Segment Information

12 Months Ended

Dec. 31, 2013

Segment Information

(5) SEGMENT INFORMATION

Pepco Holdings’ management has identified its operating segments at December 31, 2013 as Power Delivery and Pepco Energy Services. 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. Through its subsidiary PCI, PHI maintained a portfolio of cross-border energy lease investments. PHI completed the termination of its interests in its cross-border energy lease investments during 2013. As a result, the cross-border energy lease investments, which comprised substantially all of the operations of the former Other Non-Regulated segment, are being accounted for as discontinued operations. The remaining operations of the former Other Non-Regulated segment, which no longer meet the definition of a separate segment for financial reporting purposes, are now included in Corporate and Other. Segment financial information for continuing operations at and for the years ended December 31, 2013, 2012 and 2011, is as follows:

	Year Ended December 31, 2013
	(millions of dollars)
	Power Delivery		Pepco Energy Services			Corporate and Other (a)			PHI Consolidated
Operating Revenue	$	4,472	$	203		$	(9	)	$	4,666
Operating Expenses (b)		3,828		201	(e)		(31	)		3,998
Operating Income		644		2			22			668
Interest Expense		228		1			44			273
Other Income		28		3			3			34
Income Tax Expense (c)		155		1			163	(d)		319
Net Income (Loss) from Continuing Operations		289		3			(182	)		110
Total Assets (excluding Assets Held for Disposition)		13,027		335			1,485			14,847
Construction Expenditures	$	1,194	$	4		$	112		$	1,310

(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 Corporate and Other and are allocated to Power Delivery once the assets are placed in service. Corporate and Other includes intercompany amounts of $(10) million for Operating Revenue, $(9) million for Operating Expenses and $(5) million for Interest Expense.

(b) Includes depreciation and amortization expense of $473 million, consisting of $439 million for Power Delivery, $6 million for Pepco Energy Services and $28 million for Corporate and Other.

(c) Includes after-tax interest associated with uncertain and effectively settled tax positions allocated to each member of the consolidated group, including a $12 million interest benefit for Power Delivery and interest expense of $66 million for Corporate and Other.

(d) Includes non-cash charges of $101 million representing the establishment of valuation allowances against certain deferred tax assets of PCI included in Corporate and Other.

(e) Includes pre-tax impairment losses of $4 million ($3 million after-tax) at Pepco Energy Services associated with a landfill gas-fired electric generation facility.

	Year Ended December 31, 2012
	(millions of dollars)
	Power Delivery		Pepco Energy Services			Corporate and Other (a)			PHI Consolidated
Operating Revenue	$	4,378	$	256	(b)	$	(9	)	$	4,625
Operating Expenses (c)		3,847		271	(b)(d)		(34	)		4,084
Operating Income (Loss)		531		(15	)		25			541
Interest Income		1		1			(1	)		1
Interest Expense		219		2			35			256
Impairment Losses		—		—			(1	)		(1	)
Other Income		32		1			3			36
Income Tax Expense (Benefit)		110		(7	)		—			103
Net Income (Loss) from Continuing Operations		235		(8	)		(9	)		218
Total Assets (excluding Assets Held for Disposition)		12,149		342			2,028			14,519
Construction Expenditures	$	1,168	$	11		$	37		$	1,216

(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 Corporate and Other 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, $(10) million for Operating Expenses, $(21) million for Interest Income and $(18) million for Interest Expense.

(b) Includes $9 million of intra-company revenues (and associated costs) previously eliminated in consolidation which will continue to be recognized from third parties subsequent to the completion of the wind-down of the Pepco Energy Services’ retail electric and natural gas supply businesses.

(c) Includes depreciation and amortization expense of $454 million, consisting of $416 million for Power Delivery, $14 million for Pepco Energy Services and $24 million for Corporate and Other.

(d) Includes impairment losses of $12 million pre-tax ($7 million after-tax) at Pepco Energy Services associated primarily with investments in landfill gas-fired electric generation facilities, and the combustion turbines at Buzzard Point.

	Year Ended December 31, 2011
	(millions of dollars)
	Power Delivery		Pepco Energy Services			Corporate and Other (a)			PHI Consolidated
Operating Revenue	$	4,650	$	330	(b)	$	(16	)	$	4,964
Operating Expenses (c)		4,150		301	(b)		(40	)		4,411
Operating Income		500		29			24			553
Interest Income		1		1			(1	)		1
Interest Expense		208		2			32			242
Impairment Losses		—		—			(5	)		(5	)
Other Income (Expenses)		29		2			(2	)		29
Income Tax Expense (Benefit) (d)		112		8			(6	)		114
Net Income (Loss) from Continuing Operations		210		22			(10	)		222
Total Assets (excluding Assets Held for Disposition)		11,008		529			1,988			13,525
Construction Expenditures	$	888	$	14		$	39		$	941

(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 Corporate and Other and are allocated to Power Delivery once the assets are placed in service. Corporate and Other includes intercompany amounts of $(16) million for Operating Revenue, $(15) million for Operating Expense, $(22) million for Interest Income and $(22) million for Interest Expense.

(b) Includes $15 million of intra-company revenues (and associated costs) previously eliminated in consolidation which will continue to be recognized from third parties subsequent to the completion of the wind-down of the Pepco Energy Services’ retail electric and natural gas supply businesses.

(c) Includes depreciation and amortization expense of $425 million, consisting of $394 million for Power Delivery, $16 million for Pepco Energy Services and $15 million for Corporate and Other.

(d) Includes tax benefits of $14 million for Power Delivery primarily associated with an interest benefit related to federal tax liabilities.

Potomac Electric Power Co [Member]

Segment Information

(5) SEGMENT INFORMATION

The company 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

The company 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

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