Related Party Transactions

9 Months Ended

Sep. 30, 2015

Potomac Electric Power Co [Member]

Related Party Transactions

(12) 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 three months ended September 30, 2015 and 2014 were approximately $58 million and $55 million, respectively. PHI Service Company costs directly charged or allocated to Pepco for the nine months ended September 30, 2015 and 2014 were approximately $181 million and $163 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 three months ended September 30, 2015 and 2014 were approximately $5 million and $12 million, respectively. Amounts charged to Pepco by Pepco Energy Services for the nine months ended September 30, 2015 and 2014 were approximately $15 million and $23 million, respectively.

As of September 30, 2015 and December 31, 2014, Pepco had the following balances on its balance sheets due to related parties:

	September 30, 2015			December 31, 2014
	(millions of dollars)
Payable to Related Party (current) (a)
PHI Service Company	$	(22	)	$	(27	)
Pepco Energy Services (b)		(5	)		(2	)
Other		(5	)		(1	)
Total	$	(32	)	$	(30	)

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

(b) Pepco bills customers on behalf of Pepco Energy Services 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

(14) 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 three months ended September 30, 2015 and 2014 were approximately $44 million and $42 million, respectively. PHI Service Company costs directly charged or allocated to DPL for the nine months ended September 30, 2015 and 2014 were approximately $136 million and $121 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:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	(millions of dollars)
Intercompany lease transactions (a)	$	1	$	1	$	3	$	3

(a) Included in Electric revenue.

As of September 30, 2015 and December 31, 2014, DPL had the following balances on its balance sheets due to related parties:

	September 30, 2015			December 31, 2014
	(millions of dollars)
Payable to Related Party (current) (a)
PHI Service Company	$	(20	)	$	(18	)
Other		(2	)		1
Total	$	(22	)	$	(17	)

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

Atlantic City Electric Co [Member]

Related Party Transactions

(12) 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 three months ended September 30, 2015 and 2014 were approximately $36 million and $31 million, respectively. PHI Service Company costs directly charged or allocated to ACE for the nine months ended September 30, 2015 and 2014 were approximately $109 million and $91 million, respectively.

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	(millions of dollars)
Meter reading services provided by Millennium Account Services LLC (an ACE affiliate) (a)	$	(1	)	$	(1	)	$	(3	)	$	(3	)
Intercompany lease transactions (a)		—			—			(1	)		(1	)
Intercompany use revenue (b)		—			—			1			2

(a) Included in Other operation and maintenance expense.

(b) Included in operating revenue.

As of September 30, 2015 and December 31, 2014, ACE had the following balances on its consolidated balance sheets due to related parties:

	September 30, 2015			December 31, 2014
	(millions of dollars)
Payable to Related Party (current) (a)
PHI Service Company	$	(14	)	$	(14	)
Other		(1	)		(1	)
Total	$	(15	)	$	(15	)

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