<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C.  20549

                                   FORM 10-Q




/X/  QUARTERLY  REPORT   PURSUANT   TO   SECTION  13  OR   15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended  	September 30, 1996	
                               -----------------------------------------
                                       OR

/ /  TRANSITION  REPORT   PURSUANT   TO   SECTION  13  OR  15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934

For the transition period from                        to
                               ----------------------    -------------------

Commission file number     1-1405

                         Delmarva Power & Light Company
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

         Delaware and Virginia                              51-0084283
     ----------------------------                       -------------------
       (States of incorporation)                        (I.R.S. Employer
                                                        Identification No.)

     800 King Street, P.O. Box 231, Wilmington, Delaware          19899
     ---------------------------------------------------        ----------
         (Address of principal executive offices)               (Zip Code)

     Registrant's telephone number, including area code        302-429-3359
                                                               ------------

Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act 
of 1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports),  and (2) has been subject to 
such filing requirements for the past 90 days.

                                Yes     X               No
                                     -------                -------

Indicate the number of shares outstanding of each of the issuer's classes 
of common stock, as of the latest practicable date.

              Class                         Outstanding at September 30, 1996
    -----------------------------           ---------------------------------
    Common Stock, $2.25 par value                  60,523,411 Shares



<PAGE>
                         DELMARVA POWER & LIGHT COMPANY
                         ------------------------------

                               Table of Contents
                               -----------------

                                                                       Page No.
                                                                       --------

 Part I.    Financial Information:

              Consolidated Balance Sheets as of September 30, 1996
              and December 31, 1995..................................       2-3

              Consolidated Statements of Income for the three and
              nine months ended September 30, 1996 and 1995..........         4

              Consolidated Statements of Cash Flows for the nine
              months ended September 30, 1996 and 1995...............         5

              Notes to Consolidated Financial Statements.............      6-12

              Selected Financial and Operating Data..................        13

              Management's Discussion and Analysis of Financial
              Condition and Results of Operations....................     14-21

Part II.    Other Information and Signature..........................     22-27

                                      -1-
<PAGE>
                         PART I.  FINANCIAL INFORMATION

                         DELMARVA POWER & LIGHT COMPANY
                         ------------------------------
                          CONSOLIDATED BALANCE SHEETS
                             (Dollars in Thousands)
                                  (Unaudited)
                                  -----------

<TABLE>
<CAPTION>
                                                     September 30,       December 31,
                                                         1996                1995
                                                     -------------       ------------
                       ASSETS
                       ------
<S>                                                  <C>                 <C>
UTILITY PLANT, AT ORIGINAL COST:
   Electric........................................     $3,022,062         $2,942,969
   Gas.............................................        219,916            208,245
   Common..........................................        136,236            130,949
                                                     -------------       ------------
                                                         3,378,214          3,282,163
   Less:  Accumulated depreciation.................      1,266,817          1,189,269
                                                     -------------       ------------
   Net utility plant in service....................      2,111,397          2,092,894
   Construction work-in-progress...................         99,008            105,588
   Leased nuclear fuel, at amortized cost..........         32,729             31,661
                                                     -------------       ------------
                                                         2,243,134          2,230,143
                                                     -------------       ------------

INVESTMENTS AND NONUTILITY PROPERTY:
   Investment in leveraged leases..................         47,306             48,367
   Funds held by trustee...........................         34,662             36,275
   Other investments and nonutility property, net..         60,331             54,781
                                                     -------------       ------------
                                                           142,299            139,423
                                                     -------------       ------------

CURRENT ASSETS:
   Cash and cash equivalents.......................         28,280             28,951
   Accounts receivable:
       Customers...................................        110,881            116,606
       Other.......................................         24,219             14,630
   Deferred energy costs...........................         19,041                 --
   Inventories, at average cost:
       Fuel (coal, oil, and gas)...................         31,724             30,076
       Materials and supplies......................         35,868             36,823
   Prepayments.....................................          9,277             12,969
   Deferred income taxes, net......................             --              5,400
                                                     -------------       ------------
                                                           259,290            245,455
                                                     -------------       ------------

DEFERRED CHARGES AND OTHER ASSETS:
   Prepaid pension cost............................         27,458             16,899
   Unamortized debt expense........................         11,776             12,256
   Deferred debt refinancing costs.................         22,018             23,972
   Deferred recoverable income taxes...............        140,983            151,250
   Other...........................................         51,153             47,287
                                                     -------------       ------------
                                                           253,388            251,664
                                                     -------------       ------------

TOTAL ASSETS                                            $2,898,111         $2,866,685
                                                     =============       ============
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

                                      -2-
<PAGE>
                         DELMARVA POWER & LIGHT COMPANY
                         ------------------------------
                          CONSOLIDATED BALANCE SHEETS
                             (Dollars in Thousands)
                                  (Unaudited)
                                  -----------

<TABLE>
<CAPTION>
                                                     September 30,       December 31,
                                                         1996                1995
                                                     -------------       ------------
         CAPITALIZATION AND LIABILITIES
         ------------------------------
<S>                                                  <C>                 <C>
CAPITALIZATION:
   Common stock, $2.25 par value; 90,000,000
       shares authorized; shares issued: 1996--
       60,763,085, 1995--60,760,685................       $136,717           $136,713
   Additional paid-in capital......................        506,680            506,328
   Retained earnings...............................        299,108            281,862
                                                     -------------       ------------
                                                           942,505            924,903
   Treasury shares, at cost:  1996--239,674;
       1995--1,320.................................         (5,020)               (30)
   Unearned compensation...........................           (824)            (1,433)
                                                     -------------       ------------
       Total common stockholders' equity...........        936,661            923,440

   Preferred stock.................................        168,085            168,085

   Long-term debt..................................        827,242            853,904
                                                     -------------       ------------
                                                         1,931,988          1,945,429
                                                     -------------       ------------

CURRENT LIABILITIES:
   Short-term debt..................................        81,187             63,154
   Long-term debt due within one year...............        27,244              1,485
   Variable rate demand bonds.......................        86,500             86,500
   Accounts payable.................................        50,694             64,056
   Taxes accrued....................................        12,396              4,802
   Interest accrued.................................        21,336             16,355
   Dividends declared...............................        23,288             23,426
   Current capital lease obligation.................        12,456             12,604
   Deferred income taxes, net.......................         5,438                 --
   Other............................................        31,314             33,817
                                                     -------------       ------------
                                                           351,853            306,199
                                                     -------------       ------------

DEFERRED CREDITS AND OTHER LIABILITIES:
   Deferred income taxes, net.......................       518,785            519,597
   Deferred investment tax credits..................        43,141             45,061
   Long-term capital lease obligation...............        21,711             20,768
   Other............................................        30,633             29,631
                                                     -------------       ------------
                                                           614,270            615,057
                                                     -------------       ------------
TOTAL CAPITALIZATION AND LIABILITIES                    $2,898,111         $2,866,685
                                                     =============       ============
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

