|UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001    Commission file number 1-1072Potomac Electric Power Company 
  (Exact name of registrant as specified in its charter)District of Columbia and Virginia             53-0127880 
   (State or other jurisdiction of                      (I.R.S. Employer
       incorporation or organization)                     Identification No.)
        701 Ninth Street, N.W.Washington, D.C.
          20068
  (Address of principal executive offices)
   
          (Zip Code)
Registrant's telephone number, including area code     (202) 872-2000
Securities registered pursuant to Section 12(b) of the Act:
                                                  Name of each exchange on
           Title of each class                 which registered
Common Stock, $1 par value                     New York Stock Exchange, Inc.
Guarantee by Potomac Electric Power
  Company of the 7-3/8% Trust Originated
  Preferred Securities issued by
  Potomac Electric Power Company Trust I
Securities registered pursuant to Section 12(g) of the Act:
     None.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|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 and (2) has been subject 
to such filing requirements for the past 90 days.  Yes X.  No .
Indicate by check mark if disclosure of delinquent filers pursuant 
to Item 405 of Regulation S-K is not contained herein, and will not be 
contained, to the best of registrant's knowledge, in definitive proxy or 
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K.  .
As of March 25, 2002, Potomac Electric Power Company had 
107,125,976 shares of its $1 par value Common Stock outstanding, and the 
aggregate market value of these common shares (based upon the closing price 
of these shares on the New York Stock Exchange on that date) held by 
nonaffiliates was approximately $2.5 billion.                                                                                                                                                                                                                                                                                                                 



|POTOMAC ELECTRIC POWER COMPANY
Form 10-K - 2001
TABLE OF CONTENTS                                                                  
|-----------------------------------------------------------------------------------------------------------------------------------
|PART I                                                                                                                             
|Item 1.                                                                                                                            
|Item 2.                                                                                                                            
|Item 3.                                                                                                                            
|Item 4.                                                                                                                            
|PART II                                                                                                                            
|Item 5.                                                                                                                            
|Item 6.                                                                                                                            
|Item 7.                                                                                                                            
|Item 7A.                                                                                                                           
|Item 8.                                                                                                                            
|Item 9.                                                                                                                            
|PART III                                                                                                                           
|Item 10.                                                                                                                           
|Item 11.                                                                                                                           
|Item 12.                                                                                                                           
|Item 13.                                                                                                                           
|PART IV                                                                                                                            
|Item 14.                                                                                                                           
|Schedule II  -                                                                                                                     
|Exhibit 11   -                                                                                                                     
|Exhibit 12   -                                                                                                                     
|Exhibit 21   -                                                                                                                     
|Exhibit 23   -                                                                                                                     
|Report of Independent Accountants on Consolidated Financial 
       Statement Schedule  . . . . . . . . . . . . . . . . . . . . . .
|Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                               



PAGE LEFT BLANK

                            INTENTIONALLY

Part I

Except for historical statements and discussions, statements in this 
Form 10-K constitute "forward-looking statements" within the meaning of the 
federal securities laws.  These statements contain management's beliefs based 
on information currently available to management and on various assumptions 
concerning future events.  Forward-looking statements are not a guarantee of 
future performance or events.  They are subject to a number of uncertainties 
and other factors, many of which are outside the Company's control.  
Important factors that could cause actual results to differ materially from 
those in the forward-looking statements herein include risks and 
uncertainties relating to delays in obtaining or adverse conditions contained 
in, related regulatory approvals, changes in economic conditions, 
availability and cost of capital, changes in weather patterns, changes in 
laws, regulations or regulatory policies, developments in legal or public 
policy doctrines, population growth rates and demographic patterns, the 
potential negative impact resulting from the economic downturn, growth in 
demand, sales and capacity to fill demand, unanticipated changes in operating 
expenses and capital expenditures, capital market conditions, and other 
presently unknown or unforeseen factors.  These uncertainties and factors 
could cause actual results to differ materially from such statements.  The 
Company disclaims any intention or obligation to update or revise any 
forward-looking statements, whether as a result of new information, future 
events or otherwise.  This information is presented solely to provide 
additional information to further understand the Company's results and 
prospects.

Item 1.    BUSINESS

GENERAL

Additional information required by this Item, other than the information 
disclosed below, is included in the "Management's Discussion and Analysis of 
Consolidated Results of Operations and Financial Condition" section and the 
"Notes to Consolidated Financial Statements," which are included in Exhibit 
13, and is incorporated by reference herein.

Potomac Electric Power Company (Pepco or the Company) is engaged in 
three principal lines of business.  These business lines consist of (1) the 
provision of regulated electric utility transmission and distribution 
services in the Washington, D.C. (D.C.) metropolitan area, (2) the management 
of a diversified financial investments portfolio and (3) the supply of energy 
products and services in competitive retail markets.  The Company's regulated 
electric utility activities are referred to herein as the "Utility" or 
"Utility Operations," and its financial investments and competitive energy 
activities are referred to herein as its "Competitive Operations."  
Additionally, the Company has a wholly owned Delaware statutory business 
trust, Potomac Electric Power Company Trust I, and a wholly owned Delaware 
Investment Holding Company, Edison Capital Reserves Corporation.  At 
December 31, 2001, the Company had 2,449 employees.

During 2001 the Company continued to position its business activities 
for the future through the execution of its business plan to respond to the 
electric utility industry's transition from a regulatory to a competitive 
environment.  On February 12, 2001, the Company and Conectiv announced that 
each company's board of directors approved an agreement for a strategic 
transaction whereby the Company will acquire Conectiv for a combination of 
cash and stock valued at approximately $2.2 billion.  Also during the first 
quarter of 2001 the Company completed its plan to divest its generation 
assets when it sold its 9.72 percent interest in a Pennsylvania generating 
plant.  This sale followed the divestiture of substantially all of the 
Company's generation assets in December 2000.  Additionally, the Utility's 
comprehensive plans to implement customer choice were completed on January 1, 
2001, when D.C. customers began to have their choice of electricity 
suppliers.  Maryland customers received customer choice on July 1, 2000.

After the closing of the acquisition of Conectiv, Pepco and Conectiv 
will become subsidiaries of a new holding company, to be called Pepco 
Holdings, Inc. (formerly New RC, Inc.).  The Utility Operations of the merged 
company will have more than twice the Company's current customer base, 
serving more than 1.8 million electric and gas customers in Maryland, the 
District of Columbia, Virginia, Delaware and New Jersey.  The acquisition 
will also create an expanded market serving a 10,000 square-mile service 
territory in a growing region with 4 million in population and will deliver 
more than 46,000 gigawatt-hours of electricity annually.  The new company 
will be the largest owner of transmission in the Pennsylvania/New 
Jersey/Maryland power pool (PJM).  The combination, which will be accounted 
for as a purchase, has received approval from both companies' shareholders, 
from the Pennsylvania and Virginia Public Service Commissions, and from the 
Federal Energy Regulatory Commission.  Additionally, the Delaware Public 
Service Commission voted on March 19, 2002 to approve the merger and 
antitrust clearance has been received under the Hart-Scott-Rodino Antitrust 
Improvements Act.  Pending the receipt of various other regulatory approvals, 
the transaction is expected to close during the second quarter of 2002.  At 
December 31, 2001, the Company has deferred approximately $11.6 million in 
merger acquisition costs.

Item 2.     PROPERTIES

During January 2001, the Company completed the divestiture of 
substantially all of its generating assets.  Accordingly, at December 31, 
2001, the Company's principal assets are used to engage in the transmission 
and distribution of electric energy in the Washington, D.C. metropolitan 
area.  These assets include 118 substations, 988 circuit miles of 
transmission lines, 6 power station switchyards,  and approximately 24,000 
circuit miles of 69 KV (and below) distribution lines, including services and 
street lighting.  Additionally, in December 2000, the Company transferred its 
Benning Road and Buzzard Point generating plants, which were not divested to 
Mirant Corporation (Mirant), to a wholly owned subsidiary of the Company.  
These power plants are located in D.C. and have a total installed capacity of 
806 megawatts.  They are functioning as exempt wholesale generators and are 
operated and maintained by Mirant pursuant to an initial three-year contract 
with our subsidiary.  Additional information is included in the "Management's 
Discussion and Analysis of Consolidated Results of Operations and Financial 
Condition" section and the "Notes to Consolidated Financial Statements," 
which are included in Exhibit 13, and is incorporated by reference herein.

Item 3.    LEGAL PROCEEDINGS

The information required by this Item is included in Note 11 to the 
"Notes to Consolidated Financial Statements," which is included in Exhibit 
13, and is incorporated by reference herein.

