Item 1. BUSINESS
GENERAL
Additional information that is required in this section, other than the information disclosed below, is incorporated herein by reference from the "Management's Discussion and Analysis of Consolidated Results of Operations and Financial Condition" section and the "Notes to Consolidated Financial Statements" of the Company's 1999 Annual Report to shareholders.
Potomac Electric Power Company (the Company) is engaged in regulated utility operations (the Utility) and in diversified, competitive energy and telecommunications businesses through its wholly owned nonregulated subsidiary, Pepco Holdings, Inc. (PHI). PHI was created in 1999 as the parent company of its two wholly owned subsidiaries, Potomac Capital Investment Corporation (PCI) and Pepco Energy Services, Inc. (Pepco Energy Services).
The Utility is currently engaged in the generation, transmission, distribution, and sale of electric energy in the Washington, D.C. metropolitan area. The Utility's retail service territory includes all of the District of Columbia (D.C.) and major portions of Montgomery and Prince George's counties in suburban Maryland. In addition, the Utility currently supplies electricity, at wholesale, under a full-requirements agreement with Southern Maryland Electric Cooperative, Inc. (SMECO) that expires in December 2000. Thereafter, Pepco Energy Services will continue to supply full-requirements electricity to SMECO pursuant to a competitively awarded four-year contract commencing in January 2001.
The Company's business plan is to exit the electricity generating business by divesting substantially all of its generating assets through an open auction process. The Utility's operations would then consist of transmission and distribution service. The Company will compete for market share throughout the mid-Atlantic region in the deregulated electricity, natural gas, and telecommunications markets through its nonregulated subsidiaries. During December 1999, the Maryland and District of Columbia Public Service Commissions approved the Company's plan to sell, via auction, substantially all of its plants, facilities and equipment used in the generation of electricity, its purchased capacity contracts, and its other rate-based assets that are not required for the provision of electric transmission and distribution services. Accordingly, the Company has begun the auction process and through February 2000 has conducted tours of the generating stations for several potential bidders. The Company expects to receive initial bids in March 2000 and to select the final bidders in early April 2000. The Company anticipates completing the divestiture of its generation assets by year-end 2000.
Additionally, the Company's plan to usher in customer choice in Maryland provides that customers will have their choice of electricity suppliers beginning July 1, 2000. In D.C., legislation providing that customer choice begins on January 1, 2002 was enacted by the City Council in December 1999 and is pending approval by the Control Board. The District of Columbia
Public Service Commission has approved a customer choice plan providing that customers will have their choice of electricity suppliers beginning January 1, 2001. This customer choice plan is consistent with the pending legislation.
SALES
The Utility's kilowatt-hour sales and revenue by class of service and by customer type for the period 1997 through 1999 are presented below.
The Utility's sales of electric energy are seasonal, and, accordingly, rates have been designed to closely reflect the daily and seasonal variations in the cost of producing electricity, in part by raising summer rates and lowering winter rates. Mild weather during the summer billing months of June through October, when base rates are higher to encourage customer conservation and peak load shifting, has an adverse effect on revenue and net income and, conversely, hot weather during these months has a favorable effect.
The Company includes in revenue the amounts received for sales to other utilities related to pooling and interconnection agreements. Amounts received for such interchange deliveries are a component of the Company's fuel rates.
FUEL
For customer billing purposes, all of the Utility's kilowatt-hour sales, through December 31, 1999, are covered by separately stated fuel rates. Pursuant to a new full-requirements contract with SMECO, effective January 1, 1999, the rate for electricity includes a non-varying fuel component. Refer to Item 7. "Management's Discussion and Analysis of Financial Conditions and Results of Operations" for additional information regarding SMECO. The ages of the Company's generating units, all of which are in operation, are presented in the table below.
The Company's generating units burn only fossil fuels. The principal fuel is coal. The Company owns no nuclear generation facilities. The following table sets forth the quantities of each type of fuel used by the Company in the years 1999, 1998 and 1997 and the contribution, on the basis of Btus, of each fuel to energy generated.