                                      -3-
<PAGE>
                         DELMARVA POWER & LIGHT COMPANY
                         ------------------------------
                       CONSOLIDATED STATEMENTS OF INCOME
                             (Dollars in Thousands)
                                  (Unaudited)
                                  -----------

<TABLE>
<CAPTION>
                                                          Three Months Ended          Nine Months Ended
                                                             September 30                September 30
                                                         ---------------------      ---------------------
                                                            1996        1995           1996        1995
                                                         ---------   ---------      ---------   ---------
<S>                                                      <C>         <C>            <C>         <C>
OPERATING REVENUES
 Electric...........................................      $277,504    $278,123       $752,415    $685,891
 Gas................................................        13,852       4,942         82,164      68,002
                                                         ---------   ---------      ---------   ---------
                                                           291,356     283,065        834,579     753,893
                                                         ---------   ---------      ---------   ---------

OPERATING EXPENSES
 Electric fuel and purchased energy.................        90,768      77,122        244,593     207,810
 Gas purchased......................................         7,280         169         43,844      35,935
 Purchased electric capacity........................         8,194      15,647         25,147      18,384
 Operation and maintenance..........................        63,717      60,985        191,449     172,978
 Depreciation.......................................        30,861      29,309         91,435      83,550
 Taxes other than income taxes......................        11,092      10,411         32,218      29,310
 Income taxes.......................................        25,181      28,462         62,547      62,536
                                                         ---------   ---------      ---------   ---------
                                                           237,093     222,105        691,233     610,503
                                                         ---------   ---------      ---------   ---------
OPERATING INCOME....................................        54,263      60,960        143,346     143,390
                                                         ---------   ---------      ---------   ---------

OTHER INCOME
 Nonutility Subsidiaries
  Revenues and gains................................        13,955       9,329         42,194      34,785
  Expenses including interest and income taxes......       (13,517)     (9,373)       (39,105)    (32,340)
                                                         ---------   ---------      ---------   ---------
      Net earnings of nonutility subsidiaries.......           438         (44)         3,089       2,445
 Allowance for equity funds used during
   construction.....................................           293          91            774         462
 Other income, net of income taxes..................          (893)       (267)        (1,202)        381
                                                         ---------   ---------      ---------   ---------
                                                              (162)       (220)         2,661       3,288
                                                         ---------   ---------      ---------   ---------
INCOME BEFORE UTILITY INTEREST CHARGES..............        54,101      60,740        146,007     146,678
                                                         ---------   ---------      ---------   ---------

UTILITY INTEREST CHARGES
 Interest expense...................................        17,857      18,288         53,589      50,460
 Allowance for borrowed funds used during
   construction.....................................          (791)       (262)        (2,085)     (1,348)
                                                         ---------   ---------      ---------   ---------
                                                            17,066      18,026         51,504      49,112
                                                         ---------   ---------      ---------   ---------

NET INCOME..........................................        37,035      42,714         94,503      97,566
DIVIDENDS ON PREFERRED STOCK........................         2,430       2,476          7,293       7,477
                                                         ---------   ---------      ---------   ---------
EARNINGS APPLICABLE TO COMMON STOCK.................       $34,605     $40,238        $87,210     $90,089
                                                         =========   =========      =========   =========

COMMON STOCK
 Average shares outstanding (000)...................        60,667      60,372         60,709      60,073
 Earnings per average share.........................         $0.57       $0.67          $1.44       $1.50
 Dividends declared per share.......................     $0.38 1/2   $0.38 1/2      $1.15 1/2   $1.15 1/2
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

                                     - 4 -
<PAGE>
                         DELMARVA POWER & LIGHT COMPANY
                         ------------------------------
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)
                                  (Unaudited)
                                  -----------
<TABLE>
<CAPTION>
                                                                     Nine Months Ended
                                                                        September 30
                                                                   ----------------------
                                                                     1996          1995
                                                                   --------      --------
<S>                                                                <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income.................................................     $94,503       $97,566
    Adjustments to reconcile net income to
      net cash provided by operating activities:
      Depreciation and amortization............................      95,508        89,872
      Allowance for equity funds used during construction......        (774)         (462)
      Investment tax credit adjustments, net...................      (1,920)       (1,950)
      Deferred income taxes, net...............................      20,293         6,664
      Net change in :
           Accounts receivable.................................      (3,864)       (5,768)
           Inventories.........................................        (693)       20,090
           Accounts payable....................................     (13,362)       (2,603)
           Other current assets & liabilities*.................      (6,488)        9,859
      Other, net...............................................      (5,540)       (3,229)
                                                                   --------      --------
Net cash provided by operating activities......................     177,663       210,039
                                                                   --------      --------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Construction expenditures, excluding allowance for funds
      used during construction.................................     (98,274)      (87,961)
    Allowance for borrowed funds used during construction......      (2,085)       (1,348)
    Acquisition of COPCO, net of cash acquired.................          --      (156,987)
    Investment in subsidiary projects and operations...........      (6,790)       (2,348)
    Decrease in bond proceeds held in trust funds..............       5,526         2,626
    Deposits to nuclear decommissioning trust funds............      (2,825)       (2,199)
    Other, net.................................................      (4,810)        1,970
                                                                   --------      --------
Net cash used by investing activities..........................    (109,258)     (246,247)
                                                                   --------      --------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Dividends:   Common........................................     (69,968)      (68,988)
                 Preferred.....................................      (7,428)       (7,319)
    Issuance of common stock...................................          50        18,628
    Purchase of common stock...................................      (4,599)       (1,253)
    Issuance of long-term debt.................................          --       125,800
    Retirement of long-term debt...............................        (939)         (862)
    Issuance of variable rate demand bonds.....................          --        15,000
    Principal portion of capital lease payments................      (4,073)       (6,322)
    Net change in term loan....................................          --       (45,000)
    Net change in short-term debt .............................      18,033        20,353
    Cost of issuances..........................................        (152)       (1,491)
                                                                   --------      --------
Net cash provided/(used) by financing activities...............     (69,076)       48,546
                                                                   --------      --------
Net change in cash and cash equivalents........................        (671)       12,338
Cash and cash equivalents at beginning of period...............      28,951        25,029
                                                                   --------      --------
Cash and cash equivalents at end of period.....................     $28,280       $37,367
                                                                   ========      ========
</TABLE>

*Other than debt classified as current and current deferred income taxes.

See accompanying Notes to Consolidated Financial Statements.