Item 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

Part II

Item 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER           MATTERS

The following table presents the dividends per share of Common Stock and 
the high and low of the daily Common Stock transaction prices as reported in 
The Wall Street Journal during each period.  The New York Stock Exchange is 
the principal market on which the Company's Common Stock is traded.

|Period                  | Dividends
 Per Share | Price RangeHigh   Low
|----------------------- | -------------------- | ---------------------
|2001:                   |                      |                      
|First Quarter . . . . . | $.415                | $24.90               
|Second Quarter  . . . . | .250                 | 23.84                
|Third Quarter . . . . . | .250                 | 22.78                
|Fourth Quarter  . . . . | .250                 | 22.95                
|                        | $1.165               |                      
|First Quarter . . . . . | $.415                | $27.69               
|Second Quarter  . . . . | .415                 | 27.88                
|Third Quarter . . . . . | .415                 | 27.44                
|Fourth Quarter  . . . . | .415                 | 25.56                
|                        | $1.66                |                      

The number of record holders of Common Stock was 55,343 at March 25, 2002, 
and 56,189 at December 31, 2001.

There were 107,125,976 shares of the Company's $1 par value Common Stock 
outstanding at March 25, 2002, and 107,221,176 outstanding at December 31, 
2001.  A total of 200 million shares is authorized.

On February 12, 2001, the Company announced that it would reduce its 
annual dividend to $1.00 per share from $1.66 per share, effective with the 
June 2001 dividend.  In January 2002, a dividend of 25 cents per share was 
declared payable March 29, 2002, to shareholders of record of the Company's 
common stock on March 11, 2002.  The Company's dividend rate on common stock 
is determined by the Board of Directors and takes into consideration, among 
other factors, current and possible future developments which may affect the 
Company's income and cash flows.  See Item 7., Management's Discussion and 
Analysis of Financial Condition and Results of Operations, for additional 
information.

Item 6.    SELECTED FINANCIAL DATA

The information required by this Item is included in the "Selected 
Consolidated Financial Data" section, which is included in Exhibit 13, and is 
incorporated by reference herein.



Item 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS

The information required by this Item is included in the "Management's 
Discussion and Analysis of Consolidated Results of Operations and Financial 
Condition" section, which is included in Exhibit 13, and is incorporated by 
reference herein.

Item 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required by this Item is included in the "Management's 
Discussion and Analysis of Consolidated Results of Operations and Financial 
Condition" section, which is included in Exhibit 13, and is incorporated by 
reference herein.

Item 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements, together with the report thereon 
of PricewaterhouseCoopers LLP dated January 18, 2002, and supplementary data, 
are included in Exhibit 13, and is incorporated by reference herein.

Item 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
            FINANCIAL DISCLOSURE

None.



|Part III                                                                                                               |  | 
|---------------------------------------------------------------------------------------------------------------------- |  | 
|Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                                          
|Information with regard to the directors and executive officers of the 
registrant as of March 29, 2002 is as follows:

|Directors                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |               
|-------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------
|Name and Age                           | Principal Occupation and Business Experience for Past Five Years                                                                                                                                                                                                                                                                                                                                                                                                                                     | Director Since
|Edmund B. Cronin, Jr.
Age 64 (a)(c)(d) | Since 2000 has been Chairman of the Board, and since 1995 has been President and Chief Executive Officer of Washington Real Estate Investment Trust, based in Rockville, Maryland, which owns income-producing real estate in the mid-Atlantic Region.                                                                                                                                                                                                                                               | 1998          
|John M. Derrick, Jr.
Age 62 (b)        | See Executive Officers Below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 1994          
|Terence C. Golden
Age 57 (a)(c)(e)     | Chairman of Bailey Capital Corporation in Washington, D.C.  Bailey Capital Corporation is a private investment company.  From 1995 until 2000, Mr. Golden was President, Chief Executive Officer and a director of Host Marriott Corporation.  He continues to serve as a director of Host Marriott Corporation.  He is also a director of Cousins Properties, Inc., American Classic Voyages, Inc. and the Morris & Gwendolyn Cafritz Foundation.  He is also Chairman of the Federal City Council. | 1998          
|Judith A. McHale
Age 55 (a)(d)(e)      | Since 1995 has been President and Chief Operating Officer of Discovery Communications, Inc. (DCI), parent company of cable television's Discovery Channel, which is based in Bethesda, Maryland.  She is a director of John Hancock Financial Services, Inc. and Polo Ralph Lauren Corporation.                                                                                                                                                                                                      | 1998          
|Floretta D. McKenzie
Age 66 (a)(b)(d)  | Founder and Chairwoman of The McKenzie Group, Inc., a District of Columbia based educational consulting firm.  Until 2001, Dr. McKenzie was also Chief Executive Officer of The McKenzie Group, Inc.  Dr. McKenzie is a director of Marriott International, Inc.                                                                                                                                                                                                                                     | 1988          
|Edward F. Mitchell
Age 70 (b)(c)(d)    | Retired Chairman of the Board of the Company, a position he held from 1992-1999.  He was Chief Executive Officer from 1989-1997.                                                                                                                                                                                                                                                                                                                                                                     | 1980          
|Lawrence C. Nussdorf
Age 55 (a)(c)(e)  | Since 1998 has been President and Chief Operating Officer of Clark Enterprises, Inc., a holding company based in Bethesda, Maryland, which includes The Clark Construction Group, a general contracting company, of which Mr. Nussdorf has been Vice President and Treasurer since 1977.                                                                                                                                                                                                             | 2001          
|Peter F. O'Malley
Age 63 (c)(d)(e)     | Of Counsel to O'Malley, Miles, Nylen & Gilmore, P.A., a law firm headquartered in Calverton, Maryland.  Mr. O'Malley currently serves as the President of Aberdeen Creek Corp., a privately held company engaged in investment, business consulting and development activities.  Mr. O'Malley is a director of Legg Mason, Inc. and FTI Consulting.                                                                                                                                                  | 1982          
|Pauline A. Schneider
Age 58 (a)(d)(e)  | Joined the Washington office of the law firm of Hunton & Williams in 1985 and has been a partner there since 1987.  In October 2000, Ms. Schneider was elected as Chair of the Board of MedStar Health, Inc., a community-based healthcare organization that includes seven major hospitals in the Washington, D.C./Baltimore area.  Also, since 1998, she has chaired the Board of The Access Group, Inc., a not for profit student loan provider headquartered in Wilmington, Delaware.            | 2001          
|Dennis R. Wraase
Age 58 (b)            | See Executive Officers Below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 1998          
|A. Thomas Young
Age 63 (a)(b)(e)       | Retired Executive Vice President of Lockheed Martin Corporation.  From 1990 until 1995, he was President and Chief Operating Officer of Martin Marietta Corporation.  He is a director of the B.F. Goodrich Company and Science Applications International Corporation.                                                                                                                                                                                                                              | 1995          



|(a) | Mr. Cronin is Chairman of the Audit Committee.  Messrs. Golden, 
Nussdorf and Young, Ms. McHale, Dr. McKenzie and Ms. Schneider are 
members of the Committee.          
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Dr. McKenzie is Chairman of the Executive Committee.  Messrs. Derrick, 
Mitchell, Wraase and Young are members of the Committee.                                        
|(c) | Mr. Mitchell is Chairman of the Finance Committee.  Messrs. Cronin, 
Golden, Nussdorf, and O'Malley are members of the Committee.                                       
|(d) | Mr. O'Malley is Chairman of the Corporate Governance Committee.  
Messrs. Cronin and Mitchell, Ms. McHale, Dr. McKenzie and 
Ms. Schneider are members of the Committee.
|(e) | Mr. Young is Chairman of the Human Resources Committee.  Messrs. 
Golden, Nussdorf and O'Malley and Ms. McHale and Ms. Schneider are 
members of the Committee.         





|Executive Officers   |                                                                 |     |                              
|-------------------- | --------------------------------------------------------------- | --- | -----------------------------
|Name                 | Position                                                        | Age | Served in such position since
|John M. Derrick, Jr. | Chairman of the Board and Chief Executive Officer               | 62  | 1999 (1)                     
|Dennis R. Wraase     | President and Chief Operating Officer and Director              | 58  | 2001 (2)                     
|William T. Torgerson | Executive Vice President - External Affairs and General Counsel | 57  | 2001 (3)                     
|Andrew W. Williams   | Senior Vice President and Chief Financial Officer               | 52  | 2001 (4)                     
|William J. Sim       | Senior Vice President - Power Delivery                          | 57  | 2001 (5)                     
|Robert C. Grantley   | Group Vice President - Customer Care                            | 53  | 1997 (6)                     
|Kenneth P. Cohn      | Vice President and Chief Information Officer                    | 54  | 1999 (7)                     
|Kirk J. Emge         | Vice President - Legal Services                                 | 52  | 1994                         
|William R. Gee, Jr.  | Vice President - Business Performance and Technology            | 61  | 1991                         
|Anthony J. Kamerick  | Vice President, Finance, Treasurer and Comptroller              | 54  | 2002 (8)                     
|Beverly L. Perry     | Vice President - Government and Corporate Affairs               | 54  | 1999 (9)                     
|James S. Potts       | Vice President - Environment                                    | 57  | 1993                         

|None of the above persons has a "family relationship" with any other officer
listed or with any director.                                                                    
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The term of office for each of the above persons is from July 26, 2001, until the next succeeding Annual Meeting, and until their successors have been
elected and qualified.
|(1)                                                                                                                                                                          
|(2)                                                                                                                                                                          
|(3)                                                                                                                                                                          
|(4)                                                                                                                                                                          
|(5)                                                                                                                                                                          
|(6)                                                                                                                                                                          
|(7)                                                                                                                                                                          
|(8)                                                                                                                                                                          
|(9)                                                                                                                                                                          



