Pepco Holdings Subsidiary and Siemens form alliance to enhance performance and save costs

WASHINGTON, D.C., September 27, 2004 (PRNewswire-FirstCall) — Pepco Holdings Inc. announced that its unregulated subsidiary, Conectiv Energy, has agreed to form an alliance with Siemens Westinghouse Power Corporation (SWPC), a subsidiary of Siemens AG. The alliance is designed to further improve the financial and operational performance of Conectiv Energy’s fleet of Siemens industrial gas turbines, through streamlined procurement and improved equipment efficiencies. Siemens V84.2 gas turbines provide the backbone of Conectiv Energy’s combined cycle power plants, representing nearly 40 percent of its generation capability.

“We expect this agreement to result in significant cost savings and operational improvements over the next eight years,” said Bill Spence, President and Chief Operating Officer of Conectiv Energy. “With the competitive pressures facing merchant generators, our ability to lock in highly competitive prices for products and services with our largest supplier is critical for our future success. Our relationship with Siemens Westinghouse has been excellent and this alliance will deepen that working relationship.” The agreement includes a broad range of plant operating services and critical equipment components for the Conectiv Energy generation fleet; it does not create a joint venture or any ownership relationship between the companies.

According to Craig Weeks, President, Operating Plant Services Division of Siemens Power Generation, “Siemens is committed to providing our customers, such as Conectiv Energy, with comprehensive service solutions and programs that complement the diversity of their fleet. Siemens provides a total value proposition that places our global resources, capabilities and research and development for Conectiv’s benefit through maintenance service programs tailored to meet their unique business needs.”

About PHI: Pepco Holdings, Inc. is a diversified energy company with headquarters in Washington, D.C. Its principal operations consist of PHI Power Delivery, which delivers 50,000 gigawatt-hours of power to more than 1.7 million customers in Washington, D.C., Delaware, Maryland, New Jersey and Virginia. PHI engages in regulated utility operations by delivering electricity and natural gas, and provides competitive energy and energy products and services to residential and commercial customers. Conectiv Energy, a subsidiary of Pepco Holdings, Inc., operates a portfolio of highly flexible power plants within the PJM Interconnection power pool serving the Mid-Atlantic region and uses a wholesale merchant unit to optimize the value of its energy portfolio.

About Siemens

The Power Generation Group (PG) of Siemens AG is one of the premier companies in the international power generation sector. In fiscal 2003 (which ended September 30), Siemens PG posted sales amounting to approximately EUR 7 billion and received new orders totaling EUR 7.3 billion. Group profit amounted to EUR 1,171 million. On September 30, 2003, PG had a work force of more than 30,000 worldwide.

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