Washington D.C.-based Potomac Electric Power Company (Pepco) isseeking a stay in a lower court in Maryland of a July 1 orderissued by state regulators, which restricts the businessrelationship between in-state electric and gas utilities and theirnon-regulated subsidiaries.

Pepco challenged yesterday the Maryland Public ServiceCommission order in the Circuit Court of Montgomery County on thegrounds that it didn’t apply to out-of-state marketers, thus givingthem a leg up in the deregulated retail market in the state.

The order, the company’s court filing said, will cause Pepco”irreparable harm” by hamstringing its marketing affiliates and, asa result, giving an unfair market advantage to other companies thatare now allowed to sell electricity and other products and servicesin direct competition with Pepco’s subsidiaries.

“We are surprised and disappointed that the PSC reversedpolicies it adopted in a 1998 rulemaking that we relied on when weestablished our new telecommunications and energy businesses,” saidPepco President Dennis Wraase. “The new rules will now limit ourability to compete fairly on a level playing field withnationally-known companies whose hands are not tied by theserules.”

Under the new rules, marketing affiliates of Pepco must pay anunspecified royalty for use of the Pepco name, he noted. As aresult, they may not be able to offer competitively priced servicesin the future due to the added regulatory costs, the utility said.

But these same restrictions don’t apply to subsidiaries of suchnationally recognized, out-of-state companies as Enron, Shell OilCo., Bell Atlantic, Comcast and AT&T that use their corporatebrand name and can sell products and services in direct competitionwith Pepco’s energy and telecommunications subsidiaries, theutility said.

On July 1, Maryland joined more than 20 other states in thenation in deregulating its electric markets.

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