|Section 16(a) Beneficial Ownership Reporting Compliance
The rules of the Securities and Exchange Commission require that the 
Company disclose any late filing of the reports of stock ownership (and 
changes in stock ownership), and any known failure to file these reports, by 
its directors and executive officers.  Due to an administrative oversight by 
the 401(k) plan administrator, Mr. Mitchell, a director of Pepco, omitted to 
disclose on his Form 5 filed in February 2001 an exempt sale of 6,636 shares 
of Pepco common stock from his 401(k) plan account.  He amended the Form 5 in 
April 2001 to reflect the transaction.  To the best of the Company's 
knowledge, all other filings required to be made by the Company's directors 
and executive officers were made on a timely basis in 2001.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 11.  EXECUTIVE COMPENSATION
Director Compensation
Each of the Company's non-employee directors is paid an annual retainer 
of $26,000, plus a fee of $1,250 for each Board and Committee meeting 
attended.  Each director who is a Chairman of a Committee is paid an 
additional retainer of $3,500.
The Stock Compensation Plan for Directors requires each director who is 
not an employee of the Company to receive half of his or her $26,000 annual 
retainer either (i) in shares of Common Stock or (ii) as a Common Stock 
equivalent deferral under the Company's Deferred Compensation Plan, the value 
of which corresponds to the market price of the Company's Common Stock.  A 
director may elect to receive up to 100% of his or her retainer and meeting 
fees in shares of Common Stock or Common Stock equivalents.  Common Stock 
equivalents are credited with additional amounts equal to the dividend payout 
on the corresponding number of shares of Common Stock, which amounts are 
deemed reinvested in additional Common Stock equivalents.  Common Stock 
equivalents have no voting rights.  A director alternatively may elect to be 
paid in cash or to defer under the Deferred Compensation Plan the portion of 
his or her annual retainer and meeting fee payments not required to be 
invested in Common Stock or Common Stock equivalents.  Such deferrals are 
credited, at the election of the director, with a return equal to the prime 
rate, a return on a specified group of funds or a combination of both.  
Balances under the Deferred Compensation Plan, including Common Stock 
equivalent balances, are paid out in cash, in either a lump sum or 
installments, commencing at a time selected by the director.
On May 1 of each year, each non-employee director is granted an option to 
purchase 1,000 shares of Common Stock.  Each option has an exercise price 
equal to the market price of the Common Stock on the date of grant.  Options 
granted prior to 2000 become exercisable at the earlier of (i) four years 
after date of grant or (ii) fifty percent upon attainment of a target price 
and the remaining fifty percent upon the attainment of a higher target price.  
Options granted in 2000 and thereafter become exercisable at the rate of 
twenty-five percent on each of the first four anniversaries of the date of 
grant.  Upon a "change in control," all options become immediately 
exercisable.  Options expire ten years after the date of grant or at such 
earlier date as specified by the Plan in the event of retirement, death, 
disability or after termination of service of the director.
The Company also provides directors with travel accident insurance for 
Company-related travel and directors' and officers' liability insurance 
coverage.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Executive Compensation

|SUMMARY COMPENSATION TABLE                                                 
|---------------------------------------------------------------------------
|                                                                           
|Name and Principal Position                                                
|                                                                           
|John M. Derrick, Jr.
Chairman and Chief
   Executive Officer               
|Dennis R. Wraase
President and Chief 
   Operating Officer                 
|William T. Torgerson
Executive Vice President
   and General Counsel       
|Andrew W. Williams
Senior Vice President
   and Chief Financial 
   Officer
|William J. Sim
Senior Vice President                                       

|(1) Other Annual CompensationAmounts in this column for each year represent above-market earnings on 
deferred compensation funded by Pepco-owned life insurance policies held in 
trust, assuming the expected retirement at age 65. The amounts are reduced 
if the executive terminates employment prior to age 62 for any reason other 
than death, total or permanent disability or a change in control of Pepco. 
In the event of a change in control and termination of the participant's 
employment, a lump sum payment will be made equal to the net present value 
of the expected payments at age 65 discounted using the Pension Benefit 
Guaranty Corporation immediate payment interest rate plus one-half of one 
percent. Pepco has purchased such policies on participating individuals 
under a program designed so that if assumptions as to mortality experience, 
policy return and other factors are realized, the compensation deferred and 
the death benefits payable to Pepco under such insurance policies will cover 
all premium payments and benefit payments projected under this program, plus 
a factor for the use of Pepco funds.
(2) Options
Amounts in this column represent the stock options granted under the 
Long-Term Incentive Plan. The shareholders approved the Long-Term Incentive 
Plan in April 1998.
(3) Incentive Plan Payouts
All amounts in this column represent the value of vested Common Stock under 
the Company's Performance Restricted Stock Program. The amounts shown for 
2001 consist of 33-1/3% of the Common Stock award from the one-year 
performance cycle ended December 31, 1999 (the "One-Year 1999 Cycle"), 33-
1/3% of the Common Stock award from the eight-month performance cycle ended 
December 31, 1999 (the "Eight-Month 1999 Cycle"), and 100% of the Common 
Stock award from the three-year cycle ended December 31, 2001 that vested on 
January 1, 2002. The amounts shown for 2000 consist of 33-1/3% of the Common 
Stock award from the One-Year 1999 Cycle, 33-1/3% of the Common Stock award 
from the Eight-Month 1999 Cycle, and 50% of the Common Stock award from the 
performance cycle ended December 31, 1998 (the "1998 Cycle"), that vested on 
January 1, 2001. The amounts shown for 1999 consist of 33-1/3% of the Common 
Stock award from the Eight-Month 1999 Cycle, 50% of the Common Stock award 
from the 1998 Cycle, and 50% of the Common Stock award from the performance 
cycle ended December 31, 1997, that vested on January 1, 2000. For 1999, 
amounts also include cash awards under the Performance Share Plan, which was 
applicable to the years 1997 through 1999. The cash amounts awarded for 
Messrs. Derrick, Wraase, Torgerson, Williams and Sim were $119,722, $57,221, 
$53,482, $38,355 and $37,940, respectively. The value of the vested Common 
Stock was calculated based on the market price of the Common Stock on the 
day preceding the vesting date.
(4) All Other Compensation
Amounts in this column for 2001 consist of (i) Company contributions to the 
Savings Plan for Exempt Employees of $7,900, $7,876, $7,700, $4,128 and 
$7,900 for Messrs. Derrick, Wraase, Torgerson, Williams and Sim, 
respectively, (ii) Company contributions to the Executive Deferred 
Compensation Plan due to Internal Revenue Service limitations on maximum 
contributions to the Savings Plan for Exempt Employees of $16,830, $10,257, 
$7,500, $6,683 and $2,769 for Messrs. Derrick, Wraase, Torgerson, Williams 
and Sim, respectively, (iii) the term life insurance portion of life 
insurance written on a split-dollar basis of $5,184, $2,972, $2,363, $1,256 
and $1,767 for Messrs. Derrick, Wraase, Torgerson, Williams and Sim, 
respectively, (iv) the interest on employer paid premiums for split-dollar 
life insurance of $31,566, $17,583, $13,945, $12,423 and $10,296 for 
Messrs. Derrick, Wraase, Torgerson, Williams and Sim, respectively. The 
split-dollar life insurance contract provides death benefits to the 
executive's beneficiaries of approximately three times the executive's 
annual salary. The split-dollar program is designed so that, if the 
assumptions made as to mortality experience, policy return and other factors 
are realized, the Company will recover all plan costs, including a factor 
for the use of Company funds. The split-dollar policy provides a cash 
surrender value to each participant in excess of any premiums paid.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|OPTION GRANTS IN LAST FISCAL YEAR
|---------------------------------
|                                 
|                                 
|Name                             
|                                 
|John M. Derrick, Jr.             
|                                 
|Dennis R. Wraase                 
|                                 
|William T. Torgerson             
|                                 
|Andrew W. Williams               
|                                 
|William J. Sim                   

(1) Individual Grants

The exercise price of options is the market price of the Common Stock on the grant date 
(January 1, 2001). Twenty-five percent of the options became exercisable on January 1, 2002. The 
remaining options will become exercisable at a rate of twenty-five percent on January 1 of each 
year until January 1, 2005.

