The Maryland Public Service Commission approved Potomac ElectricPower Co.’s (Pepco) plan to sell its power plants and usher incustomer choice of suppliers beginning July 1.

“The PSC decision removes the final obstacle to the opening of acompetitive market for electricity,” said John M. Derrick Jr.,Pepco CEO. The District of Columbia PSC also is considering acomparable proposal to allow Pepco to sell its generatingfacilities. Derrick said he is hopeful the District PSC will act byDec. 31, so it may immediately begin an auction process.

The company expects to complete the sale by year-end 2000 ratherthan by July 1, 2000 as previously projected. Due to the delay,Pepco expects to incur one-time charges in 2000 that will reduceutility earnings by 5% to 7%. The earnings reduction is due to arate reduction and costs associated with customer choice that willnot be eliminated or offset in part until Pepco sells thegenerating assets. Sale of the generation will allow the company toshare in the benefits of lower power procurement costs.

Pepco said it hopes to recover all stranded costs fromgeneration sale proceeds. Costs not recovered from sale proceedscould be recovered from customers.

Pepco serves about 700,000 customers in Maryland and theDistrict of Columbia.

©Copyright 1999 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.