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                 POTOMAC ELECTRIC POWER COMPANY


        1900 Pennsylvania Avenue, N.W., Washington, D.C.


                               TO


                      THE BANK OF NEW YORK


                101 Barclay Street, New York, NY
                                                AS TRUSTEE


                        ________________


                     Supplemental Indenture

                   Dated as of October 2, 1997

                        ________________



           Supplemental to Mortgage and Deed of Trust

                       Dated July 1, 1936

                        _________________




            First Mortgage Bonds, 6-1/4% Series due 2007

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<PAGE>





                 POTOMAC ELECTRIC POWER COMPANY 

       Supplemental Indenture Dated As of October 2, 1997

                       TABLE OF CONTENTS* 
                      ____________________


                                                             PAGE 
PARTIES ....................................................    1
RECITALS ...................................................    1
GRANTING CLAUSES ...........................................    5
CERTAIN EXCEPTIONS .........................................   11
GRANT IN TRUST .............................................   12

                             PART I
                      DESCRIPTION OF BONDS 
 
SECTION 1.   General description of Bonds of 2007 Series ...   13
SECTION 2.   Form of face of Bond of 2007 Series ...........   14
              Form of Trustee's certificate ................   16
              Text appearing on reverse side of Bond of 
               2007 Series .................................   16
 SECTION 3.  Denominations of Bonds of 2007 Series .........   19
 SECTION 4.  Execution and form of temporary Bonds .........   19

                             PART II
                         ISSUE OF BONDS

SECTION 1.  Limitation as to principal amount ..............   20
SECTION 2.  Issue of Bonds .................................   20

                            PART III
                REDEMPTION AT OPTION OF COMPANY 

The Bonds of 2007 Series are not redeemable at the option   
            of the Company .................................   21



_________________
      * The Table of Contents is not part of the Supplemental
Indenture and should not be considered as such.  It is included
herein only for purposes of convenient reference.





<PAGE>
                               ii


                             PART IV

SECTION 1.  Bonds of 2007 Series repayable at option
             of holders .....................................  21
SECTION 2.  Cancellation of redeemed bonds ..................  21

                             PART V
         ADDITIONAL PARTICULAR COVENANTS OF THE COMPANY

SECTION 1.  Company not to withdraw moneys pursuant to
             Section 2 of Article VIII in excess of an
             amount equal to principal amount of issued
             refundable bonds ...............................  21
SECTION 2.  No property additions made on or prior to
             December 31, 1946 to be used for any purpose
             under the Indenture ............................  21

                             PART VI

Amendment of Indenture to Permit Qualification Under Trust        
             Indenture Act of 1939 ..........................  22

                            PART VII

Amendment of Original Indenture .............................  22

                            PART VIII
                           THE TRUSTEE

Acceptance of trusts by the Trustee .........................  23
Trustee not responsible for validity of the Supplemental
             Indenture ......................................  23

                             PART IX
                    MISCELLANEOUS PROVISIONS

Execution of Supplemental Indenture in counterparts .........  23
Appointment of attorneys-in-fact by parties .................  23
TESTIMONIUM .................................................  24
EXECUTION....................................................  24
COMPANY'S ACKNOWLEDGMENTS ...................................  26
TRUSTEE'S ACKNOWLEDGMENTS ...................................  28







<PAGE>


      SUPPLEMENTAL INDENTURE, dated as of the 2nd day of October,
nineteen hundred and ninety-seven (1997), made by and between
Potomac Electric Power Company, a corporation organized and
existing under the laws of the District of Columbia and a domestic
corporation of the Commonwealth of Virginia (hereinafter sometimes
called the "Company"), party of the first part, and The Bank of New
York, a New York banking corporation organized and existing under
the laws of the State of New York (hereinafter sometimes called the
"Trustee"), as Trustee under the Mortgage and Deed of Trust dated
July 1, 1936, hereinafter mentioned, party of the second part;

      WHEREAS, The Company has heretofore executed and delivered
its Mortgage and Deed of Trust, dated July 1, 1936 (hereinafter
sometimes referred to as the "Original Indenture"), to The Riggs
National Bank of Washington, D.C., as trustee, to secure an issue
of First Mortgage Bonds of the Company, issuable in series; and

      WHEREAS, the Trustee has succeeded The Riggs National Bank of
Washington, D.C. as trustee under the Original Indenture pursuant
to Article XIII, Section 3 thereof.