The following table sets forth the average cost of each type of fuel burned, for the years shown.
Coal:
Per ton
$38.33
$40.27
$42.82
Per million Btu
1.46
1.55
1.65
Residual oil:
Per barrel
15.54
16.17
20.95
Per million Btu
2.47
2.57
3.49
Natural gas:
Per dekatherm
2.83
2.63
2.87
Per million Btu
2.83
2.63
2.87
No. 2 fuel oil:
Per barrel
20.55
21.21
26.96
Per million Btu
3.51
3.63
4.63
The system average cost of fuel burned per million Btu was $1.68 in 1999, compared with $1.72 in 1998 and $1.84 in 1997. The decrease of 2.3% in the 1999 system average unit fuel cost compared with the 1998 system average is attributed primarily to the decreased unit costs of coal and residual oil. The decrease of 6.5% in the 1998 system average unit fuel cost compared with the 1997 system average is attributed primarily to the decreased unit costs of coal, residual oil and gas. The increase in the percent of residual oil burned in 1999 and 1998 reflects the decline in the price of residual oil and an increase in wholesale energy sales. The Company's major cycling and certain peaking units can burn either natural gas or oil, adding flexibility in selecting the most cost-effective fuel mix.
Eight of the Utility's 16 steam-electric generating units can burn only coal; two units can burn only residual oil; two units can burn either coal or residual oil or a combination of both; two units can burn either coal or natural gas or a combination of both; and two units can burn either residual oil or natural gas. Those units capable of burning either coal or residual oil and those units capable of burning either coal or natural gas normally burn coal as their primary fuel. The Company also has combustion turbines, some of which can burn only No. 2 fuel oil, and others which can burn either natural gas or No. 2 fuel oil. The following table provides details of the Utility's generating capability from the standpoint of plant configuration as well as actual energy generation (see Item 2.
Item 3. LEGAL PROCEEDINGS
Additional information that is required in this section, other than the information disclosed below, is incorporated herein by reference from Note 13. to the "Notes to Consolidated Financial Statements" of the Company's 1999 Annual Report to shareholders.
On May 22, 1998, the State of Maryland issued final regulations entitled, "Post RACT Requirements for Nitrogen Oxides (NOx) Sources," requiring a 65% reduction in NOx emissions at the Company's Maryland generating units by May 1, 1999. The regulations allow the purchase or trade of NOx emission allowances to fulfill this obligation. In settlement of judicial appeal of this regulation, the Company, on September 13, 1999, entered into a consent agreement with the State of Maryland which specifies a phased-in schedule for achieving a 65% reduction in NOx emissions (or acquiring NOx emission allowances to fulfill the obligation) by May 1, 2001. This agreement is consistent with the Company's preliminary plan for installing the best available removal technology on the Company's largest coal-fired units which is designed to yield NOx reductions of nearly 85% beginning in 2004. Implementation of the plan will require capital expenditures of $132 million from 2000 through 2004 and the purchase of emission allowances. The Company anticipates that based on the planned divestiture of its generation assets a significant portion of the required capital expenditures will be assumed by the purchaser of the assets. The cost of the emission allowances cannot be estimated at this time.
Item 4.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Part II
Item 5.
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The following table presents the dividends per share of Common Stock and the high and low of the daily Common Stock transaction prices as reported in The Wall Street Journal during each period. The New York Stock Exchange is the principal market on which the Company's Common Stock is traded.
The number of holders of Common Stock was 65,257 at March 20, 2000, and 66,546 at December 31, 1999.
There were 118,530,802 shares of the Company's $1 par value Common Stock outstanding at March 20, 2000, and December 31, 1999. A total of 200 million shares is authorized.
