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

PEPCO HOLDINGS, INC. (Parent Company)

STATEMENTS OF (LOSS) INCOME


	For the Year Ended December 31,
	2013			2012			2011
	*(millions of dollars, except share data)*
Operating Revenue	$	—		$	—		$	—

Operating Expenses
Other operation and maintenance		1			1			1

Total operating expenses		1			1			1

Operating Loss		(1	)		(1	)		(1	)
Other Income (Expenses)
Interest expense		(42	)		(33	)		(29	)
Income from equity investments		204			237			243
Impairment losses		—			—			(5	)

Total other income		162			204			209

Income from Continuing Operations Before Income Tax		161			203			208
Income Tax Expense (Benefit) Related to Continuing Operations		51			(15	)		(14	)

Net Income from Continuing Operations		110			218			222
(Loss) Income from Discontinued Operations, net of Income Taxes		(322	)		67			35

Net (Loss) Income	$	(212	)	$	285		$	257

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

Earnings Per Share
Basic earnings per share of common stock from Continuing Operations	$	0.45		$	0.95		$	0.98
Basic (loss) earnings per share of common stock from Discontinued Operations		(1.31	)		0.30			0.16

Basic (loss) earnings per share of common stock	$	(0.86	)	$	1.25		$	1.14

Diluted earnings per share of common stock from Continuing Operations	$	0.45		$	0.95		$	0.98
Diluted (loss) earnings per share of common stock from Discontinued Operations		(1.31	)		0.29			0.16

Diluted (loss) earnings per share of common stock	$	(0.86	)	$	1.24		$	1.14

The accompanying Notes are an integral part of these financial statements.

PEPCO HOLDINGS, INC. (Parent Company)

BALANCE SHEETS


	As of December 31,
	2013			2012
	*(millions of dollars, except share data)*
ASSETS
Current Assets
Cash and cash equivalents	$	—		$	262
Prepayments of income taxes		151			12
Accounts receivable and other		28			7

		179			281

Investments and Other Assets
Goodwill		1,398			1,398
Investment in consolidated companies		3,935			2,633
Net assets associated with investment in consolidated companies held for disposition		—			1,232
Other		37			55

		5,370			5,318

Total Assets	$	5,549		$	5,599

LIABILITIES AND EQUITY
Current Liabilities
Short-term debt	$	24		$	464
Interest and taxes accrued		10			11
Accounts payable due to associated companies		1			2

		35			477

Deferred Credits
Notes payable due to subsidiary companies		491			—
Liabilities and accrued interest related to uncertain tax positions		3			3

		494			3

Long-Term Debt		705			705

Commitments and Contingencies (Note 4)
Equity
Common stock, $.01 par value; 400,000,000 shares authorized; 250,324,898 and 230,015,427 shares outstanding, respectively		3			2
Premium on stock and other capital contributions		3,751			3,383
Accumulated other comprehensive loss		(34	)		(48	)
Retained earnings		595			1,077

Total equity		4,315			4,414

Total Liabilities and Equity	$	5,549		$	5,599

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,
	2013			2012			2011
	*(millions of dollars)*
OPERATING ACTIVITIES
Net (loss) income	$	(212	)	$	285		$	257
Loss (income) from discontinued operations, net of income taxes		322			(67	)		(35	)
Adjustments to reconcile net income to net cash from operating activities:
Distributions from related parties less than earnings		(127	)		(52	)		(169	)
Deferred income taxes		(7	)		(31	)		(16	)
Changes in:
Prepaid and other		2			(23	)		23
Accounts payable		6			6			2
Interest and taxes		(141	)		39			42
Other assets and liabilities		3			4			11

Net Cash (Used By) From Operating Activities		(154	)		161			115

FINANCING ACTIVITIES
Dividends paid on common stock		(270	)		(248	)		(244	)
Common stock issued for the Direct Stock Purchase and Dividend Reinvestment Plan and employee-related compensation		50			51			47
Issuances of common stock		324			—			—
Capital distribution to subsidiaries, net		(250	)		(110	)		(20	)
Decrease in notes receivable from associated companies		—			154			—
Increase in notes payable due to associated companies		491			—			—
(Repayments) issuances of short-term debt, net		(240	)		(201	)		235
Issuance of term loan		250			200			—
Repayments of term loans		(450	)		—			—
Costs of issuances		(13	)		(2	)		(7	)

Net Cash (Used By) From Financing Activities		(108	)		(156	)		11

Net (decrease) increase in cash and cash equivalents		(262	)		5			126
Cash and cash equivalents at beginning of year		262			257			131

CASH AND CASH EQUIVALENTS AT END OF YEAR	$	—		$	262		$	257

The accompanying Notes are an integral part of these financial statements.