(2) Grant Date Present Value

The values in this column were determined based on the Black-Scholes option pricing model and are 
calculated at the time of grant. The following assumptions were used in the calculation: (a) 
expected price volatility - 17.7%, (b) options will be exercised in the tenth year, (c) an 
interest rate based upon the corresponding yield of a U.S. Treasury note maturing ten years from 
the date of grant, (d) dividends at the rate in effect on the date of grant, and (e) no 
adjustments for transferability. The fact that the Company used the Black-Scholes model does not 
necessarily mean that the Company believes or acknowledges that the model can accurately 
determine the value of options. The ultimate value of the option, if any, will depend on the 
future market price of the Company's Common Stock and the optionee's individual investment 
decisions, neither of which can be predicted with any degree of certainty.

|AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR (2001)
|------------------------------------------------------
|                                                      
|Name                                                  
|John M. Derrick, Jr.                                  
|                                                      
|Dennis R. Wraase                                      
|                                                      
|William T. Torgerson                                  
|                                                      
|Andrew W. Williams                                    
|                                                      
|William J. Sim                                        

(3)  Value of Unexercised In-the-Money Options at End of Fiscal Year

The value of unexercised in-the-money options at December 31, 2001 is calculated by multiplying 
the number of shares by the amount by which the fair market value of the Common Stock on the last 
trading day of 2001, as reported by the New York Stock Exchange, exceeds the option exercise 
price.

|LONG-TERM INCENTIVE PLAN-
AWARDS IN LAST FISCAL YEAR
|----------------------------------------------------
|                                                    
|Name                                                
|John M. Derrick, Jr.                                
|Dennis R. Wraase                                    
|William T. Torgerson                                
|Andrew W. Williams                                  
|William J. Sim                                      

|Under the Company's Executive Performance Restricted Stock Program 
established under the Company's Long-Term Incentive Plan executives selected 
to participate in the Program have the opportunity to receive awards of 
Common Stock based on the Company's performance over a three-year performance 
cycle commencing January 1 of each year. The Program provides for the earning 
of Common Stock based on the Company's total stockholder return compared to 
other companies in a peer group comprised of 20 gas and electric distribution 
companies. If, during the course of a performance period, a significant event 
occurs, as determined in the sole discretion of the Board of Directors, which 
the Board of Directors expects to have a substantial effect on total 
shareholder performance during the period, the Board of Directors may revise 
such measures.
The preceding table shows the awards made under the Program in 2001.  
Each award provides that, following completion of the performance period, the 
participant will be eligible to earn a number of shares of Common Stock 
ranging from 0% to 200% of the target performance award to the extent that 
the performance objectives are achieved. The shares of Common Stock earned by 
a participant will vest immediately on the date that the performance award is 
earned.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|PENSION PLAN TABLE                                     
|-------------------------------------------------------
|Average Annual Salary
in Final Three Yearsof Employment
|15                                                     
|$  250,000                                             
|$  350,000                                             
|$  450,000                                             
|$  550,000                                             
|$  650,000                                             
|$  750,000                                             
|$  850,000                                             
|$  950,000                                             
|$1,050,000                                             

|The Company's General Retirement Plan provides participants benefits 
after five years of service based on the average salary (the term salary 
being equal to the amounts contained in the Salary column of the Summary 
Compensation Table) for the final three years of employment and years of 
credited service under the Plan at time of retirement. Normal retirement 
under the Plan is at age 65. Plan benefits are subject to an offset for any 
Social Security benefits. Benefits under the Plan may be reduced under 
certain provisions of the Internal Revenue Code, as amended, and by salary 
deferrals under the Company's deferred compensation plans (other than CODA 
contributions made under the Savings Plan). Where any such limitations occur, 
the Company will pay a supplemental retirement benefit to eligible executives 
designed to maintain total retirement benefits at a formula level of the 
Plan. In addition, for executives who retire under the terms of the General 
Retirement Plan and are at least 59 years of age, their retirement benefit 
will be calculated on the basis of average salary, plus the average of the 
highest three annual incentive awards in the last five consecutive years. The 
annual incentive amounts are equal to the amounts shown in the Bonus column 
of the Summary Compensation Table. The current age, years of credited service 
and compensation used to determine retirement benefits (including 
supplemental benefits) for the above-named officers are as follows: 
Mr.Derrick, 62 and 40 years of credit, $783,189; Mr. Wraase, 58 and 32 years 
of credit, $519,068; Mr. Torgerson, 57 and 32 years of credit, $423,236; 
Mr. Williams, 52 and 27 years of credit, $322,816; and Mr. Sim, 57 and 32 
years of credit, $314,649. Annual benefits at age 65 (including the effect of 
the Social Security offset) are illustrated in the table above.
Employment Agreements and Severance Agreements
Messrs. Derrick, Wraase and Torgerson each have entered into employment 
agreements with the Company that provide for his employment through 
December 10, 2004, and that automatically extend for successive periods of 
five years thereafter unless the Company or the executive has given notice 
that it shall not be so extended.  Each of the employment agreements provides 
that the executive (i) will receive an annual base salary in an amount not 
less than his salary in effect as of December 10, 1999, and incentive 
compensation as determined by the Board of Directors and (ii) will be 
entitled to participate in retirement and other benefit plans, and receive 
fringe benefits on the same basis as other senior executives of the Company.
Under each of the employment agreements, the executive is entitled to 
certain benefits if his employment is terminated prior to the expiration of 
the initial term of the agreement (or as extended) either (i) by the Company 
other than for cause, death or disability or (ii) by the executive if his 
salary is reduced, he is not in good faith considered for incentive awards, 
the Company fails to provide him with retirement benefits and other benefits 
provided to similarly situated executives, he is required to relocate by more 
than 50 miles from Washington, D.C., or he is demoted from a senior 
management position.  These benefits include: (i) a lump sum payment in cash 
equal to three times (x) the sum of the executive's highest base salary rate 
in effect during the three-year period preceding termination and (y) the 
higher of (1) the annual target bonus for the year in which the termination 
of employment occurs or (2) the highest annual bonus received by the 
executive in any of the three preceding calendar years and (ii) the 
executive's annual cash incentive award for the year preceding termination of 
employment, if not yet paid, and a pro rata portion of the executive's annual 
incentive award for the year in which the executive's employment terminates.  
In addition, any outstanding shares of restricted stock will become 
immediately vested, and the executive will be entitled to receive unpaid 
salary through the date of termination, certain supplemental retirement 
benefits under existing plans of the Company, and a continuation of premium 
payments under the Company's split-dollar life insurance policy.  The 
agreements also provide that each executive is entitled to receive a gross-up 
payment equal to the amount of any federal excise taxes imposed upon 
compensation payable upon termination and the additional taxes that result 
from such payment.
Messrs. Williams and Sim have entered into severance agreements with the 
Company.  Each severance agreement provides for the payment of severance 
benefits to the executive if, within two years following a change in control, 
which in the case of Mr. Sim includes a sale of all or substantially all of 
the generation assets, of the Company, any of the following events occur: 
(i) termination of the employment of the executive by the Company (or a 
successor company), other than for cause, death, disability or voluntary 
normal retirement; (ii) termination of employment by the executive for "good 
reason," defined as the assignment of duties materially inconsistent with the 
executive's duties prior to the change in control or a material reduction or 
alteration of his duties, a reduction in the executive's salary or relocation 
of the executive by more than 50 miles; (iii) the failure or refusal by a 
successor company to assume the Company's obligations under the agreement; or 
(iv) a material breach of the agreement by the Company (or a successor 
company).  The executive also is entitled to severance benefits upon (i) the 
termination of the executive's employment without cause in contemplation of, 
but prior to, a change in control or (ii) the occurrence of an event, in 
contemplation of, but prior to a change in control, constituting "good 
reason" followed by the executive's voluntary termination of employment 
within two years after a change in control.  The severance benefits consist 
of:  (i) an amount equal to two times the executive's annual base salary (in 
effect at the time of termination) and annual bonus (average of annual target 
bonuses during the three years prior to termination) paid in 24 equal monthly 
installments and (ii) certain welfare benefits for a three-year period after 
the date of termination. The agreements also provide that each executive is 
entitled to receive a gross-up payment equal to the amount of any federal 
excise taxes imposed upon compensation payable upon termination and the 
additional taxes that result from such payment.
Compensation Committee Interlocks and Insider Participation
Pauline Schneider, a director, is a partner in the law firm of Hunton & 
Williams.  Hunton & Williams rendered legal services to the Company and its 
subsidiaries in 2001 and is expected to render services to the Company and 
its subsidiaries in 2002.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTThe following table sets forth, as of February 1, 2002, for each 
director, the five executive officers named in the Summary Compensation Table 
under Item 11 and all directors and officers as a group (i) the number of 
shares of Common Stock beneficially owned, (ii) the number of shares that 
could be acquired within 60 days pursuant to exercise of stock options, 
(iii) credited Common Stock equivalents and (iv) the total stock-based 
holdings.  None of such persons beneficially owns shares of any other class 
of equity securities of the Company.  Each of the individuals, as well as all 
directors and executive officers as a group, beneficially owned less than 1% 
of the Company's outstanding Common Stock.  The following table also sets 
forth, as of February 1, 2002, the number and percentage of shares of Common 
Stock owned by all persons known by the Company to own beneficially 5% or 
more of the Common Stock.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Name of Beneficial Owner                                           | Shares ofCommon Stock Owned (1)  | Common Stock 
AcquirableWithin 60 Days (2) | Deferred
Common StockEquivalents (3) | Total
Stock-BasedHoldings (4)
|------------------------------------------------------------------ | -------------------------------- | ------------------------------------------ | ------------------------------------ | -----------------------------
|Edmund B. Cronin, Jr.                                              | 1,185                            | 1,250                                      | 8,096                                | 10,531                       
|John M. Derrick, Jr.                                               | 60,656                           | 198,310                                    | -                                    | 258,966                      
|Terence C. Golden                                                  | 1,942                            | 250                                        | 7,201                                | 9,393                        
|Judith A. McHale                                                   | 7,073                            | 250                                        | -                                    | 7,323                        
|Floretta D. McKenzie                                               | 3,340                            | 1,250                                      | -                                    | 4,590                        
|Edward F. Mitchell                                                 | 42,314                           | 1,250                                      | 2,236                                | 45,800                       
|Lawrence C. Nussdorf                                               | 1,000                            | -                                          | 573                                  | 1,573                        
|Peter F. O'Malley                                                  | 1,828                            | 1,250                                      | 2,236                                | 5,314                        
|Pauline A. Schneider                                               | 1,522                            | -                                          | -                                    | 1,522                        
|William J. Sim                                                     | 16,285                           | 26,584                                     | -                                    | 42,869                       
|William T. Torgerson                                               | 22,829                           | 44,343                                     | -                                    | 67,172                       
|Andrew W. Williams                                                 | 25,839                           | 26,584                                     | -                                    | 52,423                       
|Dennis R. Wraase                                                   | 33,726                           | 57,843                                     | -                                    | 91,569                       
|A. Thomas Young                                                    | 1,000                            | 1,250                                      | 8,964                                | 11,214                       
|All Directors and
Executive Officers
as a Group (21 Individuals)   | 305,571                          | 405,023                                    | 29,306                               | 739,900                      
|Name and Addressof Beneficial Owner                                | Shares of Common Stock Owned (5) | Percent of
Common StockOutstanding         |                                      |                              
|Franklin Resources, Inc.
One Franklin Parkway
San Mateo, CA  94403 | 8,621,071                        | 8.0%                                       |                                      |                              