                                      -5-
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------


1.  INTERIM FINANCIAL STATEMENTS
    ----------------------------

The consolidated financial statements include the accounts of the Company 
and its wholly-owned subsidiaries.  The statements reflect all adjustments 
necessary in the opinion of the Company for a fair presentation of interim 
results.  They should be read in conjunction with the Company's 1995 Annual 
Report to Stockholders, the Company's Reports on Form 10-Q for the first
and second quarters of 1996, and Part II of this Report on Form 10-Q for 
additional relevant information.


2.  PURCHASE OF CONOWINGO POWER COMPANY
    -----------------------------------

As previously disclosed in Note 4 to the Consolidated Financial Statements 
of the Company's 1995 Annual Report to Stockholders, on June 19, 1995, the
Company acquired Conowingo Power Company (COPCO), which was merged into the 
Company and now is being operated as the Conowingo District.  Operating 
results of the Conowingo District after June 19, 1995 are included in the 
Company's Consolidated Statements of Income.


3.  PENDING MERGER WITH ATLANTIC ENERGY, INC.
    -----------------------------------------

As previously reported in Note 3 to the Consolidated Financial Statements 
of the Company's Report on Form 10-Q for the second quarter of 1996, in
August 1996, the Company, Atlantic Energy, Inc., a New Jersey corporation 
headquartered in Egg Harbor Township, New Jersey (AEI), DS, Inc., a 
Delaware corporation which has been newly formed to accomplish this 
transaction, and DS Sub, Inc., a newly-formed Delaware corporation and a 
wholly-owned subsidiary of DS, Inc. (DS Sub), entered into an Agreement and 
Plan of Merger (the Merger Agreement), providing for a business combination 
of the Company and AEI as peer firms in a merger of equals (the 
Transaction).  As a result of the Transaction, DS, Inc. will become the 
holding company of the combined enterprise and will be registered under the 
Public Utility Holding Company Act of 1935, as amended.  The Transaction is 
expected to close shortly after all of the conditions to the consummation 
of the Transaction, including obtaining applicable regulatory approvals, 
are met or waived.  The regulatory approval process is expected to take 
approximately 12 to 18 months from the signing of the Merger Agreement.

                                      -6-
<PAGE>
4.  SALEM NUCLEAR GENERATING STATION
    --------------------------------

The Company owns 7.41% of Salem Nuclear Generating Station (Salem), which 
consists of two pressurized water nuclear reactors (PWR) and is operated by 
Public Service Electric & Gas Company (PSE&G).  As of September 30, 1996, 
the Company's net investment in plant in service for Salem was
approximately $56 million for Unit 1 and $59 million for Unit 2, including 
common plant allocated between the two units.  Each unit represents 
approximately 2% of the Company's total assets and approximately 3% of the
Company's installed electric generating capacity.

Salem Units 1 and 2 were removed from operation by PSE&G on May 16, 1995, 
and June 7, 1995, respectively, due to operational problems and maintenance 
concerns.  Their return dates are subject to completion of the requirements 
of their respective restart plans to the satisfaction of PSE&G and the 
Nuclear Regulatory Commission (NRC), which encompasses a substantial review 
and improvement of personnel, process, and equipment issues.

With respect to Unit 1, PSE&G informed the Company in early 1996 that 
inspections of the steam generators using a new testing technology 
indicated degradation in a significant number of tubes.  After evaluating 
several options, in May 1996 replacement steam generators from the 
unfinished Seabrook Unit 2 nuclear power plant in New Hampshire were 
purchased from Northeast Utilities for installation in Salem Unit 1.  The 
replacement steam generators arrived on site in October 1996 and are 
scheduled for installation by year-end 1996.  By using these steam 
generators, PSE&G expects to return Unit 1 to service in mid-1997.  The 
Company's share of the costs to be capitalized for the steam generators,
including installation, will range from approximately $11 million to $13 
million.

With respect to Unit 2, PSE&G also informed the Company in early 1996 that 
inspections of the steam generators using the new testing technology 
confirmed that the condition of the generators is within current repair 
limits.  On July 22, 1996, PSE&G announced that although substantial 
progress has been made in upgrading Unit 2's 46 major systems, some of the
originally scheduled work, along with additional work that had been 
identified since, remained to be completed and that the outage at Unit 2 
would continue well into the fourth quarter of 1996.  PSE&G recently advised
the Company that Unit 2 currently is expected to return to service early
in the first quarter of 1997.

In 1995, the Company incurred higher than expected operation and 
maintenance costs at Salem of approximately $5 million, which were expensed 
as incurred.  For the nine-month period ended September 30, 1996, the 
Company incurred and expensed higher than expected operation and 
maintenance costs at Salem of approximately $8 million.

                                      -7-
<PAGE>
The Company incurs replacement power costs while the units are out of
service of approximately $750,000 per month, per unit.  Such amounts vary, 
however, depending on the cost and availability of other Company-owned 
generation and the cost of purchased energy.  Replacement power costs 
typically are not incurred for routine refueling and maintenance outages, 
and the recovery of replacement power costs is subject to approval by the 
regulatory commissions having jurisdiction over the Company.  From the 
inception of the Salem unit outages through September 30, 1996, 
approximately one-half of the current estimated replacement power costs of 
$18 million has been expensed and the remaining portion has been deferred 
on the Company's Consolidated Balance Sheet in expectation of future
recovery.

The actual costs to be incurred by the Company may vary from the foregoing 
estimates, since the periods projected by PSE&G during which the Salem 
units will be out of service, the extent of the maintenance that will be 
required, and the costs of replacement power and the extent of its recovery 
may be different from those set forth above.

In May 1996, the Company filed an application with the Virginia State 
Corporation Commission (VSCC) for increased fuel rates effective July 1996.  
In June 1996, the Company filed an application with the Maryland Public 
Service Commission (MPSC) for increased fuel rates effective August 1996.  
In both filings, the Company proposed that one-half of the replacement 
power costs associated with the Salem outage be permitted on an interim 
basis until a full review of the outage is made at a future time.  The VSCC 
and MPSC approved the Company's filings, with rates subject to refund.

In October 1996, the Company filed a proposal with the Delaware Public 
Service Commission (DPSC) to address the recovery of replacement power 
costs.  In that filing, the Company asserted a belief that it should be 
permitted to recover all replacement power costs associated with this 
outage, and requested an interim treatment which would permit recovery of 
approximately 50% of replacement power costs, beginning in January 1997, 
until the DPSC renders a final decision on this issue.  The Company's
filing also provides that any proceeds from litigation concerning 
replacement power costs will be credited to customers, net of litigation 
costs, if full recovery is authorized by the DPSC.  The Company expects a 
decision on the requested interim treatment by year-end.