      WHEREAS, pursuant to the terms and provisions of the Original
Indenture, indentures supplemental thereto dated as of July 1,
1936, December 1, 1939, August 1, 1940, August 1, 1942, January 1,
1948, May 1, 1949, May 1, 1950, March 1, 1952, May 15, 1953, May
16, 1955, June 1, 1956, December 1, 1958, November 16, 1959,
December 1, 1960, February 15, 1963, May 15, 1964, April 1, 1966,
May 1, 1967, February 15, 1968, March 15, 1969, February 15, 1970,
August 15, 1970, September 15, 1972, April 1, 1973, January 2,
1974, August 15, 1974, August 15, 1974, June 15, 1977, July 1,
1979, June 16, 1981, June 17, 1981, December 1, 1981, August 1,
1982, October 1, 1982, April 15, 1983, November 1, 1985, March 1,
1986, November 1, 1986, March 1, 1987, September 16, 1987, May 1,
1989, August 1, 1989, April 5, 1990, May 21, 1991, May 7, 1992,
September 1, 1992, November 1, 1992, March 1, 1993, March 2, 1993,
July 1, 1993, August 20, 1993, September 29, 1993, September 30,
1993, October 1, 1993, February 10, 1994, February 11, 1994, March
10, 1995, September 6, 1995 and September 7, 1995 have been
heretofore entered into between the Company and the Trustee to
provide, respectively, for the creation of the first through the
sixty-first series of Bonds thereunder and, in the case of the
supplemental indentures dated January 1, 1948, March 1, 1952, May
15, 1953, May 16, 1955, June 1, 1956, September 15, 1972, July 1,
1979, June 17, 1981, November 1, 1985, September 16, 1987, May 1,
1989, May 21, 1991, May 7, 1992, July 1, 1993 and one of the
supplemental indentures dated August 15, 1974, to convey additional
property; and 