|(1)Includes shares held under the Company's Dividend Reinvestment Plan and 
the Employee Savings Plan.  Also includes shares awarded under the Company's 
Long-Term Incentive Plan which will vest over time.
(2) Consists of Common Stock issuable upon the exercise of stock options.
(3) Consists of Common Stock equivalents acquired under the Directors' 
Deferred Compensation Plan.
(4) Consists of the sum of the three preceding columns.
(5) According to a Schedule 13G, dated February 1, 2002, filed with the 
Securities and Exchange Commission jointly by Franklin Resources, Inc., 
Templeton Global Advisors Limited, a subsidiary of Franklin Resources, Inc., 
and Charles B. Johnson and Rupert H. Johnson, Jr., each a principal 
shareholder of Franklin Resources, Inc., the Common Stock is beneficially 
owned by one or more open or closed-end investment companies or other managed 
accounts that are advised by direct and indirect advisory subsidiaries of 
Franklin Resources, Inc.  Sole power to vote or to direct the voting of the 
Common Stock and to dispose or to direct the disposition of the Common Stock 
is as follows: Templeton Global Advisors Limited:  6,417,815; Franklin 
Advisers, Inc.:  2,200,000; and Fiduciary Trust Company International:  
3,256.
Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Part IV

Item 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)  Documents List

1.   Financial Statements

The following documents are included within this document as Exhibit 13 
on the pages identified below:



|                                                                                                                                 | Page Reference       
|-------------------------------------------------------------------------------------------------------------------------------- | ---------------------
|                                                                                                                                 | Form 10-K(Exhibit 13)
|Consolidated Balance Sheets - 
December 31, 2001 and 2000                                                                        | 30                   
|Consolidated Statements of Earnings -
for the years ended December 31, 2001, 2000 and 1999                                       | 29                   
|Consolidated Statements of Shareholders' 
Equity and Comprehensive Income - for the years ended December 31, 2001, 2000 and 1999 | 32                   
|Consolidated Statements of Cash Flows - 
for the years ended December 31, 2001, 2000 and 1999                                    | 33                   
|Notes to Consolidated Financial Statements                                                                                       | 34                   
|Report of Independent Accountants                                                                                                | 28                   



2.   Financial Statement Schedules

Unaudited supplementary data entitled "Quarterly Financial Summary 
(Unaudited)" is included herein in Exhibit 13 (included in "Notes to 
Consolidated Financial Statements" as Note 14).

Schedule II (Valuation and Qualifying Accounts) and the Report of 
Independent Accountants on Consolidated Financial Statement Schedule are 
submitted pursuant to Item 14(d).

All other schedules are omitted because they are not applicable, or the 
required information is presented in the financial statements.

