Related Party Transactions

12 Months Ended

Dec. 31, 2012

Potomac Electric Power Co [Member]

Related Party Transactions

(14) RELATED PARTY TRANSACTIONS

PHI Service Company provides various administrative and professional services to PHI and its regulated and unregulated subsidiaries, including Pepco. The cost of these services is allocated in accordance with cost allocation methodologies set forth in the service agreement using a variety of factors, including the subsidiaries’ share of employees, operating expenses, assets and other cost methods. These intercompany transactions are eliminated by PHI in consolidation and no profit results from these transactions at PHI. PHI Service Company costs directly charged or allocated to Pepco for the years ended December 31, 2012, 2011 and 2010 were approximately $211 million, $185 million and $186 million, respectively.

Pepco Energy Services performs utility maintenance services and high voltage underground transmission cabling, including services that are treated as capital costs, for Pepco. Amounts charged to Pepco by Pepco Energy Services for the years ended December 31, 2012, 2011 and 2010 were approximately $16 million, $20 million and $10 million, respectively.

As of December 31, 2012 and 2011, Pepco had the following balances on its balance sheets due to related parties:

	2012			2011
	(millions of dollars)
(Payable to) Receivable From Related Party (current) (a)
PHI Parent Company	$	—		$	15
PHI Service Company		(22	)		(32	)
Pepco Energy Services (b)		(18	)		(40	)
Other		(1	)		—
Total	$	(41	)	$	(57	)

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

(b) Pepco bills customers on behalf of Pepco Energy Services where customers have selected Pepco Energy Services as their alternative energy supplier or where Pepco Energy Services has performed work for certain government agencies under a General Services Administration area-wide agreement. Amount also includes charges for utility work performed by Pepco Energy Services on behalf of Pepco.

Delmarva Power & Light Co/De [Member]

Related Party Transactions

(16) RELATED PARTY TRANSACTIONS

PHI Service Company provides various administrative and professional services to PHI and its regulated and unregulated subsidiaries, including DPL. The cost of these services is allocated in accordance with cost allocation methodologies set forth in the service agreement using a variety of factors, including the subsidiaries’ share of employees, operating expenses, assets and other cost methods. These intercompany transactions are eliminated by PHI in consolidation and no profit results from these transactions at PHI. PHI Service Company costs directly charged or allocated to DPL for the years ended December 31, 2012, 2011 and 2010 were $153 million, $133 million and $139 million, respectively.

In addition to the PHI Service Company charges described above, DPL’s financial statements include the following related party transactions in its statements of income:

	For the Year Ended December 31,
	2012		2011		2010
	(millions of dollars)
Purchased power under Default Electricity Supply contracts with Conectiv Energy Supply, Inc. (a)(b)	$	—	$	1	$	(103	)
Intercompany lease transactions (c)		4		5		7
Transcompany pipeline gas purchases with Conectiv Energy Supply, Inc. (b)(d)		—		—		(1	)

(a) Included in Purchased energy expense.

(b) During 2010, PHI disposed of its Conectiv Energy segment and a third party assumed Conectiv Energy Supply, Inc.’s responsibilities under these contracts.

(c) Included in Electric revenue.

(d) Included in Gas purchased expense.

As of December 31, 2012 and 2011, DPL had the following balances on its balance sheets due to related parties:

	2012			2011
	(millions of dollars)
Payable to Related Party (current) (a)
PHI Service Company	$	(19	)	$	(20	)
Conectiv Energy Supply, Inc.		—			(1	)
Other		(1	)		—
Total	$	(20	)	$	(21	)

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

Atlantic City Electric Co [Member]

Related Party Transactions

(15) RELATED PARTY TRANSACTIONS

PHI Service Company provides various administrative and professional services to PHI and its regulated and unregulated subsidiaries, including ACE. The cost of these services is allocated in accordance with cost allocation methodologies set forth in the service agreement using a variety of factors, including the subsidiaries’ share of employees, operating expenses, assets and other cost methods. These intercompany transactions are eliminated by PHI in consolidation and no profit results from these transactions at PHI. PHI Service Company costs directly charged or allocated to ACE for the years ended December 31, 2012, 2011 and 2010 were $117 million, $102 million and $100 million, respectively.

In addition to the PHI Service Company charges described above, ACE’s consolidated financial statements include the following related party transactions in its consolidated statements of income:

	For the Year Ended December 31,
	2012	2011				2010
	(millions of dollars)
Purchased power under Basic Generation Service contracts with Conectiv Energy Supply, Inc. (a)(b)	$—		$	—		$	(174	)
Meter reading services provided by Millennium Account Services LLC (c)	(4)			(4	)		(4	)
Intercompany use revenue (d)	3			2			2

(a) Included in Purchased energy expense.

(b) During 2010, PHI disposed of its Conectiv Energy segment and a third party assumed Conectiv Energy Supply, Inc.’s responsibilities under those contracts.

(c) Included in Other operation and maintenance expense.

(d) Included in Operating revenue.

As of December 31, 2012 and 2011, ACE had the following balances on its consolidated balance sheets due to related parties:

	2012			2011
	(millions of dollars)
Payable to Related Party (current) (a)
PHI Service Company	$	(13	)	$	(12	)
Other		(1	)		(2	)
Total	$	(14	)	$	(14	)

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

During 2011, PHI, through Conectiv, LLC, made a $60 million capital contribution to ACE.