In January 2000, a dividend of 41-1/2 cents per share was declared payable March 31, 2000, to holders of record of the Company's common stock on March 10, 2000. The Company's current annual dividend rate on common stock is $1.66 per share. The dividend rate is determined by the Company's Board of Directors and takes into consideration, among other factors, current and possible future developments which may affect the Company's income and cash flow levels, including the impact of the divestiture of the generation assets and the impact of customer choice.
Item 6.
Item 6. SELECTED FINANCIAL DATA
The information required in this section is incorporated herein by reference from the "Selected Consolidated Financial Data" section of the Company's 1999 Annual Report to shareholders.
Item 7.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this section is incorporated herein by reference from the "Management's Discussion and Analysis of Consolidated Results of Operations and Financial Condition" section of the Company's 1999 Annual Report to shareholders.
Item 7A.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this section is incorporated herein by reference from the "Management's Discussion and Analysis of Consolidated Results of Operations and Financial Condition" section of the Company's 1999 Annual Report to shareholders.
Item 8.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements, together with the report thereon of PricewaterhouseCoopers LLP dated January 21, 2000, and supplementary data from the Company's 1999 Annual Report to shareholders are incorporated herein by reference. With the exception of the aforementioned information and the information incorporated in Items 1., 3., 6., 7., 7A and 8., the 1999 Annual Report to shareholders is not deemed filed as part of this Form 10-K.
Item 9.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
Part III
Item 10.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10. consisting of information required by Item 401 of Regulation S-K with regard to Directors of the registrant and the information required by Item 405 of Regulation S-K is incorporated herein by reference to the Company's Notice of Annual Meeting of shareholders and Proxy Statement dated March 21, 2000.
Information with regard to the executive officers of the registrant as of March 20, 2000, is as follows:
Executive Officers
Name
Position
Age
Served in
such position
since
John M. Derrick, Jr.
Chairman of the Board, President
and Chief Executive Officer
1999 (1)
Dennis R. Wraase
Executive Vice President and
Chief Financial Officer and
Director
1999 (2)
William T. Torgerson
Senior Vice President - External
Affairs and General Counsel
1994 (3)
Robert C. Grantley
Group Vice President -
Customer Service and Power
Distribution
William J. Sim
Group Vice President -
Generation
Andrew W. Williams
Group Vice President -
Transmission and Marketing
Earl K. Chism
Vice President and Comptroller
1994 (4)
Kenneth P. Cohn
Vice President and
Chief Information Officer
1999 (5)
Kirk J. Emge
Vice President - Legal Services
1994 (6)
Susann D. Felton
Vice President - Generation
Fuels and Business Planning
William R. Gee, Jr.
Vice President - Resource
Planning
Anthony J. Kamerick
Vice President and Treasurer
1994 (7)
Beverly L. Perry
Vice President - Government
and Corporate Affairs
1999 (8)
James S. Potts
Vice President - Environment
Mary M. Sharpe-Hayes
Vice President - Strategic
Planning
1998 (9)
None of the above persons has a "family relationship" with any other officer listed or with any director.
The term of office for each of the above persons is from April 28, 1999, until the next succeeding Annual Meeting and until their successors have been elected and qualified.
(1)
Mr. Derrick was elected to the position of Chairman of the Board on April 28, 1999, Chief Executive Officer on October 23, 1997, and President on December 21, 1992.
(2)
Mr. Wraase was elected to his present position on April 28, 1999. Prior to that time, from April 24, 1996, he served as Senior Vice President and Chief Financial Officer. From April 22, 1992 until April 24, 1996, he served as Senior Vice President, Finance and Accounting.
(3)
Mr. Torgerson was elected Senior Vice President and General Counsel on April 27, 1994. He served as Secretary from August 22, 1994 to April 24, 1996. Prior to 1994 he held the position of Vice President and General Counsel .
(4)
Mr. Chism was elected to his present position on April 27, 1994. Prior to that time he held the position of Vice President and Treasurer since July 1989.
(5)
Mr. Cohn was elected to his present position on April 28, 1999. Prior to that time he held the position of General Manager, Computer Services from March 1, 1997 to 1999 and Manager - Computer Services from May 1, 1987 to March 1, 1997.