3.   Exhibits required by Securities and Exchange Commission Regulation S-K 
     (summarized below).

|ExhibitNo. | Description of Exhibit                                                                                                                                                                                                                                      | Reference*                                                                                                                  
|---------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------
|2          | Agreement and Plan of Merger, dated as of February 9, 2001, among the Company, New RC, Inc., and Conectiv .                                                                                                                                                 | Exh. 2 to Form 8-K, 2/13/01.                                                                                                
|3.1        | Charter of the Company. . . . . . . .                                                                                                                                                                                                                       | Exh. 3.1 to Form 10-K, 
3/27/00.                                                                                            
|3.2        | By-Laws of the Company. . . . . . . .                                                                                                                                                                                                                       | Exh. 3.2 to Form 10-K, 
3/23/01.                                                                                            
|4          | Mortgage and Deed of Trust dated
July 1, 1936, of the Company to
The Bank of New York as Successor
Trustee, securing First Mortgage
Bonds of the Company, and
Supplemental Indenture dated
July 1, 1936. . . . . . . . . . . . .                            | Exh. B-4 to First Amendment,
6/19/36, to Registration
Statement No. 2-2232.                                                 
|           | Supplemental Indentures, to the
aforesaid Mortgage and Deed of
Trust, dated -
December 1, 1939 and December 10,
1939. . . . . . . . . . . . . . . . .                                                                                                       | Exhs. A & B to Form 8-K,
1/3/40.                                                                                            
|           | August 1, 1940. . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. A to Form 8-K, 9/25/40.                                                                                                
|           | July 15, 1942 and August 10,
1942. . . . . . . . . . . . . . . . .                                                                                                                                                                                          | Exh. B-1 to Amendment No. 2,
8/24/42, and B-3 to Post-
Effective Amendment, 
8/31/42, to Registration 
Statement No. 2-5032.
|           | August 1, 1942. . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. B-4 to Form 8-A, 
10/8/42.                                                                                             
|           | October 15, 1942. . . . . . . . . . .                                                                                                                                                                                                                       | Exh. A to Form 8-K, 12/7/42.                                                                                                
|           | October 15, 1947. . . . . . . . . . .                                                                                                                                                                                                                       | Exh. A to Form 8-K, 12/8/47.                                                                                                
|4 (cont.)  | January 1, 1948 . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 7-B to Post-Effective 
Amendment No. 2, 1/28/48, to 
Registration Statement
No. 2-7349.                                
|           | December 31, 1948 . . . . . . . . . .                                                                                                                                                                                                                       | Exh. A-2 to Form 10-K, 
4/13/49.                                                                                            
|           | May 1, 1949 . . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 7-B to Post-Effective 
Amendment No. 1, 5/10/49, to 
Registration Statement 
No. 2-7948.                               
|           | December 31, 1949 . . . . . . . . . .                                                                                                                                                                                                                       | Exh. (a)-1 to Form 8-K, 
2/8/50.                                                                                            
|           | May 1, 1950 . . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 7-B to Amendment No. 2, 
5/8/50, to Registration 
Statement No. 2-8430.                                                
|           | February 15, 1951 . . . . . . . . . .                                                                                                                                                                                                                       | Exh. (a) to Form 8-K,
3/9/51.                                                                                               
|           | March 1, 1952 . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4-C to Post-Effective 
Amendment No. 1, 3/12/52, to 
Registration Statement No. 
2-9435.                               
|           | February 16, 1953 . . . . . . . . . .                                                                                                                                                                                                                       | Exh. (a)-1 to Form 8-K, 
3/5/53.                                                                                            
|           | May 15, 1953. . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4-C to Post-Effective 
Amendment No. 1, 5/26/53, to 
Registration Statement
No. 2-10246.                               
|           | March 15, 1954 and March 15,
1955. . . . . . . . . . . . . . . . .                                                                                                                                                                                          | Exh. 4-B to Registration 
Statement No. 2-11627, 
5/2/55.                                                                   
|           | May 16, 1955. . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. A to Form 8-K, 7/6/55.                                                                                                 
|           | March 15, 1956. . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. C to Form 10-K, 4/4/56.                                                                                                
|           | June 1, 1956. . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. A to Form 8-K, 7/2/56.                                                                                                 
|           | April 1, 1957 . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4-B to Registration 
Statement No. 2-13884, 
2/5/58.                                                                   
|           | May 1, 1958 . . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 2-B to Registration 
Statement No. 2-14518, 
11/10/58.                                                                 
|           | December 1, 1958. . . . . . . . . . .                                                                                                                                                                                                                       | Exh. A to Form 8-K, 1/2/59.                                                                                                 
|           | May 1, 1959 . . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4-B to Amendment No. 1, 
5/13/59, to Registration 
Statement No. 2-15027.                                              
|           | November 16, 1959 . . . . . . . . . .                                                                                                                                                                                                                       | Exh. A to Form 8-K, 1/4/60.                                                                                                 
|           | May 2, 1960 . . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 2-B to Registration 
Statement No. 2-17286, 
11/9/60.                                                                  
|           | December 1, 1960 and April 3,
1961. . . . . . . . . . . . . . . . .                                                                                                                                                                                         | Exh. A-1 to Form 10-K, 
4/24/61.                                                                                            
|           | May 1, 1962 . . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 2-B to Registration 
Statement No. 2-21037, 
1/25/63.                                                                  
|4 (cont.)  | February 15, 1963 . . . . . . . . . .                                                                                                                                                                                                                       | Exh. A to Form 8-K, 3/4/63.                                                                                                 
|           | May 1, 1963 . . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4-B to Registration 
Statement No. 2-21961, 
12/19/63.                                                                 
|           | April 23, 1964. . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 2-B to Registration 
Statement No. 2-22344, 
4/24/64.                                                                  
|           | May 15, 1964. . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. A to Form 8-K, 6/2/64.                                                                                                 
|           | May 3, 1965 . . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 2-B to Registration 
Statement No. 2-24655, 
3/16/66.                                                                  
|           | April 1, 1966 . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. A to Form 10-K, 
4/21/66.                                                                                              
|           | June 1, 1966. . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 1 to Form 10-K, 
4/11/67.                                                                                              
|           | April 28, 1967. . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 2-B to Post-Effective 
Amendment No. 1 to 
Registration Statement No. 
2-26356, 5/3/67.                                
|           | May 1, 1967 . . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. A to Form 8-K, 6/1/67.                                                                                                 
|           | July 3, 1967. . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 2-B to Registration 
Statement No. 2-28080, 
1/25/68.                                                                  
|           | February 15, 1968 . . . . . . . . . .                                                                                                                                                                                                                       | Exh. II-I to Form 8-K, 
3/7/68.                                                                                             
|           | May 1, 1968 . . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 2-B to Registration 
Statement No. 2-31896, 
2/28/69.                                                                  
|           | March 15, 1969. . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. A-2 to Form 8-K, 
4/8/69.                                                                                              
|           | June 16, 1969 . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 2-B to Registration 
Statement No. 2-36094, 
1/27/70.                                                                  
|           | February 15, 1970 . . . . . . . . . .                                                                                                                                                                                                                       | Exh. A-2 to Form 8-K, 
3/9/70.                                                                                              
|           | May 15, 1970. . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 2-B to Registration 
Statement No. 2-38038, 
7/27/70.                                                                  
|           | August 15, 1970 . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 2-D to Registration 
Statement No. 2-38038, 
7/27/70.                                                                  
|           | September 1, 1971 . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 2-C to Registration 
Statement No. 2-45591, 
9/1/72.                                                                   
|           | September 15, 1972. . . . . . . . . .                                                                                                                                                                                                                       | Exh. 2-E to Registration 
Statement No. 2-45591, 
9/1/72.                                                                   
|           | April 1, 1973 . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. A to Form 8-K, 5/9/73.                                                                                                 
|           | January 2, 1974 . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 2-D to Registration 
Statement No. 2-49803, 
12/5/73.                                                                  
|4. (cont.) | August 15, 1974 . . . . . . . . . . .                                                                                                                                                                                                                       | Exhs. 2-G and 2-H to 
Amendment No. 1 to 
Registration Statement No. 
2-51698, 8/14/74.                                     
|           | June 15, 1977 . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4-A to Form 10-K, 
3/19/81.                                                                                            
|           | July 1, 1979. . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4-B to Form 10-K, 
3/19/81.                                                                                            
|           | June 16, 1981 . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4-A to Form 10-K, 
3/19/82.                                                                                            
|           | June 17, 1981 . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 2 to Amendment No. 1, 
6/18/81, to Form 8-A.                                                                           
|           | December 1, 1981. . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4-C to Form 10-K, 
3/19/82.                                                                                            
|           | August 1, 1982. . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4-C to Amendment No. 1 
to Registration Statement
No. 2-78731, 8/17/82.                                                
|           | October 1, 1982 . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4 to Form 8-K, 11/8/82.                                                                                                
|           | April 15, 1983. . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4 to Form 10-K, 
3/23/84.                                                                                              
|           | November 1, 1985. . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 2-B to Form 8-A, 
11/1/85.                                                                                             
|           | March 1, 1986 . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4 to Form 10-K, 
3/28/86.                                                                                              
|           | November 1, 1986. . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 2-B to Form 8-A, 
11/5/86.                                                                                             
|           | March 1, 1987 . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 2-B to Form 8-A, 
3/2/87.                                                                                              
|           | September 16, 1987. . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4-B to Registration 
Statement No. 33-18229,
10/30/87.                                                                 
|           | May 1, 1989 . . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4-C to Registration 
Statement No. 33-29382, 
6/16/89.                                                                 
|           | August 1, 1989. . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4 to Form 10-K, 
3/23/90.                                                                                              
|           | April 5, 1990 . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4 to Form 10-K, 
3/29/91.                                                                                              
|           | May 21, 1991. . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4 to Form 10-K, 
3/27/92.                                                                                              
|           | May 7, 1992 . . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4 to Form 10-K, 
3/26/93.                                                                                              
|           | September 1, 1992 . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4 to Form 10-K, 
3/26/93.                                                                                              
|           | November 1, 1992. . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4 to Form 10-K,
3/26/93.                                                                                               
|           | March 1, 1993 . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4 to Form 10-K, 
3/26/93.                                                                                              
|           | March 2, 1993 . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4 to Form 10-K, 
3/26/93.                                                                                              
|           | July 1, 1993. . . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4.4 to Registration 
Statement No. 33-49973, 
8/11/93.                                                                 
|4 (cont.)  | August 20, 1993 . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4.4 to Registration 
Statement No. 33-50377, 
9/23/93.                                                                 
|           | September 29, 1993. . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4 to Form 10-K, 
3/25/94.                                                                                              
|           | September 30, 1993. . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4 to Form 10-K, 
3/25/94.                                                                                              
|           | October 1, 1993 . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4 to Form 10-K, 
3/25/94.                                                                                              
|           | February 10, 1994 . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4 to Form 10-K, 
3/25/94.                                                                                              
|           | February 11, 1994 . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4 to Form 10-K, 
3/25/94.                                                                                              
|           | March 10, 1995. . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4.3 to Registration 
Statement No. 61379, 
7/28/95.                                                                    
|           | September 6, 1995 . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4 to Form 10-K, 4/1/96.                                                                                                
|           | September 7, 1995 . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4 to Form 10-K, 4/1/96.                                                                                                
|           | October 2, 1997 . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4 to Form 10-K, 
3/26/98.                                                                                              
|           | March 17, 1999. . . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4 to Form 10-K, 
3/27/00.                                                                                              
|4-A        | Indenture, dated as of July 28, 1989, between the Company and The Bank of New York, Trustee, with respect to
the Company's Medium-Term Note
Program . . . . . . . . . . . . . . .                                                                           | Exh. 4 to Form 8-K, 6/21/90.                                                                                                
|4-B.1      | Certificate of Trust of 
Potomac Electric Power Company 
Trust I . . . . . . . . . . . . . . .                                                                                                                                                              | Exh. 4.1 to Registration Statement No. 333-51241, 4/2/98.                                                                   
|4-B.2      | Form of Amended and Restated Declaration of Trust of Potomac Electric Power Company Trust I. . . .                                                                                                                                                          | Exh. 4.3 to Amendment No. 1 to Registration Statement No. 333-51241, 5/7/98.                                                
|4-B.3      | Form of Preferred Security. . . . . .                                                                                                                                                                                                                       | Included in Exhibit A-1 to Exh. 4.3 to Amendment No. 1 to Registration Statement No. 333-51241, 5/7/98.                     
|4-B.4      | Form of Indenture . . . . . . . . . .                                                                                                                                                                                                                       | Exh. 4.4 to Amendment No. 1 to Registration Statement No. 333-51241, 5/7/98.                                                
|4-B.5      | Form of First Supplemental Indenture to be used in providing for the issuance of 7-3/8% Junior Subordinated Deferrable Interest Debentures due 2038 . . . . . . . . . . . . . . . . .                                                                       | Exh. 4.5 to Amendment No. 1 to Registration Statement No. 333-51241, 5/7/98.                                                
|4-B.6      | Form of 7-3/8% Junior 
Subordinated Deferrable 
Interest Debentures 
due 2038 . . . . . . . . . . . . . . .                                                                                                                                                 | Included in Exh. 4.5 to Amendment No. 1 to Registration Statement No. 333-51241, 5/7/98.                                    
|4-B.7      | Form of Preferred 
Securities Guarantee 
Agreement. . . . . . . . . . . . . . .                                                                                                                                                                             | Exh. 4.8 to Amendment No. 1 to Registration Statement No. 333-51241, 5/7/98.                                                
|10         | Agreement, effective December 8, 1998, between the Company and the International Brotherhood of Electrical Workers (Local Union 
No. 1900). . . . . . . .                                                                                                   | Exh. 10 to Form 10-K, 
3/26/99.                                                                                             
|10.1       | Employment Agreement of
  John M. Derrick, Jr.**. . . . . . .                                                                                                                                                                                               | Exh. 10.1 to Form 10-K, 
3/27/00.                                                                                           
|10.2       | Employment Agreement of
  Dennis R. Wraase**. . . . . . . . .                                                                                                                                                                                               | Exh. 10.2 to Form 10-K, 
3/27/00.                                                                                           
|10.3       | Employment Agreement of
  William T. Torgerson**. . . . . . .                                                                                                                                                                                               | Exh. 10.3 to Form 10-K, 
3/27/00.                                                                                           
|10.4       | Severance Agreement of
  Robert C. Grantley**. . . . . . . .                                                                                                                                                                                                | Exh. 10.4 to Form 10-K, 
3/27/00.                                                                                           
|10.5       | Severance Agreement of
  William J. Sim** . . . . . . . . .                                                                                                                                                                                                 | Exh. 10.5 to Form 10-K, 
3/27/00.                                                                                           
|10.6       | Severance Agreement of
  Andrew W. Williams** . . . . . . .                                                                                                                                                                                                 | Exh. 10.6 to Form 10-K, 
3/27/00.                                                                                           
|10.7       | Severance Agreement of
  Kenneth P. Cohn** . . . . . . . .                                                                                                                                                                                                  | Exh. 10.8 to Form 10-K, 
3/27/00.                                                                                           
|10.8       | Severance Agreement of
  Kirk J. Emge** . . . . . . . . .                                                                                                                                                                                                   | Exh. 10.9 to Form 10-K, 
3/27/00.                                                                                           
|10.9       | Severance Agreement of
  William R. Gee** . . . . . . . .                                                                                                                                                                                                   | Exh. 10.11 to Form 10-K, 
3/27/00.                                                                                          
|10.10      | Severance Agreement of
  Anthony J. Kamerick** . . . . . . . .                                                                                                                                                                                              | Exh. 10.12 to Form 10-K, 
3/27/00.                                                                                          
|10.11      | Severance Agreement of
  Beverly L. Perry** . . . . . . . .                                                                                                                                                                                                 | Exh. 10.13 to Form 10-K, 
3/27/00.                                                                                          
|10.12      | Severance Agreement of
  James S. Potts** . . . . . . . .                                                                                                                                                                                                   | Exh. 10.14 to Form 10-K, 
3/27/00.                                                                                          
|10.13      | 1999 General Memorandum of Understanding, dated December 8, 1998 between the Company and the International Brotherhood of Electrical Workers (Local Union No. 1900) . .. . . . . . . . . . . .                                                              | Exh. 10.2 to Form 10-K, 3/26/99.                                                                                            
|10.14      | Potomac Electric Power Company Long-Term Incentive Plan** . . . . . . . .                                                                                                                                                                                   | Exh. 4 to Form S-8, 6/12/98.                                                                                                
|10.15      | 2001 General Memorandum of Understanding, dated August 14, 2001, between the Company and Local 1900 of the International Brotherhood of Electrical Workers. . . . . . . . . .                                                                               | Exh. 10 to Form 10-Q, 
11/9/01.                                                                                             
|10.16      | Asset Purchase and Sale Agreement for Generating Plants and Related Assets by and between Potomac Electric Power Company and Southern Energy, Inc. dated June 7, 2000, including Exhibits A through M . . . . . . . . . . . . .                             | Exh. 10 to Form 8-K, 6/13/00.                                                                                               
|10.17      | Amendment No. 1, dated September 18, 2000 to Asset Purchase and Sale Agreement for Generating Plants and Related Assets by and between Potomac Electric Power Company and Southern Energy, Inc., dated June 7, 2000, including Exhibits A-1, A-2 and A-3. . | Exh. 10.1 to Form 8-K, 12/19/00.                                                                                            
|10.18      | Amendment No. 2, dated December 19, 2000, to Asset Purchase and Sale Agreement for Generating Plants and Related Assets by and between Potomac Electric Power Company and Southern Energy, Inc., dated June 7, 2000 . . .                                   | Exh. 10.2 to Form 8-K, 12/19/00.                                                                                            
|10.19      | Transition Power Agreement -- District of Columbia. . . . . . . . . . . . . .                                                                                                                                                                               | Exh. 10.3 to Form 8-K, 12/19/00.                                                                                            
|10.20      | Transition Power Agreement -- Maryland. . . . . . . . . . . . . . .                                                                                                                                                                                         | Exh. 10.4 to Form 8-K, 12/19/00.                                                                                            
|11         | Statements Re. Computation of
  Earnings Per Common Share . . . . .                                                                                                                                                                                         | Filed herewith.                                                                                                             
|12         | Statements Re. Computation of
  Ratios. . . . . . . . . . . . . . .                                                                                                                                                                                         | Filed herewith.                                                                                                             
|13         | Financial Information Section of
  Annual Report . . . . . . . . . . .                                                                                                                                                                                      | Filed herewith.                                                                                                             
|21         | Subsidiaries of the Registrant. . . .                                                                                                                                                                                                                       | Filed herewith.                                                                                                             
|23         | Consent of Independent Accountants. .                                                                                                                                                                                                                       | Filed herewith.                                                                                                             

