(Loss) Income from Equity Investments, principally Telecommunication Entities

          These amounts represent the Company's share of the pre-tax income or loss from
entities in which it has a 20% to 50% equity investment. The Company's most significant
equity investment is the joint venture known as Starpower Communications, LLC
(Starpower) that was formed in 1997 between a wholly owned subsidiary of PCI and
RCN Corporation. Additionally, this line item includes income from Pepco Energy
Services' 50% share of the operations from Viron/Pepco Services, Inc., which was
created in 1999 to provide energy-savings performance contracting services to the
Military District of Washington.

          Starpower, which is discussed in detail in Item 8. Financial Statements and
Supplementary Data in the Company's 1999 Form 10-K, is the only regional company
providing cable television, local and long distance telephone, and dial-up and high-speed
Internet services in a competitively priced bundled package for residential customers,
over an advanced fiber-optic network. Total customer subscriber services including
cable, telephone and Internet customers were in excess of 285,000 as of March 31, 2000,
compared to 250,000 customers as of March 31, 1999. The customer subscriber services
base is composed of customers served on Starpower's advanced fiber-optic network (On-
network) and off of other networks ahead of Starpower's build-out (Off-network). The
On-network customer subscriber services are principally composed of cable, local and
long distance telephone and high-speed Internet customer services and totaled in excess
of 25,000 as of March 31, 2000, compared to 3,000 at March 31, 1999. The Off-network
customer subscriber services are principally composed of dial-up Internet and resale local
and long distance telephone customers and totaled approximately 260,000 as of March
31, 2000, compared to 250,000 at March 31, 1999.

          Authorized cable households for Starpower in the Washington metropolitan area at
March 31, 2000 exceeded 550,000, up from approximately 250,000 authorized cable
households at March 31, 1999. Starpower continues to solicit approvals from the
remaining jurisdictions within the Washington metropolitan area and is currently seeking
further agreements that will add over 500,000 additional households. Through March 31,
2000, Starpower has built sufficient advance fiber-optic network to cumulatively reach
approximately 90,000 On-network households as compared to approximately 6,000 On-
network households at March 31, 1999. Of these On-network marketable households,
over 25,000 On-network marketable customer connections have been sold as of March
31, 2000, with the average customer household purchasing in excess of two customer
services. As of March 31, 2000, PCI has invested $85.9 million of its initial $150 million
commitment in Starpower. PCI expects to invest the balance of its initial capital
commitment during 2000.

          The Loss from Equity Investments, principally Telecommunication Entities,
increased slightly for the three months ended March 31, 2000, compared to the
corresponding period in 1999 due to expenses incurred in connection with the expansion
of the Starpower network. The loss for the twelve months ended March 31, 2000,
compared to the corresponding period in 1999, decreased slightly due to the fact that PCI
sold its investment in Metricom D.C., LLC, which had consistently generated losses
through its sale in October 1999. PCI expects that Starpower will continue to incur losses
in 2000 as it develops and expands its network and customer base. During 2000,
Starpower may decide to accelerate the scope and pace of system construction in 2001
and beyond based upon the favorable receipt of additional cable franchises ahead of plan.
If Starpower decides to accelerate its build, its pre-tax losses may increase over the near-
term.

Effective Federal Income Tax Rate

          The Company's effective federal income tax rate was 27.8% for the twelve months
ended March 31, 2000 compared to 32.2% for the corresponding period in 1999. This
decrease results from PCI's recognition of $18.7 million in tax benefits in June 1999
associated with the completion of a restructuring transaction related to a partnership.
This restructuring allowed PCI to consolidate the majority of its aircraft under one
umbrella company, and by doing so, facilitates the management and disposition of its
aircraft portfolio.

Oil Spill at the Chalk Point Generating Station

          On April 7, 2000, approximately 110,000 gallons of oil leaked from the Company's
pipeline at its Chalk Point Generating Station in Aquasco, Maryland. The pipeline is
operated by Support Terminals Services Operating Partnership LP, an unaffiliated
pipeline management company. The oil spread from Swanson Creek to the Patuxent
River and several of its tributaries. The area affected covers portions of seventeen miles
of shoreline along the Patuxent River and approximately 45 acres of marshland located
on and adjacent to the Company's property. Cleanup operations have been underway
since the leak was discovered. The 51-mile pipeline, which transports oil to the
Company's Chalk Point and Morgantown plants, has been shut down by the Office of
Pipeline Safety, a unit of the federal government's Department of Transportation until a
plan of corrective measures to prevent a reoccurrence of the spill is approved. However,
the plants remain fully operational and are being operated using coal and natural gas.