<PAGE>

                                2

      WHEREAS, $20,000,000 principal amount of Bonds of the 3 1/4%
Series due 1966 (the first series), $5,000,000 principal amount of
Bonds of the 3 1/4% Series due 1974 (the second series),
$10,000,000 principal amount of Bonds of the 31/4% Series due 1975
(the third series), $5,000,000 principal amount of Bonds of the 3
1/4% Series due 1977 (the fourth series), $15,000,000 principal
amount of Bonds of the 3% Series due 1983 (the fifth series),
$10,000,000 principal amount of Bonds of the 2 7/8% Series due 1984
(the sixth series), $30,000,000 principal amount of Bonds of the 2
3/4% Series due 1985 (the seventh series), $15,000,000 principal
amount of Bonds of the 3 1/4% Series due 1987 (the eighth series),
$10,000,000 principal amount of Bonds of the 3 7/8% Series due 1988
(the ninth series), $10,000,000 principal amount of Bonds of the 3
3/8% Series due 1990 (the tenth series), $10,000,000 principal
amount of Bonds of the 3 5/8% Series due 1991 (the eleventh
series), $25,000,000 principal amount of Bonds of the 4 5/8% Series
due 1993 (the twelfth series), $15,000,000 principal amount of
Bonds of the 5 1/4% Series due 1994 (the thirteenth series),
$40,000,000 principal amount of Bonds of the 5% Series due 1995
(the fourteenth series), $45,000,000 principal amount of Bonds of
the 7 3/4% Series due 2004 (the twentieth series), $35,000,000
principal amount of Bonds of the 8.85% Series due 2005 (the
twenty-first series), $70,000,000 principal amount of Bonds of the
9 1/2% Series due August 15, 2005 (the twenty-second series),
$50,000,000 principal amount of Bonds of the 7 3/4% Series due 2007
(the twenty-third series), $25,000,000 principal amount of Bonds of
the 5 5/8% Series due 1997 (the twenty-fourth series), $100,000,000
principal amount of Bonds of the 8 3/8% Series due 2009 (the
twenty-fifth series), $50,000,000 principal amount of Bonds of the
10 1/4% Series due 1981 (the twenty-sixth series), $50,000,000
principal amount of Bonds of the 10 3/4% Series due 2004 (the
twenty-seventh series), $38,300,000 principal amount of Bonds of
the 6 1/8% Series due 2007 (the twenty-eighth series), $15,000,000
principal amount of Bonds of the 6 1/2% Series due 2004 (the
twenty-ninth series), $20,000,000 principal amount of Bonds of the
6 1/2% Series due 2007 (the thirtieth series), $7,500,000 principal
amount of Bonds of the 6 5/8% Series due 2009 (the thirty-first
series), $30,000,000 principal amount of Bonds of the Floating Rate
Series due 2010 (the thirty-second series), $50,000,000 principal
amount of Bonds of the 14 1/2% Series due 1991 (the thirty-third
series), $60,000,000 principal amount of Bonds of the 14 1/4%
Series due 1992 (the thirty-fifth series), $50,000,000 principal
amount of Bonds of the 11 7/8% Series due 1989 (the thirty-sixth
series), $37,000,000 principal amount of Bonds of the 8 3/4% Series
due 2010 (the thirty-seventh series), $75,000,000 principal amount
of Bonds of the 11 1/4% Series due 2015 (the thirty-eighth series),
$75,000,000 principal amount of Bonds of the 9 1/4% Series due 2016
(the thirty-ninth series), $75,000,000 principal amount of Bonds of
the 8 3/4% Series due 2016 (the

<PAGE>

                                3

fortieth series), $75,000,000 principal amount of Bonds of the
8 1/4% Series due 2017 (the forty-first series), $75,000,000
principal amount of Bonds of the 9% Series due 1990 (the
forty-second series), $75,000,000 principal amount of Bonds of the
9 3/4% Series due 2019 (the forty-third series) and $75,000,000
principal amount of Bonds of the 8 5/8% Series due 2019 (the
forty-fourth series), have been heretofore redeemed and retired and
there are now issued and outstanding under the Original Indenture
and under the supplemental indentures referred to above:
$50,000,000 principal amount of Bonds of the 4 3/8% Series due 1998
(the fifteenth series); $45,000,000 principal amount of Bonds of
the 4 1/2% Series due 1999 (the sixteenth series); $15,000,000
principal amount of Bonds of the 5 1/8% Series due 2001 (the
seventeenth series); $35,000,000 principal amount of Bonds of the
5 7/8% Series due 2002 (the eighteenth series); $40,000,000
principal amount of Bonds of the 6 5/8% Series due 2003 (the
nineteenth series); $50,000,000 principal amount of Bonds of the
Adjustable Rate Series due 2001 (the thirty-fourth series);
$100,000,000 principal amount of Bonds of the 9% Series due 2000
(the forty-fifth series); $100,000,000 principal amount of Bonds of
the 9% Series due 2021 (the forty-sixth series); $75,000,000
principal amount of Bonds of the 8 1/2% Series due 2027 (the
forty-seventh series); $30,000,000 principal amount of Bonds of the
6% Series due 2022 (the forty-eighth series); $37,000,000 principal
amount of Bonds of the 6 3/8% Series due 2023 (the forty-ninth
series); $78,000,000 principal amount of Bonds of the 6 1/2% Series
due 2008 (the fiftieth series); $40,000,000 principal amount of
Bonds of the 7 1/2% Series due 2028 (the fifty-first series);
$100,000,000 principal amount of Bonds of the 7 1/4% Series due
2023 (the fifty-second series); $100,000,000 principal amount of
Bonds of the 6 7/8% Series due 2023 (the fifty-third series);
$50,000,000 principal amount of Bonds of the 5 5/8% Series due 2003
(the fifty-fourth series); $50,000,000 principal amount of Bonds of
the 5 7/8% Series due 2008 (the fifty-fifth series); $75,000,000
principal amount of Bonds of the 6 7/8% Series due 2024 (the
fifty-sixth series); $42,500,000 principal amount of Bonds of the
5 3/8% Series due 2024 (the fifty-seventh series); $38,300,000
principal amount of Bonds of the 5 3/8% Series due 2024 (the
fifty-eighth series); $16,000,000 principal amount of Bonds of the
5 3/4% Series due 2010 (the fifty-ninth series); $100,000,000
principal amount of Bonds of the 6 1/2% series due 2005 (the
sixtieth series); and $75,000,000 principal amount of Bonds of the
7 3/8% Series due 2025 (the sixty-first series); and