*The exhibits referred to in this column by specific designations and date
  have heretofore been filed with the Securities and Exchange Commission
  under such designations and are hereby incorporated herein by reference.
  The Forms 8-A, 8-K and 10-K referred to were filed by the Company under the
  Commission's File No. 1-1072 and the Registration Statements referred to
  are registration statements of the Company.
**Management contract or compensatory plan or arrangement.
(b)  Reports on Form 8-K
     A Current Report on Form 8-K was filed by the Company on October 26, 
2001, which included the Company's Press Release dated October 25, 2001.  The 
items reported on such Form 8-K were Item 5. (Other Events) and Item 7. 
(Financial Statements and Exhibits).  A Current Report on Form 8-K was filed 
by the Company on December 21, 2001, which disclosed an aircraft impairment 
write-off and Enron investment write-off by Potomac Capital Investment Corp., 
a wholly owned subsidiary of the Company.  The item reported on such Form 8-K 
was Item 5. (Other Events).

|Schedule II                                                                                                   | Valuation and Qualifying Accounts
|------------------------------------------------------------------------------------------------------------- | ---------------------------------
|Col. A                                                                                                        | Col. B                           
|                                                                                                              |                                  
|                                                                                                              |                                  
|Description                                                                                                   | Balance at Beginning of Period   
|                                                                                                              | (Millions of Dollars)            
|Year Ended December 31, 2001 Allowance for uncollectible   accounts -customer and   other accounts receivable | $9.1                             
|Year Ended December 31, 2000 Allowance for uncollectible   accounts -customer and   other accounts receivable | $8.0                             
|Year Ended December 31, 1999 Allowance for uncollectible   accounts -customer and   other accounts receivable | $7.7                             
|                                                                                                              |                                  
|                                                                                                              |                                  
|(a)  Collection of accounts previously written off.                                                          
|(b)  Uncollectible accounts written off.                                                                     



(c)  Exhibit 11   Statements Re. Computation of Earnings Per Common Share
     The information required by this Exhibit is included in Note 10 of the 
"Notes to Consolidated Financial Statements," which is included in Exhibit 
13.

|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 each of the years 2001 through 1997, on a consolidated basis, are as follows:
|                                                                                                                                                                                                                           
|                                                                                                                                                                                                                           
|                                                                                                                                                                                                                           
|                                                                                                                                                                                                                           
|Net income                                                                                                                                                                                                                 
|Taxes based on income                                                                                                                                                                                                      
|                                                                                                                                                                                                                           
|Income before taxes                                                                                                                                                                                                        
|                                                                                                                                                                                                                           
|Fixed charges:                                                                                                                                                                                                             
|Interest charges                                                                                                                                                                                                           
|Interest factor in rentals                                                                                                                                                                                                 
|                                                                                                                                                                                                                           
|Total fixed charges                                                                                                                                                                                                        
|                                                                                                                                                                                                                           
|Competitive operations capitalized interest                                                                                                                                                                                
|                                                                                                                                                                                                                           
|Income before income taxes and fixed charges                                                                                                                                                                               
|                                                                                                                                                                                                                           
|Coverage of fixed charges                                                                                                                                                                                                  
|                                                                                                                                                                                                                           
|Preferred dividend requirements, including redemption premium                                                                                                                                                              
|                                                                                                                                                                                                                           
|Ratio of pre-tax income to net income                                                                                                                                                                                      
|                                                                                                                                                                                                                           
|Preferred dividend factor                                                                                                                                                                                                  
|                                                                                                                                                                                                                           
|Total fixed charges and preferred dividends                                                                                                                                                                                
|                                                                                                                                                                                                                           
|Coverage of combined fixed charges and preferred dividends                                                                                                                                                                 