(6)
Mr. Emge was elected to his present position on April 27, 1994. Prior to that time he held the position of Deputy General Counsel.
(7)
Mr. Kamerick was elected to his present position on April 27, 1994. Prior to that time he held the position of Comptroller from 1992 to 1994.
(8)
Ms. Perry was elected to her present position on April 28, 1999. Prior to that time she held the position of General Manager - Government Relations from March 1, 1997 to 1999, Manager - Government Relations from May 1, 1994 to 1997, and Manager, Government Affairs - D.C. and Federal from November 19, 1990 to 1994.
(9)
Ms. Sharpe-Hayes was elected to her position on June 29, 1998.
Item 11.
Item 11. EXECUTIVE COMPENSATION
The information required by Item 11. is incorporated herein by reference to the Company's Notice of Annual Meeting of Shareholders and Proxy Statement dated March 21, 2000.
Item 12.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12. is incorporated herein by reference to the Company's Notice of Annual Meeting of Shareholders and Proxy Statement dated March 21, 2000.
Item 13.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
Part IV
Item 14.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Documents List
1. Financial Statements
The following documents are filed as part of this report as incorporated herein by reference from the indicated pages of the Company's 1999 Annual Report.
2. Financial Statement Schedules
Unaudited supplementary data entitled "Quarterly Financial Summary (Unaudited)" is incorporated herein by reference in Item 8 (included in "Notes to Consolidated Financial Statements" as Note 16).
Schedule II (Valuation and Qualifying Accounts) and the Report of Independent Accountants on Consolidated Financial Statement Schedule are submitted pursuant to Item 14(d).
All other schedules are omitted because they are not applicable, or the required information is presented in the financial statements.
3. Exhibits required by Securities and Exchange Commission Regulation S-K
(summarized below).
Exhibit
No.
Description of Exhibit
Reference*
3.1
Charter of the Company. . . . . . . .
Filed herewith.
3.2
By-Laws of the Company. . . . . . . .
Exh. 3.2 to Form 10-K, 3/26/99.
Mortgage and Deed of Trust dated
July 1, 1936, of the Company to
The Bank of New York as Successor
Trustee, securing First Mortgage
Bonds of the Company, and
Supplemental Indenture dated
July 1, 1936. . . . . . . . . . . . .
Exh. B-4 to First Amendment,
6/19/36, to Registration
Statement No. 2-2232.
Supplemental Indentures, to the
aforesaid Mortgage and Deed of
Trust, dated -
December 1, 1939 and December 10,
1939. . . . . . . . . . . . . . . . .
Exhs. A & B to Form 8-K,
1/3/40.
August 1, 1940. . . . . . . . . . . .
Exh. A to Form 8-K, 9/25/40.
Exhibit
No.
Description of Exhibit
Reference*
4 (cont.)
July 15, 1942 and August 10,
1942. . . . . . . . . . . . . . . . .
Exh. B-1 to Amendment No. 2,
8/24/42, and B-3 to Post-
Effective Amendment, 8/31/42, to Registration Statement No. 2-5032.
August 1, 1942. . . . . . . . . . . .
Exh. B-4 to Form 8-A, 10/8/42.
October 15, 1942. . . . . . . . . . .
Exh. A to Form 8-K, 12/7/42.
October 15, 1947. . . . . . . . . . .
Exh. A to Form 8-K, 12/8/47.
January 1, 1948 . . . . . . . . . . .
Exh. 7-B to Post-Effective Amendment No. 2, 1/28/48, to Registration Statement
No. 2-7349.
December 31, 1948 . . . . . . . . . .
Exh. A-2 to Form 10-K, 4/13/49.
May 1, 1949 . . . . . . . . . . . . .
Exh. 7-B to Post-Effective Amendment No. 1, 5/10/49, to Registration Statement
No. 2-7948.
December 31, 1949 . . . . . . . . . .
