As previously disclosed, the Maryland Public Service Commission ("MPSC") approved a settlement agreement on April 21, 2006, among Pepco Holdings, Inc.'s ("PHI") subsidiaries, Potomac Electric Power Company ("Pepco") and Delmarva Power & Light Company ("DPL"), the staff of the MPSC, and the Maryland Office of People's Counsel. The settlement agreement provides for a rate mitigation program for Pepco's and DPL's residential customers to address recent significant increases in electricity costs.
Through May 17, 2006, approximately 1% of Pepco's residential customers and less than 1% of DPL's customers have elected to participate in the deferral program.
As previously disclosed, the State of Delaware on April 6, 2006, enacted legislation that provides for a deferral of the impact of recent significant increases in electricity costs.
Through May 17, 2006, approximately 50% of DPL's residential customers in Delaware have opted out of the deferral program.
As DPL has continued to work through the details of implementing this program, it has determined that the aggregate amount of the deferred customer payments will be included in revenues and taxable income sooner than originally believed, and, accordingly, the deferral program will not result in a temporary tax timing benefit as previously disclosed.
Set forth below is a revised table showing the estimated maximum customer deferral balances and the estimated total interest expense, net of taxes, at various levels of assumed customer participation in the customer deferral program based on a projected interest cost of 5% accrued over the combined 37-month deferral and recovery period. This table revises the table set forth in PHI's Form 10-Q for the quarter ended March 31, 2006.
Customer Deferral Balance
Estimated Total Interest Expense, Net of Taxes
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Pepco Holdings, Inc.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PEPCO HOLDINGS, INC.
Date May 19, 2006
/s/ JOSEPH M. RIGBY
Name: Joseph M. Rigby
Title: Senior Vice President and
Chief Financial Officer
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