|PEPCO HOLDINGS, INC.
SUPPLEMENTAL BENEFIT PLAN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                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|Introduction
            On February 17, 1983, the Potomac Electric Power Company ("Pepco") established the Supplemental Benefit Plan (the "Pepco plan")to provide for the payment of a retirement supplement to executives eligible to participate in the plan or their beneficiaries in amounts equal to any reduction of total retirement benefits that otherwise would be payable under the Pepco General Retirement Plan to the extent such reduction is attributable to A) the benefit limitation provisions of federal law and regulations; or B) the exclusion of deferred compensation from the compensation base used in determining retirement benefits under the General Retirement Plan, as required under applicable law.  The Pepco plan was amended from time to time thereafter.  On March 28, 2002, further amendments were authorized to the Pepco plan to recognize the intent to consummate a transaction (the "Merger") by which Pepco and Conectiv would become wholly owned subsidiaries of Pepco Holdings, Inc. (the "Company" or "Pepco Holdings") and, for the near term future, to maintain for the benefit of the executives of Pepco Holdings and its subsidiaries, the level of benefits provided to such executives by their respective employers prior to the Merger.  Such amendments include  authorization to name Pepco Holdings as the sponsor of the Pepco plan; to change the name of the Pepco plan to reflect the change in plan sponsorship; to amend the section of the plan relating to eligibility to participate;  and to delete all references to Pepco's General Retirement Plan, and to replace all such references to the Pepco General Retirement Plan with "the principal defined benefit pension plan of Pepco Holdings or one of its subsidiaries in which the employee participates".   Therefore, the Pepco plan has been amended and is restated herein and is now known as the Pepco Holdings, Inc. Supplemental Benefit Plan. (the "Plan").
I.            Definitions:
            1.1            Applicable Form of Benefit  -  The type of life annuity which will be provided to a Participant receiving benefits under this Plan. The Plan benefit to be paid to a Participant under this Plan shall be paid in the annuity form elected by the Participant with respect to the Participant's benefits under the Applicable Defined Benefit Pension Plan, except that the variable annuity option under the Pepco General Retirement Plan is not an annuity form available for payment of benefits under this Plan.  If a Participant does elect the variable annuity option under the Pepco General Retirement Plan, benefits under this Plan will be paid in the form applicable to the component of the Participant's accrued benefit under the General Retirement Plan which is not payable in the variable annuity form.
            1.2            Applicable Defined Benefit Pension Plan  - The principal defined benefit pension plan of Pepco Holdings or one of its subsidiaries in which the Participant participates.  In the case of Participants who participate in Pepco's General Retirement Plan, such term shall also include participation in the Pepco Exempt Surviving Spouse Welfare Plan.
            1.3            Code  -  The Internal Revenue Code of 1986, as amended from time to time.
            1.4            Committee  -  The Human Resources Committee of the Board of Directors of the Company.
            1.5            Company  -  Pepco Holdings, Inc., or its successor.
            1.6            Participant  -  An employee who has been so designated as described in Section II.
            1.7            Plan - shall mean the Pepco Holdings. Inc. Supplemental Benefit Plan.
            Any term which is not defined in this section or any other section of the Plan shall have the same meaning as that term has under the Applicable Defined Benefit Pension Plan.
II.            Eligibility and Participation
            Any employee of any Pepco Holdings subsidiary as designated by the Chief Executive Officer of Pepco Holdings (the Chief Executive Officer to be designated by the Board) shall be eligible to participate in this Plan.
III.            Supplemental Benefit
            3.1  -  This Section defines the amount of retirement income (the "Supplemental Benefit") which will be paid to a Participant under this Plan. The amount of retirement benefits payable from this Plan in the Applicable Form of Benefit shall be the difference, if any, between (i) the amount of the benefits to which such Participant would be entitled under the provisions of the Applicable Defined Benefit Pension Plan  and the Conectiv Supplemental Executive Retirement Plan, if applicable (expressed in the Applicable Form of Benefit) (1) had the amount of the benefits under such plan not been otherwise reduced due to the limitations imposed by Section 415 of the Internal Revenue Code, (2) had any dollar limitation under the Internal Revenue Code on the amount of compensation that may be considered in determining benefits under such plan not been imposed, and (3) had the deferred compensation earned by such Participant which was excluded from the Participant's compensation base used in determining retirement benefits under such plan been included in such compensation base, and (ii) the amount of benefits, if any, to which such Participant is otherwise entitled under the Applicable Defined Benefit Pension Plan. To the extent that a cost of living adjustment is made to the benefits payable under the Applicable Defined Benefit Pension Plan, a comparable and proportionate adjustment will be made to the benefits payable hereunder.
            3.2            Vesting
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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

|3.3            Supplemental Benefit Account                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
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|3.4            Time and Form of Payment of Supplemental Retirement Benefit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
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|3.5            Death Benefits
            Except as provided in Section 1.1, above, the terms of the Applicable Defined Benefit Pension Plan shall govern the timing and form of payment of the Participant's Supplemental Benefit to the surviving spouse upon the Participant's death. Payment of the Supplemental Benefit, if any, to a Participant's surviving spouse (as that term is used under the Applicable Defined Benefit Pension Plan shall begin when benefits commence to such surviving spouse under such plan and shall continue for so long as benefits are payable to such surviving spouse under such plan.
IV.            General Provisions
            4.1            Rights of Participants, Joint Annuitants and Beneficiaries
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|4.2            Amendment and Termination
            The Plan may be amended, suspended or terminated at any time by the Company; provided, however, that no amendment, suspension or termination shall have the effect of impairing the rights of Participants or Beneficiaries with respect to the amount reflected in their Supplemental Benefit Account on or before the date of the amendment, suspension or termination.                                                                                                                                                                                                                                                                                                                        
|4.3            Interpretation
            This Plan shall be construed in accordance with and governed by the laws of the District of Columbia.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.4            Limitation of Responsibility
            Neither the establishment of the Plan, any modifications thereof nor the payment of any benefits shall be construed as giving to any Participant or other person any legal or equitable right against the Company (the Board of Directors, the Committee, or any officer or employee) except as herein provided, and in no event shall the other terms of employment of any employee be modified or in any way affected thereby.                                                                                                                                                                                                                                                              
|IN WITNESS WHEREOF, the Company has caused this Plan to be signed effective this 1st day of August, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|ATTEST
By:/s/  Ellen Sheriff Rogers               Secretary