Segment Information

9 Months Ended

Sep. 30, 2012

Segment Information

(5) SEGMENT INFORMATION

Pepco Holdings’ management has identified its operating segments at September 30, 2012 as Power Delivery, Pepco Energy Services and Other Non-Regulated. In the tables below, the Corporate and Other column is included to reconcile the segment data with consolidated data and includes unallocated Pepco Holdings’ (parent company) capital costs, such as financing costs. Segment financial information for continuing operations for the three and nine months ended September 30, 2012 and 2011 is as follows:

	Three Months Ended September 30, 2012
	(millions of dollars)
	Power Delivery		Pepco Energy Services			Other Non- Regulated			Corporate and Other  (a)			PHI Consolidated
Operating Revenue	$	1,335	$	131		$	13		$	(3	)	$	1,476
Operating Expenses (b)		1,136		125	(c)		(38	)(d)		(11	)		1,212
Operating Income		199		6			51			8			264
Interest Income		—		1			1			(2	)		—
Interest Expense		56		—			3			9			68
Other Income (Expenses)		8		1			(1	)		1			9
Preferred Stock Dividends		—		—			1			(1	)		—
Income Tax Expense		59		3			31	(e)		—			93
Net Income (Loss) from Continuing Operations		92		5			16	(d)		(1	)		112
Total Assets		12,039		442			1,483			1,658			15,622
Construction Expenditures	$	289	$	1		$	—		$	9		$	299

(a) Total Assets in this column includes Pepco Holdings’ goodwill balance of $1.4 billion, all of which is allocated to Power Delivery for purposes of assessing impairment. Total assets also include capital expenditures related to certain hardware and software expenditures which primarily benefit Power Delivery. These expenditures are recorded as incurred in the Corporate and Other segment and are allocated to Power Delivery once the assets are placed in service. Corporate and Other includes intercompany amounts of $(3) million for Operating Revenue, $(4) million for Operating Expenses, $(7) million for Interest Income, $(5) million for Interest Expense and $(1) million for Preferred Stock Dividends.

(b) Includes depreciation and amortization expense of $122 million, consisting of $114 million for Power Delivery, $2 million for Pepco Energy Services and $6 million for Corporate and Other.

(c) Includes impairment losses of $2 million pre-tax ($1 million after-tax) at Pepco Energy Services associated with the combustion turbines at Buzzard Point.

(d) Includes $39 million pre-tax ($9 million after-tax) gain from the early termination of finance leases held in trust.

(e) Includes a $16 million reversal of previously recognized tax benefits associated with the early termination of finance leases held in trust.

	Three Months Ended September 30, 2011
	(millions of dollars)
	Power Delivery		Pepco Energy Services		Other Non- Regulated			Corporate and Other  (a)			PHI Consolidated
Operating Revenue	$	1,329	$	317	$	7		$	(5	)	$	1,648
Operating Expenses (b)		1,167		305		2			(21	)		1,453
Operating Income		162		12		5			16			195
Interest Income		1		1		—			(2	)		—
Interest Expense		53		1		3			7			64
Other Income (Expenses)		7		1		(3	)		(1	)		4
Preferred Stock Dividends		—		—		1			(1	)		—
Income Tax Expense (Benefit)		51		5		(7	)		6			55
Net Income from Continuing Operations		66		8		5			1			80
Total Assets (excluding Assets Held For Sale)		11,015		611		1,467			1,475			14,568
Construction Expenditures	$	239	$	4	$	—		$	9		$	252

(a) Total Assets in this column includes Pepco Holdings’ goodwill balance of $1.4 billion, all of which is allocated to Power Delivery for purposes of assessing impairment. Total assets also include capital expenditures related to certain hardware and software expenditures which primarily benefit Power Delivery. These expenditures are recorded as incurred in the Corporate and Other segment and are allocated to Power Delivery once the assets are placed in service. Corporate and Other includes intercompany amounts of $(5) million for Operating Revenue, $(6) million for Operating Expenses, $(7) million for Interest Income, $(6) million for Interest Expense and $(1) million for Preferred Stock Dividends.

(b) Includes depreciation and amortization expense of $115 million, consisting of $107 million for Power Delivery, $4 million for Pepco Energy Services and $4 million for Corporate and Other.

