Segment Information

3 Months Ended

Mar. 31, 2014

Segment Information

(5) SEGMENT INFORMATION

Pepco Holdings’ management has identified its operating segments at March 31, 2014 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 for the three months ended March 31, 2014 and 2013 is as follows:

	Three Months Ended March 31, 2014
	Power Delivery		Pepco Energy Services		Corporate and Other (a)			PHI Consolidated
	(millions of dollars)
Operating Revenue	$	1,272	$	60	$	(2	)	$	1,330
Operating Expenses (b)		1,103		60		(6	)		1,157
Operating Income		169		—		4			173
Interest Expense		55		—		10			65
Other Income		12		—		1			13
Income Tax Expense (Benefit)		47		—		(1	)		46
Net Income (Loss) from Continuing Operations		79		—		(4	)		75
Total Assets (excluding Assets Held for Disposition)		13,438		286		1,279			15,003
Construction Expenditures	$	264	$	—	$	18		$	282

(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 $(2) million for Operating Revenue, $(1) million for Operating Expenses and $(1) million for Interest Expense.

(b) Includes depreciation and amortization expense of $133 million, consisting of $124 million for Power Delivery, $2 million for Pepco Energy Services and $7 million for Corporate and Other.

	Three Months Ended March 31, 2013
	Power Delivery		Pepco Energy Services		Corporate and Other (a)			PHI Consolidated
	(millions of dollars)
Operating Revenue	$	1,124	$	56	$	—		$	1,180
Operating Expenses (b)		1,001		54		(8	)		1,047
Operating Income		123		2		8			133
Interest Expense		56		—		11			67
Other Income		6		1		1			8
Income Tax Expense (c)		15		1		169	(d)		185
Net Income (Loss) from Continuing Operations		58		2		(171	)		(111	)
Total Assets (excluding Assets Held for Disposition)		12,453		346		1,965			14,764
Construction Expenditures	$	282	$	1	$	13		$	296

(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 zero for Operating Revenue, $(1) million for Operating Expenses and $(4) million for Interest Expense.

(b) Includes depreciation and amortization expense of $112 million, consisting of $104 million for Power Delivery, $2 million for Pepco Energy Services and $6 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.

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.