On February 27, 1996, the co-owners of Salem, including the Company, filed 
a complaint in the United States District Court for the District of New 
Jersey against Westinghouse Electric Corporation (Westinghouse), the 
designer and manufacturer of the Salem steam generators.  The complaint, 
which seeks to recover from Westinghouse the costs associated with and 
resulting from the cracks discovered in Salem's steam generators and with
replacing such steam generators, alleges violations of federal and New 
Jersey Racketeer Influenced and Corrupt Organizations Acts, fraud, 
negligent misrepresentation, and breach of contract.  The Salem co-owners 
contend that the recently-discovered degradation of the steam generators 
will prevent the steam generators from operating for a design life of 40 
years.  The lawsuit asserts that the Salem steam generators require 
replacement and these costs should be borne by Westinghouse and not the 
customers and shareholders of the Salem co-owners.  Westinghouse filed an 
answer and a $2.5 million counterclaim for unpaid work on April 30, 1996.  
The Company cannot predict the outcome of this lawsuit

                                      -8-
<PAGE>
On March 5, 1996, the Company and PECO Energy Company (PECO) filed a
complaint in the United States District Court for the Eastern District of 
Pennsylvania against Public Service Enterprise Group, Inc. (Enterprise) and 
PSE&G.  The lawsuit alleges that the defendants failed to heed numerous 
citations, warnings, notices of violations, and fines by the NRC as well as 
repeated warnings from the Institute of Nuclear Power Operations about 
performance, safety, and management problems at Salem and to take 
appropriate corrective action.  The suit contends that as a result of these 
actions and omissions, the Salem units were forced to shut down in 1995.  
The suit asks for compensatory damages for breach of contract, negligence, 
and punitive damages, in amounts to be specified.  The Company cannot 
predict the outcome of this lawsuit.  A similar complaint has been filed 
against Enterprise and PSE&G in the Superior Court of New Jersey by the 
remaining co-owner, Atlantic City Electric Company.


5.  PREFERRED CAPITAL SECURITIES OF A WHOLLY-OWNED TRUST
    ----------------------------------------------------

In October 1996, a wholly-owned trust (Delmarva Power Financing I) formed 
for the purpose of issuing securities, issued $70 million of 8.125% 
preferred capital securities (representing 2,800,000 preferred capital 
securities at $25 per security).  All or a portion of the preferred capital 
securities, which are subject to mandatory redemption in 2036, may be 
redeemed on or after September 30, 2001.  The wholly-owned trust loaned the 
proceeds to the Company, which used $63,813,000 of the total proceeds in 
October 1996 to purchase $63,382,700 (par value) of its preferred stock as 
follows: $1,013,400 of the 3.70% series ($100 par value); $2,012,600 of the 
4% series ($100 par value); $2,459,600 of the 4.2% series ($100 par value); 
$2,154,000 of the 4.28% series ($100 par value), $3,042,900 of the 4.56% 
series ($100 par value); $3,147,700 of the 5% series ($100 par value), 
$16,500,000 of the 6.75% series ($100 par value); $32,087,500 of the 7.75% 
series ($25 par value), and $965,000 of the Adjustable Rate series ($100 
par value).  By December 1996, the Company plans to use the remaining 
proceeds of $6,187,000 and cash from short-term debt to fund the redemption 
of its entire 7.52% preferred stock series which has a total par value of 
$15,000,000.


6.  CONTINGENCIES
    -------------

Nuclear Insurance
-----------------

In the event of an incident at any commercial nuclear power plant in the 
United States, the Company could be assessed for a portion of any third-
party claims associated with the incident.  Under the provisions of the 
Price Anderson Act, if third-party claims relating to such an incident 
exceed $200 million (the amount of primary insurance), the Company could 
be assessed up to $23.7 million for third-party claims.  In addition, 
Congress could impose a revenue-raising measure on the nuclear power 
industry to pay such claims.

                                      -9-
<PAGE>
The co-owners of the Peach Bottom Atomic Power Station (Peach Bottom) and
Salem maintain property insurance coverage in the aggregate amount of 
$2.8 billion for each unit for loss or damage to the units, including 
coverage for decontamination expense and premature decommissioning.  The 
Company is self-insured, to the extent of its ownership interest, for its 
share of property losses in excess of insurance coverage.  Under the 
terms of the various insurance agreements, the Company could be assessed 
up to $5.4 million in any policy year for losses incurred at nuclear 
plants insured by the insurance companies.

The Company is a member of an industry mutual insurance company, which 
provides replacement power cost coverage in the event of a major 
accidental outage at a nuclear power plant.  The premium for this 
coverage is subject to retrospective assessment for adverse loss 
experience.  The Company's present maximum share of any assessment is 
$1.4 million per year.

The property damage and replacement power policies discussed above do not 
cover the operational problems and maintenance concerns, including the 
steam generator degradation, which caused PSE&G to remove Salem Units 1 
and 2 from operation and to keep the units shut down.

Environmental Matters
---------------------

As previously disclosed under "Hazardous Substances" on page I-19 of the 
Company's 1995 Annual Report on Form 10-K, the disposal of Company-
generated hazardous substances can result in costs to clean up facilities 
found to be contaminated due to past disposal practices.  The Company is 
currently a potentially responsible party at three federal superfund 
sites and is alleged to be a third-party contributor at three other 
federal superfund sites.  The Company also has two former coal 
gasification sites in Delaware and one former coal gasification site in 
Maryland which are state superfund sites.  The Company is currently 
participating with the States of Delaware and Maryland in evaluating 
these sites to assess the extent of contamination and risk to the 
environment.  As of September 30, 1996, the Company had accrued a 
liability of $2 million representing its estimate of site study and 
cleanup costs for all of its federal and state superfund sites.

Other
-----

The Company is involved in certain other legal and administrative 
proceedings before various courts and governmental agencies concerning 
rates, fuel contracts, tax filings, and other matters.  The Company 
expects that the ultimate disposition of these proceedings will not have 
a material effect on the Company's financial position or results of 
operations.

                                      -10-
<PAGE>
7.  SUPPLEMENTAL CASH FLOW INFORMATION
    ----------------------------------

<TABLE>
<CAPTION>
                                       Nine Months Ended
                                         September 30,
                                     --------------------
(Dollars in Thousands)                 1996        1995
                                     --------    --------
<S>                                  <C>         <C>
Cash paid for
  Interest, net of amounts
     capitalized                       $44,669    $41,673

  Income taxes, net of refunds         $39,226    $64,691
</TABLE>


8.  NONUTILITY SUBSIDIARIES
    -----------------------

The following presents condensed financial information of the Company's 
nonregulated wholly-owned subsidiaries: Delmarva Capital Investments, Inc.; 
Delmarva Energy Company; and Delmarva Industries, Inc.  A subsidiary that 
leases real estate to the Company's utility business, Delmarva Services 
Company, is excluded from these statements since its income is derived from 
intercompany transactions which are eliminated in consolidation.