Exh. (a)-1 to Form 8-K, 2/8/50.
May 1, 1950 . . . . . . . . . . . . .
Exh. 7-B to Amendment No. 2, 5/8/50, to Registration Statement No. 2-8430.
February 15, 1951 . . . . . . . . . .
Exh. (a) to Form 8-K, 3/9/51.
March 1, 1952 . . . . . . . . . . . .
Exh. 4-C to Post-Effective Amendment No. 1, 3/12/52, to Registration Statement No. 2-9435.
February 16, 1953 . . . . . . . . . .
Exh. (a)-1 to Form 8-K, 3/5/53.
May 15, 1953. . . . . . . . . . . . .
Exh. 4-C to Post-Effective Amendment No. 1, 5/26/53, to Registration Statement
No. 2-10246.
March 15, 1954 and March 15,
1955. . . . . . . . . . . . . . . . .
Exh. 4-B to Registration Statement No. 2-11627, 5/2/55.
May 16, 1955. . . . . . . . . . . . .
Exh. A to Form 8-K, 7/6/55.
March 15, 1956. . . . . . . . . . . .
Exh. C to Form 10-K, 4/4/56.
June 1, 1956. . . . . . . . . . . . .
Exh. A to Form 8-K, 7/2/56.
April 1, 1957 . . . . . . . . . . . .
Exh. 4-B to Registration Statement No. 2-13884, 2/5/58.
May 1, 1958 . . . . . . . . . . . . .
Exh. 2-B to Registration Statement No. 2-14518, 11/10/58.
December 1, 1958. . . . . . . . . . .
Exh. A to Form 8-K, 1/2/59.
May 1, 1959 . . . . . . . . . . . . .
Exh. 4-B to Amendment No. 1, 5/13/59, to Registration Statement No. 2-15027.
Exhibit
No.
Description of Exhibit
Reference*
4 (cont.)
November 16, 1959 . . . . . . . . . .
Exh. A to Form 8-K, 1/4/60.
May 2, 1960 . . . . . . . . . . . . .
Exh. 2-B to Registration Statement No. 2-17286, 11/9/60.
December 1, 1960 and April 3,
1961. . . . . . . . . . . . . . . . .
Exh. A-1 to Form 10-K, 4/24/61.
May 1, 1962 . . . . . . . . . . . . .
Exh. 2-B to Registration Statement No. 2-21037, 1/25/63.
February 15, 1963 . . . . . . . . . .
Exh. A to Form 8-K, 3/4/63.
May 1, 1963 . . . . . . . . . . . . .
Exh. 4-B to Registration Statement No. 2-21961, 12/19/63.
April 23, 1964. . . . . . . . . . . .
Exh. 2-B to Registration Statement No. 2-22344, 4/24/64.
May 15, 1964. . . . . . . . . . . . .
Exh. A to Form 8-K, 6/2/64.
May 3, 1965 . . . . . . . . . . . . .
Exh. 2-B to Registration Statement No. 2-24655, 3/16/66.
April 1, 1966 . . . . . . . . . . . .
Exh. A to Form 10-K, 4/21/66.
June 1, 1966. . . . . . . . . . . . .
Exh. 1 to Form 10-K, 4/11/67.
April 28, 1967. . . . . . . . . . . .
Exh. 2-B to Post-Effective Amendment No. 1 to Registration Statement No. 2-26356, 5/3/67.
May 1, 1967 . . . . . . . . . . . . .
Exh. A to Form 8-K, 6/1/67.
July 3, 1967. . . . . . . . . . . . .
Exh. 2-B to Registration Statement No. 2-28080, 1/25/68.
February 15, 1968 . . . . . . . . . .
Exh. II-I to Form 8-K, 3/7/68.
May 1, 1968 . . . . . . . . . . . . .
Exh. 2-B to Registration Statement No. 2-31896, 2/28/69.
March 15, 1969. . . . . . . . . . . .
Exh. A-2 to Form 8-K, 4/8/69.
