinued operations.

In December 2009, PHI announced the wind-down of the retail energy supply component of the Pepco Energy Services business which was comprised of the retail electric and natural gas supply businesses. In 2013, Pepco Energy Services completed the wind-down and, accordingly, the operations of Pepco Energy Services’ retail electric and natural gas supply businesses have been classified as discontinued operations.

(7) RELATED PARTY TRANSACTIONS

As of December 31, 2014 and 2013, PHI had the following balances on its balance sheets due (to) from related parties:


	2014			2013
	*(millions of dollars)*
(Payable to) Receivable from Related Party (current) (a)
Conectiv Communications, Inc.	$	(4	)	$	(4	)
PHI Service Company		(10	)		3
Other		1			—

Total	$	(13	)	$	(1	)

Payable to Related Party (non-current) (b)
Potomac Capital Investment Corporation	$	(494	)	$	(491	)


Money Pool Balance (included in cash and cash equivalents)	$	65		$	—

(a)	Included in Accounts payable due to associated companies.

(b)	Included in Notes payable due to subsidiary companies.

(8) DIVIDEND RESTRICTIONS

PHI, on a stand-alone basis, generates no operating income of its own. Accordingly, its ability to pay dividends to its shareholders depends on dividends received from its subsidiaries. In addition to their future financial performance, the ability of PHI’s direct and indirect subsidiaries to pay dividends is subject to limits imposed by: (i) state corporate laws, which impose limitations on the funds that can be used to pay dividends and, in the case of ACE, the regulatory requirement that it obtain the prior approval of the New Jersey Board of Public Utilities before dividends can be paid if its equity as a percent of its total capitalization, excluding securitization debt, falls below 30%; (ii) the prior rights of holders of mortgage bonds and other long-term debt issued by the subsidiaries, and any other restrictions imposed in connection with the incurrence of liabilities; and (iii) certain provisions of ACE’s charter that impose restrictions on payment of common stock dividends for the benefit of preferred stockholders. Pepco, DPL and ACE have no shares of preferred stock outstanding at December 31, 2014. Currently, the capitalization ratio limitation to which ACE is subject and the restriction in the ACE charter do not limit ACE’s ability to pay common stock dividends. As further described in Note (10), “Debt,” to the consolidated financial statements of Pepco Holdings, PHI, Pepco, DPL and ACE have restrictions on total indebtedness in relation to total capitalization under the credit facility.

PHI had approximately $565 million and $595 million of retained earnings free of restrictions at December 31, 2014 and 2013, respectively. These amounts represent the total retained earnings balances at those dates. The amount of restricted net assets for PHI’s consolidated subsidiaries at December 31, 2014 is $2,547 million.