<TABLE>
<CAPTION>
                                     Three Months Ended          Nine Months Ended
                                        September 30,              September 30,
                                    ---------------------      ---------------------
(Dollars in Thousands)                1996         1995          1996         1995
                                    --------     --------      --------     --------
<S>                                 <C>          <C>           <C>          <C>
Revenues and gains
  Landfill and waste hauling          $3,377       $3,502       $11,235      $10,277
  Operating services                   5,582        5,084        15,807       18,262
  Real estate                          4,376          245        10,450          715
  Leveraged leases                       184          121           501        1,638
  Other revenue                          436          377         4,201        3,893
                                    --------     --------      --------     --------
                                      13,955        9,329        42,194       34,785
                                    --------     --------      --------     --------
Cost and expenses
  Operating expenses                  12,977        9,322        36,855       30,745
  Interest expense, net                  209          124           660          269
  Income taxes                           331          (73)        1,590        1,326
                                    --------     --------      --------     --------
                                      13,517        9,373        39,105       32,340
                                    --------     --------      --------     --------

Net income                            $  438       $  (44)      $ 3,089      $ 2,445
                                    ========     ========      ========     ========

Earnings per share of common
  stock attributed to subsidiaries     $0.01           --         $0.05        $0.04
</TABLE>

                                      -11-
<PAGE>
Pine Grove Landfill, Inc.
-------------------------

One of the Company's indirect subsidiaries, Pine Grove Landfill, Inc.
("Pine Grove"), which owns and operates a solid waste disposal facility in
Pennsylvania, currently has pending before the Pennsylvania Department of 
Environmental Protection an application for expansion of the facility.  In 
August 1996, the Governor of Pennsylvania issued an executive order which 
suspended consideration of all landfill expansion applications in the 
Commonwealth, including Pine Grove's, while state officials re-evaluate
existing regulations.  At this time, it is unknown how long this delay in 
considering expansion applications will continue.  Pine Grove's existing
permitted capacity is limited and, at the 1,000 tons per day maximum Pine 
Grove is allowed to accept for disposal, would be fully utilized in March 
1998.  Management is limiting the intake of waste at the site with the 
intent of extending the life of the facility until March 1999.  Based on 
this March 1999 date, Pine Grove would need to receive its expansion permit 
by May 1998 to avoid a temporary or permanent shutdown.  Management is 
taking additional steps to secure regulatory approval of the expansion.  
However, no assurance can be given that such steps will be successful.

Pine Grove records depletion expense to recognize, in part, the usage of 
certain general facilities at the landfill and the landfill closure 
liability based on the planned landfill capacity, including the additional 
capacity related to the pending expansion permit.  In the event that Pine 
Grove does not receive approval of the expansion permit, Pine Grove may 
expense approximately $10 million (pre-tax) of capitalized costs.

                                      -12-
<PAGE>
                     SELECTED FINANCIAL AND OPERATING DATA
                     -------------------------------------
                             (Dollars in Thousands)


<TABLE>
<CAPTION>
                                                 3 Months Ended                 9 Months Ended
                                                  September 30                   September 30
                                            -------------------------      -------------------------
                                               1996           1995            1996           1995
                                            ----------     ----------      ----------     ----------
<S>                                         <C>            <C>             <C>            <C>
ELECTRIC REVENUES
-----------------

Residential                                   $107,891       $116,374        $297,087       $266,285
Commercial                                      85,057         84,530         220,384        203,278
Industrial                                      42,987         43,538         119,414        116,449
Resale                                          18,765         19,380          52,502         46,050
Other Sales Revenues (1)                        (2,648)           505            (603)         4,447
                                            ----------     ----------      ----------     ----------

Sales Revenues                                 252,052        264,327         688,784        636,509
Interchange Deliveries                          21,573         10,640          52,908         40,442
Miscellaneous Revenues                           3,879          3,156          10,723          8,940
                                            ----------     ----------      ----------     ----------

Total Electric Revenues                       $277,504       $278,123        $752,415       $685,891
                                            ==========      =========      ==========      =========

ELECTRIC SALES
--------------
  (1000 kWh)

Residential                                  1,106,917      1,194,218       3,345,325      2,944,920
Commercial                                   1,122,412      1,114,054       3,061,018      2,823,962
Industrial                                     895,748        909,555       2,520,139      2,512,294
Resale                                         363,723        392,451       1,029,485        928,448
Other sales (2)                                (56,599)       (24,586)       (106,126)       (41,501)
                                            ----------     ----------      ----------     ----------

Total Electric Sales                         3,432,201      3,585,692       9,849,841      9,168,123
                                            ==========      =========      ==========      =========

GAS REVENUES
------------

Firm Sales (1)                                 $11,107         $2,925         $76,503        $61,686
Non-firm Sales, Gas Transportation,
     and Miscellaneous Revenues                  2,745          2,017           5,661          6,316
                                            ----------     ----------      ----------     ----------

Total Gas Revenues                             $13,852         $4,942         $82,164        $68,002
                                            ==========      =========      ==========      =========

GAS SALES AND GAS TRANSPORTED
-----------------------------
  (1000 mcf)

Firm Sales (2)                                   1,377          1,615          12,263         11,340
Non-firm Sales and Gas Transported               1,629          1,302           3,790          3,705
                                            ----------     ----------      ----------     ----------

Total                                            3,006          2,917          16,053         15,045
                                            ==========      =========      ==========      =========



<CAPTION>
                                               September 30, 1996              December 31, 1995
                                            -------------------------      -------------------------
                                                 $              %               $              %
                                            ----------     ----------      ----------     ----------
<S>                                         <C>            <C>             <C>            <C>
CAPITALIZATION

Variable Rate Demand Bonds (3)                 $86,500            4.3         $86,500            4.3
Long-Term Debt                                 827,242           41.0         853,904           42.0
Preferred Stock                                168,085            8.3         168,085            8.3
Common Stockholders' Equity                    936,661           46.4         923,440           45.4

                                            ----------     ----------      ----------     ----------

Total                                       $2,018,488          100.0      $2,031,929          100.0
                                            ==========      =========      ==========      =========
</TABLE>

(1)  Includes unbilled revenues.
(2)  Includes unbilled sales.
(3)  The Company intends to use the bonds as a source of long-term financing
     as discussed in Note 12 to the Consolidated Financial Statements of the
     1995 Annual Report.