	Nine Months Ended September 30, 2012
	(millions of dollars)
	Power Delivery		Pepco Energy Services			Other Non- Regulated			Corporate and Other  (a)			PHI Consolidated
Operating Revenue	$	3,374	$	544		$	40		$	(11	)	$	3,947
Operating Expenses (b)		2,950		507	(c)		(35	)(d)		(30	)		3,392
Operating Income		424		37			75			19			555
Interest Income		—		1			3			(4	)		—
Interest Expense		162		1			10			25			198
Other Income		24		1			—			2			27
Preferred Stock Dividends		—		—			2			(2	)		—
Income Tax Expense		93		15			33	(e)		1			142
Net Income (Loss) from Continuing Operations		193		23			33	(d)		(7	)		242
Total Assets		12,039		442			1,483			1,658			15,622
Construction Expenditures	$	854	$	11		$	—		$	23		$	888

(a) Total Assets in this column includes Pepco Holdings’ goodwill balance of $1.4 billion, all of which is allocated to Power Delivery for purposes of assessing impairment. Total assets also include capital expenditures related to certain hardware and software expenditures which primarily benefit Power Delivery. These expenditures are recorded as incurred in the Corporate and Other segment and are allocated to Power Delivery once the assets are placed in service. Corporate and Other includes intercompany amounts of $(11) million for Operating Revenue, $(11) million for Operating Expenses, $(18) million for Interest Income, $(15) million for Interest Expense and $(2) million for Preferred Stock Dividends.

(b) Includes depreciation and amortization expense of $343 million, consisting of $313 million for Power Delivery, $12 million for Pepco Energy Services, $1 million for Other Non-Regulated and $17 million for Corporate and Other.

(c) Includes impairment losses of $5 million pre-tax ($3 million after-tax) at Pepco Energy Services associated primarily with an investment in a landfill gas-fired electric generation facility, and the combustion turbines at Buzzard Point.

(d) Includes $39 million pre-tax ($9 million after-tax) gain from the early termination of finance leases held in trust.

(e) Includes a $16 million reversal of previously recognized tax benefits associated with the early termination of finance leases held in trust.

	Nine Months Ended September 30, 2011
	(millions of dollars)
	Power Delivery		Pepco Energy Services		Other Non- Regulated			Corporate and Other  (a)			PHI Consolidated
Operating Revenue	$	3,671	$	1,005	$	35		$	(13	)	$	4,698
Operating Expenses (b)		3,255		964		(34	)(c)		(33	)		4,152
Operating Income		416		41		69			20			546
Interest Income		1		1		2			(4	)		—
Interest Expense		155		3		10			21			189
Other Income (Expenses)		23		3		(4	)		1			23
Preferred Stock Dividends		—		—		2			(2	)		—
Income Tax Expense (d)		100		16		25			2			143
Net Income (Loss) from Continuing Operations		185		26		30	(c)		(4	)		237
Total Assets (excluding Assets Held For Sale)		11,015		611		1,467			1,475			14,568
Construction Expenditures	$	603	$	11	$	—		$	25		$	639

(a) Total Assets in this column includes Pepco Holdings’ goodwill balance of $1.4 billion, all of which is allocated to Power Delivery for purposes of assessing impairment. Total assets also include capital expenditures related to certain hardware and software expenditures which primarily benefit Power Delivery. These expenditures are recorded as incurred in the Corporate and Other segment and are allocated to Power Delivery once the assets are placed in service. Corporate and Other includes intercompany amounts of $(13) million for Operating Revenue, $(12) million for Operating Expenses, $(17) million for Interest Income, $(15) million for Interest Expense and $(2) million for Preferred Stock Dividends.

(b) Includes depreciation and amortization expense of $325 million, consisting of $301 million for Power Delivery, $13 million for Pepco Energy Services, $1 million for Other Non-Regulated and $10 million for Corporate and Other.

(c) Includes $39 million pre-tax ($3 million after-tax) gain from the early termination of finance leases held in trust.

(d) Includes tax benefits of $14 million for Power Delivery primarily associated with an interest benefit related to federal tax liabilities and a $22 million reversal of previously recognized tax benefits for Other Non-Regulated associated with the early termination of finance leases held in trust.

Potomac Electric Power Co [Member]

Segment Information

(5) SEGMENT INFORMATION

Pepco operates its business as one regulated utility segment, which includes all of its services as described above.

Delmarva Power & Light Co/De [Member]

Segment Information

(5) SEGMENT INFORMATION

DPL operates its business as one regulated utility segment, which includes all of its services as described above.

Atlantic City Electric Co [Member]

Segment Information

(5) SEGMENT INFORMATION

ACE operates its business as one regulated utility segment, which includes all of its services as described above.