NOTES TO FINANCIAL INFORMATION

(1) BASIS OF PRESENTATION

Pepco Holdings, Inc. (Pepco Holdings) 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 AND ADJUSTMENTS

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

Revision to Prior Period Financial Statements

PCI Deferred Income Tax Liability Adjustment

Since 1999, PCI had not recorded a deferred tax liability related to a temporary difference between the financial reporting basis and the tax basis of an investment in a wholly owned partnership. In the second quarter of 2013, PHI re-evaluated this accounting treatment and found it to be in error, requiring an adjustment related to prior periods. PHI determined that the cumulative adjustment required, representing a charge to earnings of $32 million, related to a period prior to the year ended December 31, 2009 (the earliest period for which selected consolidated financial data were presented in the table entitled “Selected Financial Data” in Part II, Item 6 of this Annual Report on Form 10-K). Consistent with PHI’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, the accompanying PHI parent company financial statements reflect the correction of this error as an adjustment to shareholders’ equity for the earliest period presented. The adjustment to correct the error did not affect PHI’s parent company statements of income and cash flows for each of the three years in the period ended December 31, 2013, and only affected the reported balances of investment in consolidated companies and retained earnings as reflected in PHI’s parent company balance sheets as of December 31, 2013 and 2012. The adjustment is not considered to be material to the reported balances of retained earnings and total equity reflected in PHI’s parent company financial statements included in this Annual Report on Form 10-K. The table below illustrates the effects of the revision on reported balances in PHI’s parent company financial statements.


	As Filed			Adjustment			As Revised
	(millions of dollars)
December 31, 2012
Investment in consolidated companies	$	2,665	(a)	$	(32	)	$	2,633
Total investments and other assets		5,350			(32	)		5,318
Retained earnings		1,109			(32	)		1,077
Total equity		4,446			(32	)		4,414
December 31, 2011
Investment in consolidated companies	$	2,351	(a)	$	(32	)	$	2,319
Total investments and other assets		5,230			(32	)		5,198
Retained earnings		1,072			(32	)		1,040
Total equity		4,336			(32	)		4,304
December 31, 2010
Investment in consolidated companies	$	1,664		$	(32	)	$	1,632
Total investments and other assets		4,959			(32	)		4,927
Retained earnings		1,059			(32	)		1,027
Total equity		4,230			(32	)		4,198

(a)	The amount differs from the amount originally reported in the 2012 Form 10-K due to the reclassification of net assets associated with investment in consolidated companies to assets held for disposition.

(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 (15), “Commitments and Contingencies” to the consolidated financial statements of Pepco Holdings.

Pepco Holdings guarantees the obligations of Pepco Energy Services under certain contracts in its energy savings performance contracting businesses and underground transmission and distribution construction business. At December 31, 2013, Pepco Holdings’ guarantees of Pepco Energy Services’ obligations under these contracts totaled $190 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 $229 million at December 31, 2013.

In addition, Pepco Holdings guarantees certain obligations of Pepco, DPL, and ACE under surety bonds obtained by these subsidiaries, for construction projects and self-insured workers compensation matters. These guarantees totaled $29 million at December 31, 2013.

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, 2013.

(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:


	2013		2012
	*(millions of dollars)*
Conectiv LLC	$	1,730	$	1,473
Potomac Electric Power Company		1,922		1,643
Potomac Capital Investment Corporation (a)		29		(729	)
Pepco Energy Services, Inc.		250		242
PHI Service Company		4		4

Total investment in consolidated companies	$	3,935	$	2,633

(a)	The investment in PCI excludes net assets held for disposition at December 31, 2012 and primarily represents income tax obligations related to the assets held for disposition.

(6) DISCONTINUED OPERATIONS

During the second and third quarters of 2013, PCI terminated all of its interests in its six remaining cross-border energy lease investments. PCI received aggregate net cash proceeds from these early terminations of $873 million (net of aggregate termination payments of $2.0 billion used to retire the non-recourse debt associated with the terminated leases) and recorded an aggregate pre-tax loss, including transaction costs, of approximately $3 million ($2 million after-tax), representing the excess of the carrying value of the terminated leases over the net cash proceeds received. As a result, PHI has reported the results of operations of the cross-border energy lease investments as discontinued operations in all periods presented in the accompanying statements of (loss) income. Further, the assets and liabilities related to the cross-border energy lease investments are reported as held for disposition as of each date in the accompanying balance sheets.

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. Pepco Energy Services implemented the wind-down by not entering into any new retail electric or natural gas supply contracts while continuing to perform under its existing retail electric and natural gas supply contracts through their respective expiration dates. On March 21, 2013, Pepco Energy Services entered into an agreement whereby a third party assumed all the rights and obligations of the remaining retail natural gas supply customer contracts, and the associated supply obligations, inventory and derivative contracts. The transaction was completed on April 1, 2013. In addition, Pepco Energy Services completed the wind-down of its retail electric supply business in the second quarter of 2013 by terminating its remaining customer supply and wholesale purchase obligations beyond June 30, 2013. The operations of Pepco Energy Services’ retail electric and natural gas supply businesses have been classified as discontinued operations for financial reporting purposes.

In April 2010, the Board of Directors approved a plan for the disposition of PHI’s competitive wholesale power generation, marketing and supply business, which had been conducted through Conectiv Energy. On July 1, 2010, PHI completed the sale of Conectiv Energy’s wholesale power generation business to Calpine for $1.64 billion. The disposition of Conectiv Energy’s remaining assets and businesses, consisting of its load service supply contracts, energy hedging portfolio, certain tolling agreements and other assets not included in the Calpine sale, has been completed.

(7) RELATED PARTY TRANSACTIONS

As of December 31, 2013 and 2012, PHI had the following balances on its balance sheets due (to) from related parties:


	2013			2012
	*(millions of dollars)*
(Payable to) Receivable from Related Party (current) (a)
Conectiv Communications, Inc.	$	(4	)	$	(4	)
PHI Service Company		3			1
Other		—			1

Total	$	(1	)	$	(2	)

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

Money Pool Balance (included in cash and cash equivalents)	$	—		$	262

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

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