          The Company has been working under the direction of the Environmental
Protection Agency since the spill was reported and has been joined in the cleanup effort
with officials from other federal, state, county and local government agencies.

          The total cost to the Company, net of insurance recovery, cannot be determined at
this time; however, based on information known at this time, the Company does not
believe the costs of cleanup, associated claims, or any resulting fines or penalties will
have a material adverse effect on its financial position. However, depending upon the
outcome of insurance claims, the cost of remediation, along with any damage claims,
fines and penalties could have a material adverse effect on the Company's results of
operations in the year in which such expenses are incurred.

Pepco Energy Services

          In March 2000, the Apartment and Office Building Association (AOBA)
announced that it had selected Pepco Energy Services to supply electricity and energy
management services to its members. AOBA is the Washington, D.C. area federated
chapter of the Building Owners and Managers Association and the National Apartment
Association. The agreement will permit AOBA members in Maryland to obtain a
contractually fixed amount of competitively priced electricity from Pepco Energy
Services beginning by September 2000. In addition, Pepco Energy Services will provide
energy information services to AOBA members and fuel management services, including
assistance in the procurement and use of electricity, natural gas, and fuel oil.

          In March 2000, Pepco Energy Services reached an agreement with the National
Institutes of Health (NIH) for the construction, operation and maintenance of a 23-
megawatt co-generation plant to supply steam and electricity on NIH's main campus in
Maryland. The construction and operation and maintenance portions of this project are
expected to produce over $50 million in revenue over 10 years. Financing for this project
has been obtained and construction has begun.

Statistical Data
	Three Months Ended						Twelve Months Ended
	March 31,						March 31,
	2000		1999		% Change		2000		1999		% Change
Utility Operating Revenue
(Millions of Dollars)
Electric Revenue	$ 389.6		$ 389.9		(0.1)		$ 1,916.4		$ 1,896.3		1.1
Other	51.5		63.1		(18.4)		290.9		244.2		19.1
Total	$ 441.1		$ 453.0		(2.6)		$ 2,207.3		$ 2,140.5		3.1
Electric Revenue by Class of Service
Residential	$ 121.9		$ 123.6		(1.4)		$ 584.6		$ 577.4		1.2
General Service	216.9		215.6		0.6		1,122.6		1,112.9		0.9
Large Power Service *	7.1		7.1		-		36.3		35.1		3.4
Street Lighting	3.6		3.5		2.9		13.7		13.1		4.6
Rapid Transit	7.1		7.0		1.4		30.6		29.8		2.7
Wholesale	33.0		33.1		(0.3)		128.6		128.0		0.5
System	$ 389.6		$ 389.9		(0.1)		$ 1,916.4		$ 1,896.3		1.1
Energy Sales
(Millions of KWH)
Residential	1,823		1,824		(0.1)		7,012		6,875		2.0
General Service	3,801		3,682		3.2		16,009		15,722		1.8
Large Power Service *	170		165		3.0		706		684		3.2
Street Lighting	47		46		2.2		168		163		3.1
Rapid Transit	108		104		3.8		443		425		4.2
Wholesale	756		738		2.4		2,778		2,724		2.0
System	6,705		6,559		2.2		27,116		26,593		2.0
Average System Revenue
per KWH (Cents/KWH)	5.81	Cents	5.94	Cents	(2.2)		7.07	Cents	7.13	Cents	(0.8)
System Peak Demand **
(Thousands of KW)
Summer	-		-				5,927		5,807
Winter	-		-				4,735		4,631
Net Generation
(Millions of KWH)	4,905		5,353				22,359		22,359
Fuel Mix (% of Btu)
Coal (%)	84		87				81		84
Oil (%)	12		12				13		13
Gas (%)	4		1				6		3
Fuel Cost per MBtu
System Average	$1.69		$1.64				$1.69		$1.69
Weather Data
Heating Degree Days	1,953		2,121				3,558		3,639
20 Year Average	2,183						3,964
Cooling Degree Hours	12		-				10,819		10,086
20 Year Average	12						9,495
Heating Degree Days - The daily difference in degrees by which the mean temperature is below 65 degrees    Fahrenheit (dry bulb).
Cooling Degree Hours - The daily sum of the differences, by hours, by which the temperature    (effective temperature) for each hour exceeds 71 degrees Fahrenheit (effective temperature).
* Large Power Service customers are served at high voltage of 66KV or higher.
**At March 31, 2000, the net generation capability, excluding short-term capacity transactions, was 6,806 MW.