June 16, 1969 . . . . . . . . . . . .
Exh. 2-B to Registration Statement No. 2-36094, 1/27/70.
February 15, 1970 . . . . . . . . . .
Exh. A-2 to Form 8-K, 3/9/70.
May 15, 1970. . . . . . . . . . . . .
Exh. 2-B to Registration Statement No. 2-38038, 7/27/70.
August 15, 1970 . . . . . . . . . . .
Exh. 2-D to Registration Statement No. 2-38038, 7/27/70.
Exhibit
No.
Description of Exhibit
Reference*
4 (cont.)
September 1, 1971 . . . . . . . . . .
Exh. 2-C to Registration Statement No. 2-45591, 9/1/72.
September 15, 1972. . . . . . . . . .
Exh. 2-E to Registration Statement No. 2-45591, 9/1/72.
April 1, 1973 . . . . . . . . . . . .
Exh. A to Form 8-K, 5/9/73.
January 2, 1974 . . . . . . . . . . .
Exh. 2-D to Registration Statement No. 2-49803, 12/5/73.
August 15, 1974 . . . . . . . . . . .
Exhs. 2-G and 2-H to Amendment No. 1 to Registration Statement No. 2-51698, 8/14/74.
June 15, 1977 . . . . . . . . . . . .
Exh. 4-A to Form 10-K, 3/19/81.
July 1, 1979. . . . . . . . . . . . .
Exh. 4-B to Form 10-K, 3/19/81.
June 16, 1981 . . . . . . . . . . . .
Exh. 4-A to Form 10-K, 3/19/82.
June 17, 1981 . . . . . . . . . . . .
Exh. 2 to Amendment No. 1, 6/18/81, to Form 8-A.
December 1, 1981. . . . . . . . . . .
Exh. 4-C to Form 10-K, 3/19/82.
August 1, 1982. . . . . . . . . . . .
Exh. 4-C to Amendment No. 1 to Registration Statement No. 2-78731, 8/17/82.
October 1, 1982 . . . . . . . . . . .
Exh. 4 to Form 8-K, 11/8/82.
April 15, 1983. . . . . . . . . . . .
Exh. 4 to Form 10-K, 3/23/84.
November 1, 1985. . . . . . . . . . .
Exh. 2-B to Form 8-A, 11/1/85.
March 1, 1986 . . . . . . . . . . . .
Exh. 4 to Form 10-K, 3/28/86.
November 1, 1986. . . . . . . . . . .
Exh. 2-B to Form 8-A, 11/5/86.
March 1, 1987 . . . . . . . . . . . .
Exh. 2-B to Form 8-A, 3/2/87.
September 16, 1987. . . . . . . . . .
Exh. 4-B to Registration Statement No. 33-18229, 10/30/87.
May 1, 1989 . . . . . . . . . . . . .
Exh. 4-C to Registration Statement No. 33-29382, 6/16/89.
August 1, 1989. . . . . . . . . . . .
Exh. 4 to Form 10-K, 3/23/90.
April 5, 1990 . . . . . . . . . . . .
Exh. 4 to Form 10-K, 3/29/91.
May 21, 1991. . . . . . . . . . . . .
Exh. 4 to Form 10-K, 3/27/92.
May 7, 1992 . . . . . . . . . . . . .
Exh. 4 to Form 10-K, 3/26/93.
Exhibit
No.
Description of Exhibit
Reference*
4 (cont.)
September 1, 1992 . . . . . . . . . .
Exh. 4 to Form 10-K, 3/26/93.
November 1, 1992. . . . . . . . . . .
Exh. 4 to Form 10-K, 3/26/93.
March 1, 1993 . . . . . . . . . . . .
Exh. 4 to Form 10-K, 3/26/93.
March 2, 1993 . . . . . . . . . . . .
Exh. 4 to Form 10-K, 3/26/93.
July 1, 1993. . . . . . . . . . . . .