      WHEREAS, for the purpose of conforming the Original Indenture
to the standards prescribed by the Trust Indenture Act of 1939 or
otherwise modifying certain of the provisions of the Original
Indenture, indentures supplemental thereto dated December 10, 1939,
August 10, 1942, October 15, 1942, April 1, 1966, June 16, 1981,
June 17, 1981, December 1, 1981, August 1, 1982,

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                                4

October 1, 1982, April 15, 1983, November 1, 1985, March 1, 1986,
November 1, 1986, March 1, 1987, September 16, 1987, May 1, 1989,
August 1, 1989, April 5, 1990, May 21, 1991, May 7, 1992, September
1, 1992, November 1, 1992, March 1, 1993, March 2, 1993, July 1,
1993, August 20, 1993, September 29, 1993, September 30, 1993,
October 1, 1993, February 10, 1994, February 11, 1994, March 10,
1995, September 6, 1995 and September 7, 1995 have been heretofore
entered into between the Company and the Trustee, and for the
purpose of conveying additional property, indentures supplemental
thereto dated July 15, 1942, October 15, 1947, December 31, 1948,
December 31, 1949, February 15, 1951, February 16, 1953, March 15,
1954, March 15, 1955, March 15, 1956, April 1, 1957, May 1, 1958,
May 1, 1959, May 2, 1960, April 3, 1961, May 1, 1962, May 1, 1963,
April 23, 1964, May 3, 1965, June 1, 1966, April 28, 1967, July 3,
1967, May 1, 1968, June 16, 1969, May 15, 1970, September 1, 1971,
June 17, 1981, November 1, 1985, September 16, 1987, May 1, 1989,
May 21, 1991, May 7, 1992 and July 1, 1993 have been heretofore
entered into between the Company and the Trustee, and for the
purpose of better securing and protecting the Bonds then or
thereafter issued and confirming the lien of the Original
Indenture, an indenture dated October 15, 1942 supplemental thereto
has been heretofore entered into between the Company and the
Trustee; the Original Indenture as heretofore amended and
supplemented being hereinafter referred to as the "Original
Indenture as amended"; and
 
      WHEREAS, the Company is entitled to have authenticated and
delivered additional Bonds on the basis of the net bondable value
of property additions, upon compliance with the provisions of
Section 4 of Article III of the Original Indenture as amended; and
 
      WHEREAS, the Company has determined to issue a sixty-second
series of Bonds under the Original Indenture as amended in the
principal amount of $175,000,000, to be known as First Mortgage
Bonds, 6-1/4% Series due 2007 (hereinafter called "Bonds of 2007
Series"); and

      WHEREAS, the Original Indenture as amended provides that
certain terms and provisions, as determined by the Board of
Directors of the Company, of the Bonds of any particular series may
be expressed in and provided by the execution of an appropriate
supplemental indenture; and