|Exhibit 12    Statements Re: Computation of Ratios, continued                                                                                                                                                                                     
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                  
|The computations of the coverage of fixed charges before income taxes, and the coverage of combined fixed charges and preferred dividends for each of the years 2001 through 1997, on the basis of parent company operations only, are as follows:
|                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                  
|Net income                                                                                                                                                                                                                                        
|Taxes based on income                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                  
|Income before taxes                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                  
|Fixed charges:                                                                                                                                                                                                                                    
|Interest charges                                                                                                                                                                                                                                  
|Interest factor in rentals                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                  
|Total fixed charges                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                  
|Income before income taxes and fixed charges                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                  
|Coverage of fixed charges                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                  
|Preferred dividend requirements, including redemption premium                                                                                                                                                                                     
|                                                                                                                                                                                                                                                  
|Ratio of pre-tax income to net income                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                  
|Preferred dividend factor                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                  
|Total fixed charges and preferred dividends                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                  
|Coverage of combined fixed charges and preferred dividends                                                                                                                                                                                        





|Exhibit 21    Subsidiaries of the Registrant            |                              
|------------------------------------------------------- | -----------------------------
|Name                                                    | Jurisdiction of Incorporation
|Aircraft International Management Company               | Delaware                     
|Aircraft Leasing Associates, LP                         | Delaware                     
|American Energy Corporation                             | Delaware                     
|AMP Funding, LLC                                        | Delaware                     
|BCR-BT Ventures                                         | Delaware                     
|Edison Capital Reserves Corporation                     | Delaware                     
|Edison Place, LLC                                       | Delaware                     
|Electro Ecology, Inc.                                   | New York                     
|Energy and Telecommunication Services, LLC              | Delaware                     
|Engineered Services, Inc.                               | Delaware                     
|Friendly Skies, Inc.                                    | U.S. Virgin Islands          
|G&L Mechanical Services, Inc.                           | Delaware                     
|Harmans Building Associates                             | Maryland                     
|KJC Consulting Company                                  | California                   
|KJC Operating Company                                   | California                   
|Kramer Junction Company                                 | California                   
|Linpro Harmans Land LTD Partnership                     | Maryland                     
|Luz Solar Partners, Ltd., III                           | California                   
|Luz Solar Partners, Ltd., IV                            | California                   
|Luz Solar Partners, Ltd., V                             | California                   
|Luz Solar Partners, Ltd., VI                            | California                   
|Luz Solar Partners, Ltd., VII                           | California                   
|Met Electrical Testing Company, Inc.                    | Delaware                     
|Microcell Corporation                                   | North Carolina               
|PCI Air Management Corporation                          | Nevada                       
|PCI Air Management Partners, LLC                        | Delaware                     
|PCI Energy Corporation                                  | Delaware                     
|PCI Engine Trading, Ltd.                                | Bermuda                      
|PCI Ever, Inc.                                          | Delaware                     
|PCI Holdings, Inc.                                      | Delaware                     
|PCI Netherlands Corporation                             | Nevada                       
|PCI Nevada Investments                                  | Delaware                     
|PCI Queensland Corporation                              | Nevada                       
|PCI-BT Investing, LLC                                   | Delaware                     
|PCI-BT Ventures                                         | Delaware                     
|Pepco Building Services, Inc.                           | Delaware                     
|Pepco Communications, Inc.                              | Delaware                     
|Pepco Communications, LLC                               | Delaware                     
|Pepco Energy Services, Inc.                             | Delaware                     
|Pepco Enterprises, Inc.                                 | Delaware                     
|Pepco Technologies, LLC                                 | Delaware                     
|PES Home Services of Virginia                           | Virginia                     
|POM Holdings, Inc.                                      | Delaware                     
|Potomac Aircraft Leasing Corporation                    | Nevada                       
|Potomac Capital Investment Corporation                  | Delaware                     
|Potomac Capital Joint Leasing Corporation               | Delaware                     
|Potomac Capital Markets Corporation                     | Delaware                     
|Potomac Delaware Leasing Corporation                    | Delaware                     
|Potomac Electric Power Company Trust I                  | Delaware                     
|Potomac Equipment Leasing Corporation                   | Nevada                       
|Potomac Harmans Corporation                             | Maryland                     
|Potomac Leasing Associates, LP                          | Delaware                     
|Potomac Nevada Corporation                              | Nevada                       
|Exhibit 21    Subsidiaries of the Registrant, Continued
|Name                                                    | Jurisdiction of Incorporation
|Potomac Nevada Investment, Inc.                         | Nevada                       
|Potomac Nevada Leasing Corporation                      | Nevada                       
|Potomac Power Resources, Inc.                           | Delaware                     
|RAMP Investments, LLC                                   | Delaware                     
|Seaboard Mechanical Services, Inc.                      | Delaware                     
|Severn Cable, LLC                                       | Delaware                     
|Severn Construction, LLC                                | Delaware                     
|Starpower Communications, LLC                           | Delaware                     
|Substation Test Company, Inc.                           | Delaware                     
|Trigen-Pepco Energy Services, LLC                       | District of Columbia         
|Unitemp, Inc.                                           | Delaware                     
|Viron/Pepco Services Partnership                        | Delaware                     
|W.A. Chester Corporation                                | Delaware                     
|W.A. Chester, LLC                                       | Delaware                     





Exhibit 23    Consent of Independent AccountantsWe hereby consent to the incorporation by reference in the Registration 
Statements on Forms S-8 (Numbers 33-36798, 33-53685 and 33-54197) and the 
Registration Statements on Forms S-3 (Numbers 33-58810, 33-61379, 333-33495 
and 333-66127) of Potomac Electric Power Company and in the Registration 
Statement on Form S-4 (Number 333-57042) of Pepco Holdings, Inc. (formerly 
New RC, Inc.) of our report dated January 18, 2002 relating to the financial 
statements which appear in the Annual Report to Shareholders, which is 
incorporated in the Annual Report on Form 10-K.  We also consent to the 
incorporation by reference of our report dated January 18, 2002, relating 
to the Consolidated Financial Statement Schedule, which appears in this 
Form 10-K.
PRICEWATERHOUSECOOPERS LLP
Washington, D.C.
March 29, 2002

Report of Independent Accountants on Consolidated Financial Statement 
Schedule
To the Board of Directors of
Potomac Electric Power Company
Our audits of the consolidated financial statements referred to in our report 
dated January 18, 2002 appearing in the 2001 Annual Report to shareholders of 
Potomac Electric Power Company (which report and consolidated financial 
statements are incorporated by reference in this Annual Report on Form 10-K) 
also included an audit of the consolidated financial statement 
schedule listed in Item 14(a)2 of this Form 10-K.  In our opinion, this 
consolidated financial statement schedule presents fairly, in all material 
respects, the information set forth therein when read in conjunction with the 
related consolidated financial statements.
PRICEWATERHOUSECOOPERS LLP
Washington, D.C.
January 18, 2002

SIGNATURES
     Pursuant to the requirements of Section 13 or 15(d) 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, in the City of 
Washington, District of Columbia, on the 29th day of March, 2002.



|POTOMAC ELECTRIC POWER COMPANY
           (Registrant)                                                                 
|-----------------------------------------------------------------------------------------------------------------------
|By    John M. Derrick
        (John M. Derrick, Jr.,
        Chairman of the Board and
        Chief Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, 
this report has been signed below by the following persons on behalf of the 
registrant and in the capacities and on the dates indicated:

|      | Signature                                                             | Title                                                 | Date          
|----- | --------------------------------------------------------------------- | ----------------------------------------------------- | --------------
|(i)   | Principal Executive OfficersJohn M. Derrick
   (John M. Derrick, Jr.) | Chairman of the Board
  and Chief Executive   Officer |               
|      | D. R. Wraase
    (Dennis R. Wraase)                                   | President, Chief
  Operating Officer
  and Director   |               
|(ii), | Principal Financial Officer                                           |                                                       |               
|(iii) | Principal Accounting OfficerA. W. Williams
   (Andrew W. Williams)    | Senior Vice President
  and Chief Financial
  Officer |               
|(iv)  | Directors:Edmund B. Cronin, Jr.   (Edmund B. Cronin, Jr.)             | Director                                              |               
|      | T. C. Golden
   (Terence C. Golden)                                   | Director                                              |               
|      |                                                                       |                                                       | March 29, 2002
|      | Signature                                                             | Title                                                 | Date          
|(iv)  | Directors (cont.):Judith A. McHale
    (Judith A. McHale)             | Director                                              |               
|      | Floretta D. McKenzie   (Floretta D. McKenzie)                         | Director                                              |               
|      | Edward F. Mitchell
   (Edward F. Mitchell)                            | Director                                              |               
|      | Lawrence C. Nussdorf   (Lawrence C. Nussdorf)                         | Director                                              |               
|      | Peter F. O'Malley   (Peter F. O'Malley)                               | Director                                              |               
|      | Pauline A. Schneider   (Pauline A. Schneider)                         | Director                                              |               
|      | A. T. Young   (A. Thomas Young)                                       | Director                                              |               
|      |                                                                       |                                                       |               
|      |                                                                       |                                                       |               
|      |                                                                       |                                                       | March 29, 2002