Exh. 4.4 to Registration Statement No. 33-49973, 8/11/93.
August 20, 1993 . . . . . . . . . . .
Exh. 4.4 to Registration Statement No. 33-50377, 9/23/93.
September 29, 1993. . . . . . . . . .
Exh. 4 to Form 10-K, 3/25/94.
September 30, 1993. . . . . . . . . .
Exh. 4 to Form 10-K, 3/25/94.
October 1, 1993 . . . . . . . . . . .
Exh. 4 to Form 10-K, 3/25/94.
February 10, 1994 . . . . . . . . . .
Exh. 4 to Form 10-K, 3/25/94.
February 11, 1994 . . . . . . . . . .
Exh. 4 to Form 10-K, 3/25/94.
March 10, 1995. . . . . . . . . . . .
Exh. 4.3 to Registration Statement No. 61379, 7/28/95.
September 6, 1995 . . . . . . . . . .
Exh. 4 to Form 10-K, 4/1/96.
September 7, 1995 . . . . . . . . . .
Exh. 4 to Form 10-K, 4/1/96.
October 2, 1997 . . . . . . . . . . .
Exh. 4 to Form 10-K, 3/26/98.
March 17, 1999. . . . . . . . . . . .
Filed herewith.
4-A
Indenture, dated as of July 28, 1989, between the Company and The Bank of New York, Trustee, with respect to
the Company's Medium-Term Note
Program . . . . . . . . . . . . . . .
Exh. 4 to Form 8-K, 6/21/90.
4-B
Indenture, dated as of August 15, 1992, between the Company and
The Bank of New York, Trustee, for
the Company's $115,000,000 issue of
5% Convertible Debentures due 2002. .
Exh. 4-C to Form 10-K, 3/26/93.
Exhibit
No.
Description of Exhibit
Reference*
Agreement, effective December 8, 1998, between the Company and the International Brotherhood of Electrical Workers (Local Union No. 1900). . . . . . . .
Exh. 10 to Form 10-K, 3/26/99.
10.1
Employment Agreement**. . . . . . . .
Filed herewith.
10.2
Employment Agreement**. . . . . . . .
Filed herewith.
10.3
Employment Agreement**. . . . . . . .
Filed herewith.
10.4
Severance Agreement**. . . . . . . .
Filed herewith.
10.5
Severance Agreement** . . . . . . . .
Filed herewith.
10.6
Severance Agreement** . . . . . . . .
Filed herewith.
10.7
Severance Agreement** . . . . . . . .
Filed herewith.
10.8
Severance Agreement** . . . . . . . .
Filed herewith.
10.9
Severance Agreement** . . . . . . . .
Filed herewith.
10.10
Severance Agreement** . . . . . . . .
Filed herewith.
10.11
Severance Agreement** . . . . . . . .
Filed herewith.
10.12
Severance Agreement** . . . . . . . .
Filed herewith.
10.13
Severance Agreement** . . . . . . . .
Filed herewith.
10.14
Severance Agreement** . . . . . . . .
Filed herewith.
10.15
Severance Agreement** . . . . . . . .
Filed herewith.
10.16
1999 General Memorandum of Understanding, dated December 8,
1998 between the Company and the International Brotherhood of Electrical Workers (Local Union
No. 1900) . . . . . . . . . . . . . .
Exh. 10.2 to Form 10-K, 3/26/99.
Exhibit
No.
Description of Exhibit
Reference*
Statements Re. Computation of
Earnings Per Common Share . . . . .
Filed herewith.
Statements Re. Computation of
Ratios. . . . . . . . . . . . . . .
Filed herewith.
Financial Information Section of
Annual Report . . . . . . . . . . .
Filed herewith.
Subsidiaries of the Registrant. . . .
Filed herewith.
Consent of Independent Accountants. .
Filed herewith.
Financial Data Schedule . . . . . . .
Filed herewith.
*The exhibits referred to in this column by specific designations and date
have heretofore been filed with the Securities and Exchange Commission
under such designations and are hereby incorporated herein by reference.
