Pension And Other Postretirement Benefits

9 Months Ended

Sep. 30, 2012

Pension And Other Postretirement Benefits

(9) PENSION AND OTHER POSTRETIREMENT BENEFITS

The following Pepco Holdings information is for the three months ended September 30, 2012 and 2011:

	Pension Benefits						Other Postretirement Benefits
	2012			2011			2012			2011
	(millions of dollars)
Service cost	$	8		$	10		$	2		$	1
Interest cost		27			27			9			10
Expected return on plan assets		(33	)		(32	)		(5	)		(5	)
Amortization of prior service cost (benefit)		1			—			(1	)		(1	)
Amortization of net actuarial loss		16			11			4			3
Net periodic benefit cost	$	19		$	16		$	9		$	8

The following Pepco Holdings information is for the nine months ended September 30, 2012 and 2011:

	Pension Benefits						Other Postretirement Benefits
	2012			2011			2012			2011
	(millions of dollars)
Service cost	$	26		$	27		$	6		$	4
Interest cost		80			80			26			28
Expected return on plan assets		(99	)		(96	)		(14	)		(14	)
Amortization of prior service cost (benefit)		2			(1	)		(3	)		(3	)
Amortization of net actuarial loss		48			35			11			9
Termination benefits		—			—			1			1
Net periodic benefit cost	$	57		$	45		$	27		$	25

Pension and Other Postretirement Benefits

Net periodic benefit cost related to continuing operations is included in Other operation and maintenance expense, net of the portion of the net periodic benefit cost that is capitalized as part of the cost of labor for internal construction projects. After intercompany allocations, the three utility subsidiaries are responsible for substantially all of PHI’s total net periodic pension and other postretirement benefit costs related to continuing operations.

Pension Contributions

PHI’s funding policy with regard to PHI’s non-contributory retirement plan (the PHI Retirement Plan) is to maintain a funding level that is at least equal to the target liability as defined under the Pension Protection Act of 2006. In the first quarter of 2012, Pepco, DPL and ACE made discretionary tax-deductible contributions to the PHI Retirement Plan in the amounts of $85 million, $85 million and $30 million, respectively, which brought the PHI Retirement Plan assets to the funding target level for 2012 under the Pension Protection Act. In the first quarter of 2011, Pepco, DPL and ACE made discretionary tax-deductible contributions to the PHI Retirement Plan in the amounts of $40 million, $40 million and $30 million, which brought plan assets to the funding target level for 2011 under the Pension Protection Act.

Potomac Electric Power Co [Member]

Pension And Other Postretirement Benefits

(7) PENSION AND OTHER POSTRETIREMENT BENEFITS

Pepco accounts for its participation in its parent’s single-employer plans, Pepco Holdings’ non-contributory retirement plan (the PHI Retirement Plan) and the Pepco Holdings, Inc. Welfare Plan for Retirees, as participation in multiemployer plans. PHI’s pension and other postretirement net periodic benefit cost for the three months ended September 30, 2012 and 2011, before intercompany allocations from the PHI Service Company, were $28 million and $24 million, respectively. Pepco’s allocated share was $10 million and $15 million, respectively, for the three months ended September 30, 2012 and 2011. PHI’s pension and other postretirement net periodic benefit cost for the nine months ended September 30, 2012 and 2011, before intercompany allocations from the PHI Service Company, were $84 million and $70 million, respectively. Pepco’s allocated share was $30 million and $32 million, respectively, for the nine months ended September 30, 2012 and 2011.

In the first quarter of 2012, Pepco made a discretionary tax-deductible contribution to the PHI Retirement Plan of $85 million. In the first quarter of 2011, Pepco made a discretionary tax-deductible contribution to the PHI Retirement Plan in the amount of $40 million.

Delmarva Power & Light Co/De [Member]

Pension And Other Postretirement Benefits

(8) PENSION AND OTHER POSTRETIREMENT BENEFITS

DPL accounts for its participation in its parent’s single-employer plans, Pepco Holdings’ non-contributory retirement plan (the PHI Retirement Plan) and the Pepco Holdings, Inc. Welfare Plan for Retirees, as participation in multiemployer plans. PHI’s pension and other postretirement net periodic benefit cost for the three months ended September 30, 2012 and 2011, before intercompany allocations from the PHI Service Company, were $28 million and $24 million, respectively. DPL’s allocated share was $6 million each for the three months ended September 30, 2012 and 2011. PHI’s pension and other postretirement net periodic benefit cost for the nine months ended September 30, 2012 and 2011, before intercompany allocations from the PHI Service Company, were $84 million and $70 million, respectively. DPL’s allocated share was $18 million each for the nine months ended September 30, 2012 and 2011.

In the first quarter of 2012, DPL made a discretionary tax-deductible contribution to the PHI Retirement Plan of $85 million. In the first quarter of 2011, DPL made a discretionary tax-deductible contribution to the PHI Retirement Plan in the amount of $40 million.

Atlantic City Electric Co [Member]

Pension And Other Postretirement Benefits

(7) PENSION AND OTHER POSTRETIREMENT BENEFITS

ACE accounts for its participation in its parent’s single-employer plans, Pepco Holdings’ non-contributory retirement plan (the PHI Retirement Plan) and the Pepco Holdings, Inc. Welfare Plan for Retirees, as participation in multiemployer plans. PHI’s pension and other postretirement net periodic benefit cost for the three months ended September 30, 2012 and 2011, before intercompany allocations from the PHI Service Company, were $28 million and $24 million, respectively. ACE’s allocated share was $6 million and $5 million, respectively, for the three months ended September 30, 2012 and 2011. PHI’s pension and other postretirement net periodic benefit cost for the nine months ended September 30, 2012 and 2011, before intercompany allocations from the PHI Service Company, were $84 million and $70 million, respectively. ACE’s allocated share was $18 million and $15 million, respectively, for the nine months ended September 30, 2012 and 2011.

In the first quarter of 2012, ACE made a discretionary tax-deductible contribution to the PHI Retirement Plan of $30 million. In the first quarter of 2011, ACE made a discretionary tax-deductible contribution to the PHI Retirement Plan in the amount of $30 million.