Segment Information

12 Months Ended

Dec. 31, 2015

Segment Information

(5) SEGMENT INFORMATION

Pepco Holdings’ management has identified its operating segments at December 31, 2015 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. During 2013, PHI completed the termination of its interests in its cross-border energy lease investments that had been maintained by PHI through its wholly- owned subsidiary, PCI. As a result, the cross-border energy lease investments, which comprised substantially all of the operations of the former Other Non-Regulated segment, have been 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, have been included in Corporate and Other. Segment financial information for continuing operations at and for the years ended December 31, 2015, 2014 and 2013, is as follows:

	Year Ended December 31, 2015
	Power Delivery			Pepco Energy Services			Corporate and Other (a)			PHI Consolidated
	(millions of dollars)
Operating Revenue	$	4,805		$	223		$	(5	)	$	5,023
Operating Expenses (b)		4,124	(c)		224			2			4,350
Operating Income (Loss)		681			(1	)		(7	)		673
Interest Expense		238			—			42			280
Other Income		36			1			17	(d)		54
Income Tax Expense (Benefit) (e)		177			(4	)		(44	)		129
Net Income from Continuing Operations		302			4			12			318
Total Assets		14,413			221			1,692			16,326
Construction Expenditures	$	1,196		$	3		$	31		$	1,230

(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 $(5) million for Operating Revenue, $(4) million for Operating Expenses and $(5) million for Interest Expense.

(b) Includes depreciation and amortization expense of $651 million, consisting of $606 million for Power Delivery, $4 million for Pepco Energy Services and $41 million for Corporate and Other.

(c) Includes $46 million ($27 million after-tax) related to gains on sales of land at Pepco.

(d) Includes $15 million ($10 million after-tax) increase in fair value of preferred stock derivative.

(e) Includes tax benefit of $3 million for Power Delivery, $1 million for Pepco Energy Services and $43 million for Corporate and Other associated with the Global Tax Settlement.

	Year Ended December 31, 2014
	Power Delivery		Pepco Energy Services			Corporate and Other (a)			PHI Consolidated
	(millions of dollars)
Operating Revenue	$	4,607	$	278		$	(7	)	$	4,878
Operating Expenses (b)		3,916		354	(c)		4			4,274
Operating Income (Loss)		691		(76	)		(11	)		604
Interest Expense		226		1			41			268
Other Income		40		2			2			44
Income Tax Expense (Benefit)		185		(36	)		(11	)		138
Net Income (Loss) from Continuing Operations		320		(39	)		(39	)		242
Total Assets		13,636		249			1,704			15,589
Construction Expenditures	$	1,144	$	3		$	76		$	1,223

(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 $(7) million for Operating Revenue, $(7) million for Operating Expenses and $(4) million for Interest Expense.

(b) Includes depreciation and amortization expense of $549 million, consisting of $511 million for Power Delivery, $7 million for Pepco Energy Services and $31 million for Corporate and Other.

(c) Includes impairment losses of $81 million ($48 million after-tax) associated with Pepco Energy Services’ combined heat and power thermal generating facilities and operations in Atlantic City.

	Year Ended December 31, 2013
	Power Delivery		Pepco Energy Services			Corporate and Other (a)			PHI Consolidated
	(millions of dollars)
Operating Revenue	$	4,472	$	203		$	(9	)	$	4,666
Operating Expenses (b)		3,828		201	(c)		(31	)		3,998
Operating Income		644		2			22			668
Interest Expense		228		1			44			273
Other Income		28		3			3			34
Income Tax Expense (d)		155		1			163	(e)		319
Net Income (Loss) from Continuing Operations		289		3			(182	)		110
Total Assets		12,868		337			1,573			14,778
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 impairment losses of $4 million ($3 million after-tax) associated with Pepco Energy Services’ landfill gas-fired electric generation facility.

(d) 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.

(e) 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.