                                      -13-
<PAGE>
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                ------------------------------------------------


EARNINGS SUMMARY
----------------

Earnings per share for the third quarter of 1996 were $0.57, a $.10 
decrease compared to 1995.  The decrease was primarily due to cooler summer 
weather which caused electric kilowatt-hour (kWh) sales and revenues to 
decline.  Additional revenues gained in the first half of 1996 from 
increased electricity and gas usage attributable to a colder heating season 
were largely offset by the unfavorable impact of mild weather on electric 
sales in the third quarter.  Earnings per share for the nine months ended 
September 30, 1996 were $1.44, a $0.06 decrease from 1995 which reflects a 
$0.12 decrease in earnings per share due to increased expenses associated 
with the Salem outage discussed in Note 4 to the Consolidated Financial 
Statements.  The decrease in earnings per share attributed to the Salem 
outage was comprised of increases in operation and maintenance expense 
($0.08) and fuel-related costs ($0.04), including replacement power.  
Excluding the Salem outage, earnings rose $0.06 per share primarily due to 
additional revenues from customer growth and the positive net impact of 
weather, partly offset by higher operating expenses.

Operating results from the Conowingo District, which began in June 1995, 
had a minimal impact on earnings, as expected.


UPDATE ON THE COMPANY'S WHOLESALE (RESALE) BUSINESS
---------------------------------------------------

The Company currently provides approximately 200 megawatts (MW) of load to 
Old Dominion Electric Cooperative (ODEC), the Company's largest resale
customer.  In 1995, total revenues from ODEC represented 3.8% of the 
Company's total sales revenues, and non-fuel (base rate) revenues from ODEC
were about $24 million.  On August 16, 1996, ODEC notified the Company that 
it will reduce its load by 60 MW effective September 1, 1998, and will 
further reduce its load to zero effective September 1, 2001. 

ODEC had issued a request for proposals in March 1996 to replace eventually 
ODEC's capacity and energy agreements with its current suppliers.  On July
1, 1996, the Company submitted its proposal to ODEC to continue to serve 
all of the load currently supplied by the Company.  ODEC expects to select 
a supplier by December 1996 for the 60 MW it will cease purchasing under 
its existing contract with the Company, effective September 1, 1998.

If ODEC selects a new electric supplier for some or all the load currently 
supplied by the Company, the decrease in non-fuel revenues would be offset 
partially by purchased capacity costs which otherwise would have been 
incurred.  The Company would continue to receive transmission wheeling 
revenues from ODEC.  Based on these assumptions, the Company estimates that 
earnings per share would decrease by $0.06 to $0.08 if ODEC reduces its 
load by 60 MW and that earnings per share would decrease by an additional 
$0.10 to $0.12 if ODEC further reduces its load to zero.  Any such earnings 
decrease would be mitigated by natural load growth in the Company's service
territory and by any of ODEC's load that the Company may secure through the
bidding process.

                                      -14-
<PAGE>
UPDATE ON THE COMPANY'S RETAIL BUSINESS
---------------------------------------

In March and April 1996, the MPSC and DPSC, respectively, accepted the 
Company's proposal to establish a forum to address changes in the
regulation of the electric utility industry.  The Company's objective is to
work together with the Commissions and other interested parties in order to 
develop a blueprint to move toward increased customer choice; i.e., the 
ability of all retail customers to gain direct access to market-priced 
electricity from the suppliers of their choice.  The forum process is 
addressing issues such as retail wheeling, stranded investment, rate 
redesign, and alternative forms of regulation, such as performance-based 
regulation.  Forum participants are to submit reports to the DPSC and MPSC 
by December 31, 1996, describing the significant issues raised by allowing 
customer choice and providing proposed solutions to those issues.

In June 1996, the Company sponsored a conference in which utility experts 
addressed restructuring issues from a variety of perspectives.  The 
conference was attended by participants of both the Delaware and Maryland 
forums.  Meetings with forum participants in Delaware and Maryland are 
ongoing.

In October 1996, the MPSC issued an order to reopen the issue of retail 
electric competition in Maryland.  In August 1995, the MPSC had determined 
that retail competition was not in the public interest at that time.  The 
MPSC chose to reopen this issue in view of the recent orders of the Federal 
Energy Regulatory Commission on open access transmission at the wholesale 
level and actions by other states concerning retail open access.  In 
consultation with Maryland's electric utilities and other concerned
stakeholders, the MPSC Staff is directed to evaluate regulatory and 
competitive issues facing the electric utility industry, including electric 
retail competition, developments in federal and state regulation, and the 
interests of Maryland's customers and utilities.  The MPSC instructed its
Staff to submit their recommendations by May 31, 1997.  The MPSC plans to 
use "Roundtables" to identify, discuss, and resolve industry issues.  The
MPSC also advised Maryland's four major electric utilities, including the
Company, to be prepared to present unbundled cost studies and model 
unbundled retail service tariffs to their respective Roundtables on or 
before August 1, 1997.

                                      -15-
<PAGE>
ELECTRIC REVENUES AND SALES
---------------------------

Details of the changes in the various components of electric revenues are 
shown below:

<TABLE>
<CAPTION>
                         Increase in Electric Revenues
                      From Comparable Period in Prior Year
                      ------------------------------------
                             (Dollars in Millions)

                                              Three       Nine
                                              Months     Months
                                              ------     ------
          <S>                                 <C>        <C>
          Non-fuel (Base Rate) Revenues
            Retail Sales Volume               $(14.5)    $ 31.2
            Resale Sales Volume                 (1.6)       1.2
          Fuel Revenues                          3.8       19.9
          Interchange Delivery Revenues         10.9       12.5
          Other Operating Revenues               0.8        1.7
                                              ------     ------
               Total                          $ (0.6)    $ 66.5
                                              ======     ======
</TABLE>


Non-fuel revenues from retail sales volume decreased $14.5 million for the 
three-month period due to a 3.9% decrease in retail kWh sales which was 
mainly due to cooler summer weather.  For the nine-month period, non-fuel 
revenues from retail sales volume increased $31.2 million primarily because 
electric sales to the Conowingo District began June 19, 1995.  A 2.2% 
increase in retail sales excluding the Conowingo District also contributed 
to the $31.2 million non-fuel revenue increase.  This sales increase 
resulted from customer growth and the positive net effect of weather.

Non-fuel revenues from resale sales volume decreased $1.6 million for the 
three-month period due to a 7.3% decrease in resale kWh sales which 
resulted from the cooler summer weather. Non-fuel revenues from resale 
sales volume increased $1.2 million for the nine-month period due to a 
10.9% kWh sales increase which mainly resulted from the Company providing a 
part of the Delaware municipalities' load previously served by other
suppliers.  Changes in resale sales have less impact on non-fuel revenues 
than changes in retail sales, since average resale non-fuel rates are 
significantly lower than average retail non-fuel rates.