The Forms 8-A, 8-K and 10-K referred to were filed by the Company under the
Commission's File No. 1-1072 and the Registration Statements referred to
are registration statements of the Company.
**These exhibits are submitted pursuant to Item 14(c).
(b) Reports on Form 8-K
None.
(c) Exhibit 11 Statements Re. Computation of Earnings Per Common Share
The information required by Exhibit 11 is incorporated herein by reference to Note 11 of the "Notes to Consolidated Financial Statements" of the Company's Annual Report to shareholders.
Exhibit 21 Subsidiaries of the Registrant
Over the past few years, with the passage of the Telecommunications Act of 1996, and the deregulation of the natural gas and electric industries also underway, the focus of the Company's nonregulated subsidiaries has been expanded to include new competitive telecommunications and energy businesses. To facilitate this expansion, in May 1999, the Company reorganized its nonregulated subsidiaries into two major operating groups to compete for market share in deregulated markets. As part of the reorganization, a new unregulated company, PHI, was created as the parent company of its two wholly owned subsidiaries, PCI and Pepco Energy Services.
Potomac Electric Power Company Trust I (the Trust), a wholly owned business trust and subsidiary of the Company, was established in April 1998 for the purposes of issuing Trust Securities representing undivided beneficial interests in the assets of the Trust, and investing the gross proceeds from the sale of the Trust Securities in Junior Subordinated Debentures of the Company.
Exhibit 23 Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration Statements on Forms S-8 (Numbers 33-36798, 33-53685 and 33-54197) and to the incorporation by reference in the Prospectuses constituting part of the Registration Statements on Forms S-3 (Numbers 33-58810, 33-61379, 333-33495 and 333-66127) of Potomac Electric Power Company of our report dated January 21, 2000 appearing in the Annual Report to shareholders which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report on the Consolidated Financial Statement Schedule, which appears under Item 14(a) of this Form 10-K.
PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Washington, D.C.
March 27, 2000
Report of Independent Accountants on Consolidated Financial Statement Schedule
January 21, 2000
To the Board of Directors of
Potomac Electric Power Company
Our audits of the consolidated financial statements referred to in our report dated January 21, 2000 appearing in the 1999 Annual Report to shareholders of Potomac Electric Power Company (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the consolidated financial statement schedule listed in Item 14(a) of this Form 10-K. In our opinion, this consolidated financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Washington, D.C.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Washington, District of Columbia, on the 24th day of March, 2000.
POTOMAC ELECTRIC POWER COMPANY
(Registrant)
By JOHN M. DERRICK, JR.
(John M. Derrick, Jr.,
Chairman of the Board,
President and Chief
Executive Officer)
Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
Signature
Title
Date
(i)
Principal Executive Officer
JOHN M. DERRICK, JR.
(John M. Derrick, Jr.)
Chairman of the Board,
President and Chief
Executive Officer
(ii),(iii)
Principal Financial Officer,
Principal Accounting Officer
D. R. WRAASE
(Dennis R. Wraase)
Executive Vice President
and Chief Financial
Officer and Director
(iv)
Directors:
ROGER R. BLUNT
(Roger R. Blunt, Sr.)
Director
E. B. CRONIN
(Edmund B. Cronin, Jr.)
Director
T. C. GOLDEN
(Terence C. Golden)
Director
March 24, 2000
Signature
Title
Date
(iv)
Directors (cont.):
DAVID O. MAXWELL
(David O. Maxwell)
Director
JUDITH A. McHALE
(Judith A. McHale)
Director
FLORETTA D. McKENZIE
(Floretta D. McKenzie)
Director
E. F. MITCHELL
(Edward F. Mitchell)
Director
PETER F. O'MALLEY
(Peter F. O'Malley)
Director
LOUIS A. SIMPSON
(Louis A. Simpson)
Director
A. T. YOUNG
(A. Thomas Young)
Director
March 24, 2000