May 11, 2000
     Date

Exhibit 12 Statements Re. Computation of Ratios
The computations of the coverage of fixed charges before income taxes, and the coverage of combined fixed charges and preferred dividends for the twelve months ended March 31, 2000, and each of the years 1999 through 1995, on the basis of Utility operations only, are as follows:
	Twelve
	Months Ended	For the Year Ended December 31,
	March 31, 2000	1999	1998	1997	1996	1995
		(Dollar Amounts in Millions)
Net income	$209.8	$228.0	$211.2	$164.7	$220.1	$218.8
Taxes based on income	130.4	142.6	131.0	97.5	135.0	129.4
Income before taxes	340.2	370.6	342.2	262.2	355.1	348.2
Fixed charges:
Interest charges	157.5	156.1	151.8	146.7	146.9	146.6
Interest factor in rentals	23.1	23.4	23.8	23.6	23.6	23.4
Total fixed charges	180.6	179.5	175.6	170.3	170.5	170.0
Income before income taxes and fixed charges	$520.8	$550.1	$517.8	$432.5	$525.6	$518.2
Coverage of fixed charges	2.88	3.06	2.95	2.54	3.08	3.05
Preferred dividend requirements	$8.3	$8.9	$18.0	$16.5	$16.6	$16.9
Ratio of pre-tax income to net income	1.62	1.63	1.62	1.59	1.61	1.59
Preferred dividend factor	$13.4	$14.5	$29.2	$26.2	$26.7	$26.9
Total fixed charges and preferred dividends	$194.0	$194.0	$204.8	$196.5	$197.2	$196.9
Coverage of combined fixed charges and preferred dividends	2.68	2.84	2.53	2.20	2.66	2.63

Exhibit 12 Statements Re. Computation of Ratios
The computations of the coverage of fixed charges before income taxes, and the coverage of combined fixed charges and preferred dividends for the twelve months ended March 31, 2000, and for each of the years 1999 through 1995, on a consolidated basis, are as follows.
	Twelve
	Months Ended	For the Year Ended December 31,
	March 31, 2000	1999	1998	1997	1996	1995
		(Dollar Amounts in Millions)
Net income	$230.8	$247.1	$226.3	$181.8	$237.0	$94.4
Taxes based on income	105.9	114.5	122.3	65.6	80.4	43.7
Income before taxes	336.7	361.6	348.6	247.4	317.4	138.1
Fixed charges:
Interest charges	211.5	208.7	208.6	216.1	231.1	238.7
Interest factor in rentals	23.5	23.8	24.0	23.7	23.9	26.7
Total fixed charges	235.0	232.5	232.6	239.8	255.0	265.4
Nonregulated subsidiary capitalized interest	(2.4)	(1.8)	(0.6)	(0.5)	(0.7)	(0.5)
Income before income taxes and fixed charges	$569.3	$592.3	$580.6	$486.7	$571.7	$403.0
Coverage of fixed charges	2.42	2.55	2.50	2.03	2.24	1.52
Preferred dividend requirements	$8.3	$8.9	$18.0	$16.5	$16.6	$16.9
Ratio of pre-tax income to net income	1.46	1.46	1.54	1.36	1.34	1.46
Preferred dividend factor	$12.1	$12.9	$27.7	$22.4	$22.2	$24.7
Total fixed charges and preferred dividends	$247.1	$245.4	$260.3	$262.2	$277.2	$290.1
Coverage of combined fixed charges and preferred dividends	2.30	2.41	2.23	1.86	2.06	1.39