Electric fuel costs billed to customers, or fuel revenues, generally do not 
affect net income, since the expense recognized as fuel costs is adjusted 
to match the fuel revenues.  The amount of under- or over-recovered fuel 
costs is deferred until it is subsequently recovered from or returned to 
utility customers.  Fuel revenues increased $3.8 million for the three- 
month period due to higher average fuel rates and increased $19.9 million 
for the nine-month period primarily due to higher sales.

                                      -16-
<PAGE>
Interchange delivery revenues are reflected in the calculation of rates
charged to customers under fuel adjustment clauses and, thus, generally do 
not affect net income.  Interchange delivery revenues benefit customers by 
reducing the effective cost of fuel billed to customers.  Interchange 
delivery revenues increased $10.9 million and $12.5 million for the three-
month period and nine-month period, respectively.  The revenue increases in 
both periods were primarily attributed to increased purchases of cheaper 
power in the third quarter which enabled the Company to sell more of its 
peaking unit output to utilities in the Pennsylvania-New Jersey-Maryland 
Interconnection Association (PJM).


GAS REVENUES, SALES, AND TRANSPORTATION
---------------------------------------

For the three-month period, total gas revenues increased $8.9 million in 
1996, primarily because in July of last year, $6.8 million of over-
recovered gas costs had been refunded to customers.  For the nine-month 
period, total gas revenues increased $14.2 million due to a $6.3 million 
increase in non-fuel revenues and a $7.9 million increase in fuel revenues.
Non-fuel revenues increased $6.3 million mainly due to a colder heating 
season which resulted in a 6.7% increase in total gas sold and transported.  
Fuel revenues increased $7.9 million primarily due to the prior year
customer refund.


ELECTRIC FUEL AND PURCHASED ENERGY EXPENSES
-------------------------------------------

The components of the changes in electric fuel and purchased energy 
expenses are shown in the table below:

<TABLE>
<CAPTION>
                    Increase (Decrease) in Electric Fuel and
              Purchased Energy From Comparable Period in Prior Year
              -----------------------------------------------------
                              (Dollars in Millions)

                                               Three         Nine
                                               Months       Months
                                               ------       ------
          <S>                                  <C>          <C>
          Higher Average Cost of Electric
            Fuel and Purchased Energy          $  3.4       $ 41.9
          Increased kWh Output                    8.5         20.9
          Deferral of Fuel Costs                  1.7        (26.0)
                                               ------       ------
                Total                          $ 13.6       $ 36.8
                                               ======       ======
</TABLE>

For the three-month period, expenses rose $3.4 million due to a higher 
average cost per kWh of output, which was related primarily to higher gas 
commodity prices partially offset by lower prices for purchased energy.  
The $8.5 million increase associated with higher kWh output resulted from 
increased purchases of cheaper power which enabled the Company to sell more 
of its peaking unit output to utilities in the PJM.

                                      -17-
<PAGE>
For the nine-month period, costs increased $41.9 million primarily due to
higher gas and oil prices and increased purchases of energy at a higher 
average price which was mitigated by lower prices in the third quarter.  
The Company purchased more energy during the nine-month period primarily 
due to higher demand and lower overall availability of its generating 
units, including the Salem units.  The $20.9 million increase that resulted 
from greater kWh output reflects stronger sales demand and increased 
interchange sales during the third quarter.

Expenses increased $1.7 million and decreased $26 million for the three- 
and nine-month periods, respectively, due to variances in fuel costs 
deferred and subsequently recovered or expensed under the Company's fuel
adjustment clauses.

The kWh output required to serve load within the Company's service
territory is substantially equivalent to total output less interchange 
deliveries.  For the nine months ended September 30, 1996, the Company's 
output for load within its service territory was provided by 36% coal 
generation, 26% net purchased power, 29% oil and gas generation, and 9% 
nuclear generation.


GAS PURCHASED
-------------

The cost of gas purchased increased $7.1 million and $7.9 million for the 
three-month and nine-month periods, respectively, primarily due to higher 
gas commodity prices and the $6.8 million refund in July 1995 of over-
recovered fuel costs.  The $6.8 million refund reduced the cost of gas 
purchased in 1995 since gas purchased costs are adjusted (reduced) to 
match fuel revenues.


PURCHASED ELECTRIC CAPACITY
---------------------------

Compared to 1995, purchased electric capacity decreased $7.5 million in 
the third quarter of 1996 primarily due to higher costs incurred last year 
under an interim purchased power contract with PECO, which was effective 
from June 19, 1995 to February 1, 1996 and was associated with the 
Company's purchase of COPCO.  Pursuant to agreements made in conjunction
with the COPCO purchase, in February 1996, a long-term contract with 
lower-priced capacity replaced the interim contract.  For the nine-month 
period, purchased electric capacity increased $6.7 million due to the 
absence of the aforementioned purchased power contracts during the first 
half of 1995, partially offset by lower-priced capacity purchased under 
the long-term contract during the third quarter.

                                      -18-
<PAGE>
OPERATION, MAINTENANCE, AND DEPRECIATION EXPENSES
-------------------------------------------------

Operation and maintenance expense increased $2.7 million and $18.5 million 
for the three- and nine-month periods, respectively.  During the third 
quarter of 1996, the higher expense resulted from increases in costs 
related to the Salem outage ($1.4 million) and various other expenses ($1.3 
million).  The year-to-date increase was due to higher costs related to the 
Salem outage ($7.7 million), the addition of the Conowingo District ($2.4 
million), and various other expenses ($8.4 million), none of which were 
materially significant individually.

Depreciation expense increased $1.6 million and $7.9 million for the three- 
and nine-month periods, respectively, primarily due to higher utility plant
balances including those of the Conowingo District.


UTILITY FINANCING COSTS--INTEREST EXPENSE
-----------------------------------------

Interest expense increased $3.1 million for the nine-month period 
primarily due to long-term debt issued in June 1996 to finance the COPCO 
acquisition and higher average short-term debt balances.  These increases 
were partly offset by decreased interest expense on deferred energy costs.


LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

Cash flows from operating activities were $177.7 million for the nine 
months ended September 30, 1996 in comparison to $210.0 million for the 
same period last year.  The $32.3 million decrease reflects three major 
factors.  First, the increase in electric fuel and purchased energy costs 
exceeded the increase in electric fuel revenues.  Second, cash required for 
fuel inventories in 1995 was minimized by a high inventory level at the 
beginning of 1995.  Third, lower income tax payments partly offset the 
effect of the first two items.  Short-term debt increased $18.0 million 
mainly due to the decrease in cash flows from operating activities.

On October 31, 1996, the Company filed for an increase in Delaware electric 
retail fuel rates.  Electric fuel rates in the Company's other regulatory
jurisdictions were raised beginning in May 1996.

For the first nine months of 1996, utility construction expenditures were 
$98 million compared to $88 million for the same period last year.  
Internally-generated funds (net cash provided by operating activities less 
common and preferred dividends) provided 102% and 152% of the cash 
required for construction during the nine months ended September 30, 1996
and 1995, respectively.

                                      -19-
<PAGE>
Cash flows from investing and financing activities for last year's nine-
month period reflected the Company's $157.0 million payment to acquire
COPCO.  The acquisition was financed primarily by $125.8 million of long-
term debt, and the balance of funds was provided by short-term debt.  Last 
year's cash flows from financing activities also include a $45 million term
loan repayment and $18.6 million of cash raised from common stock issued 
through the Dividend Reinvestment and Common Share Purchase Plan (DRIP).  
In 1996, no cash has been raised through the DRIP since the Company has 
obtained common shares for the DRIP through open market purchases.

Long-term debt due within one year increased from $1.5 million as of 
December 31, 1995 to $27.2 million as of September 30, 1996 primarily 
because the Company's $25 million, 6 3/8% Series First Mortgage Bond is
scheduled to mature on September 1, 1997.

In October 1996, a wholly-owned trust of the Company issued $70 million of 
mandatorily redeemable preferred securities.  The wholly-owned trust 
loaned the proceeds to the Company which used the funds in part to 
purchase $63,382,700 (par value) of its preferred stock.  This transaction 
will lower the after-tax cost of the Company's total capital and is not
expected to affect the Company's credit rating.  Refer to Note 5 to the
Consolidated Financial Statements for further details.


RATIO OF EARNINGS TO FIXED CHARGES
----------------------------------

The Company's ratios of earnings to fixed charges under the Securities and 
Exchange Commission (SEC) Method are shown below:

<TABLE>
<CAPTION>
                                            12 Months
                                              Ended                Year Ended December 31,
                                          September 30,  -------------------------------------------
                                              1996        1995      1994     1993     1992     1991
                                          -------------  ------    ------   ------   ------   ------
<S>                                       <C>            <C>       <C>      <C>      <C>      <C>
Ratio of Earnings to Fixed Charges
        (SEC Method)..................        3.33         3.54     3.49     3.47     3.03     2.58
Ratio of Earnings to Fixed Charges
        (SEC Method) as Adjusted......                              3.74              2.78
</TABLE>

Adjusted ratios exclude the following pre-tax amounts: for 1994, a $17.5 
million early retirement charge and, for 1992, an $18.5 million gain from 
the Company's share of the settlement of a lawsuit against PECO in
connection with the shutdown of Peach Bottom.

Under the SEC Method, earnings, including Allowance for Funds Used During 
Construction (AFUDC), have been computed by adding income taxes and fixed 
charges to net income.  Fixed charges include gross interest expense and 
the estimated interest component of rentals.  Net income and income taxes 
related to the cumulative effect of a change in accounting for unbilled 
revenues recorded in 1991 are excluded from the computation of these 
ratios.

                                      -20-
<PAGE>
NONUTILITY SUBSIDIARIES
-----------------------

Earnings per share of nonutility subsidiaries were $0.05 and $0.04 for the 
nine-month periods ended September 30, 1996 and 1995.  Both nine-month 
periods reflect earnings primarily from the recovery of previously written-
off joint venture assets and the operation of power plants for other 
parties.  The prior nine-month period also reflects an operating loss for 
the solid waste group and income from the receipt of an additional payment 
related to the sale of a leveraged lease interest in a previous year.

As discussed in Note 8 to the Consolidated Financial Statements, it is 
uncertain that a permit to expand the Pine Grove landfill will be received.  
Pine Grove records depletion expense to recognize, in part, the usage of 
certain general facilities at the landfill and the landfill closure 
liability based on the planned landfill capacity, including the additional 
capacity related to the pending expansion permit.  In the event that Pine 
Grove does not receive approval of the expansion permit, Pine Grove may 
expense approximately $10 million (pre-tax) of capitalized costs.

                                      -21-
<PAGE>
                           PART II. OTHER INFORMATION
                           --------------------------


Item 1. Legal Proceedings
-------------------------

Salem Nuclear Generating Station
--------------------------------

Refer to Note 4 to the Consolidated Financial Statements for information on
the complaints filed by the Company against PSE&G and Westinghouse related 
to Salem.


Item 5. Other Information
-------------------------

Pending Merger with Atlantic Energy, Inc.
-----------------------------------------

Refer to Note 3 to the Consolidated Financial Statements for information 
regarding an Agreement and Plan of Merger with Atlantic Energy, Inc.

Salem Nuclear Generating Station
--------------------------------

Refer to Note 4 to the Consolidated Financial Statements and Management's
Discussion and Analysis of Financial Condition and Results of Operations 
for an update on matters concerning the current Salem outage.

PSE&G has informed the Company that in August 1996, the NRC conducted an 
inspection of the Physical Security Program for Salem and Hope Creek and 
identified six apparent violations which are being considered for escalated 
enforcement.  These apparent violations include the failure to: (1) control 
photo badge key cards; (2) properly search an individual prior to entrance 
to the protected area; (3) notify the nuclear shift supervisor of a 
potential threat event; (4) deactivate photo badges for individuals who no 
longer require site access; (5) complete training for security supervisors 
prior to assignment of duties; and (6) test an intrusion detection system 
in accordance with procedures.  On September 3, 1996, PSE&G met with the 
NRC to discuss these issues and provide specific corrective actions.  On 
November 14, 1996, an enforcement conference will be held to address these 
apparent violations.  PSE&G has advised the Company that it cannot predict 
what other actions the NRC may take on this matter.


Item 6.  Exhibits and Reports on Form 8-K
-----------------------------------------

Exhibits
--------

Exhibit 12, Computation of Ratio of Earnings to Fixed Charges.
Exhibit 27, Financial Data Schedule.

                                      -22-
<PAGE>
Reports on Form 8-K
-------------------

The Company did not file any Reports on Form 8-K during the third quarter 
of 1996 in addition to those listed in the Company's Report on Form 10-Q
for the period ended June 30, 1996.

                                      -23-
<PAGE>
                                   SIGNATURE


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 thereunto duly authorized.




                                       Delmarva Power & Light Company
                                       ------------------------------
                                                (Registrant)




Date:  November 14, 1996               /s/ B. S. Graham
       -----------------               --------------------------------------
                                       B. S. Graham, Senior Vice President,
                                       Treasurer, and Chief Financial Officer

                                      -24-
<PAGE>
                                 EXHIBIT INDEX





                                                         Exhibit      Page
                                                         Number      Number
                                                         -------     ------

Computation of ratio of earnings to fixed charges          12          26

Financial Data Schedule                                    27          27

                                      -25-