      WHEREAS, the Original Indenture as amended provides that the
Company and the Trustee may enter into indentures supplemental
thereto to add to the covenants and agreements of the Company
contained therein other covenants and agreements thereafter to be
observed; and to surrender 

<PAGE>

                                5

any right or power reserved to or conferred upon the Company in the
Original Indenture as amended; and

      WHEREAS,  the Company, in the exercise of the powers and
authority conferred upon and reserved to it under the provisions of
the Original Indenture as amended and pursuant to appropriate
resolutions of its Board of Directors, has duly resolved and
determined to make, execute and deliver to the Trustee a
Supplemental Indenture in the form hereof for the purposes herein
provided; and

      WHEREAS, all conditions and requirements necessary to make
this Supplemental Indenture a valid, binding and legal instrument
have been done, performed and fulfilled, and the execution and
delivery hereof have been in all respects duly authorized;

      NOW, THEREFORE, THIS INDENTURE WITNESSETH:

      THAT POTOMAC ELECTRIC POWER COMPANY, in consideration of the
premises and of One Dollar to it duly paid by the Trustee at or
before the ensealing and delivery of these presents, and for other
valuable considerations, the receipt whereof is hereby
acknowledged, and in order further to secure the payment of the
principal of, and premium (if any) and interest on all Bonds at any
time issued and outstanding under the Indenture according to their
tenor, purport and effect, and for the purpose of ratifying and
confirming the lien of the Indenture and the performance and
observance by the Company of all of the covenants and conditions
contained in the Indenture, has executed and delivered this
Supplemental Indenture, and has granted, bargained, sold,
warranted, aliened, remised, released, conveyed, assigned,
transferred, mortgaged, pledged, set over, ratified and confirmed
and by these presents does grant, bargain, sell, warrant, alien,
remise, release, convey, assign, transfer, mortgage, pledge, set
over, ratify and confirm unto The Bank of New York, as Trustee
under the Indenture and to its successors in the trust created
thereby and to its and their assigns forever, all and singular the
following described properties (in addition to all other properties
heretofore subject to the lien of the Original Indenture as amended
and not heretofore released from the lien thereof), that is to say:

<PAGE>

                                6

                             FIRST.

      All and singular the lands, real estate, chattels real,
easements, servitudes and leasehold and other interests in real
estate which the Company now owns or, subject to the provisions of
Article XII of the Original Indenture as amended, may hereafter
acquire, including, among other things, the following (but
reference to, or enumeration of, any particular kinds, classes or
items of property shall not be deemed to exclude from the operation
and effect of this Indenture any kind, class or item not so
referred to or enumerated, except as hereinafter expressly
provided):

                     I. DISTRICT OF COLUMBIA

The following parcel of land in the District of Columbia:

                    Alabama Avenue Substation

       Land acquired from the District of Columbia, Department of
Housing and Community Development by deed dated December 4, 1996
and recorded December 9, 1996 as Instrument No. 9600080488.

                  II. CHARLES COUNTY, MARYLAND

                     Morgantown Fly Ash Site

      Land acquired from Brinsfield Farms, Inc. by deed dated June
27, 1995 and recorded June 28, 1995 in Liber 2102, Folio 263.

                III. MONTGOMERY COUNTY, MARYLAND

                   Derwood Substation No. 209

      Land acquired from Potomac Capital Investment Corporation by
quitclaim deed dated March 22, 1995 and recorded April 7, 1995 in
Liber 13338, Folio 479.

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                                7

       Brighton/High Ridge Transmission Line Right-of-Way

      The following parcels of land, being part of an 88-foot wide
right-of-way extending from Brighton Substation No. 66 in
Montgomery County, Maryland to Baltimore Gas and Electric Company's
High Ridge Substation in Howard County, Maryland:
 
Property   Name of Company's   Deed by which Acquired
  No.          Grantor             by the Company
--------   -----------------   ----------------------
1906       State of Maryland,  Deed of Easement Date--March 3, 1995
           to the use of the   Record Date--March 22, 1995
           Department of       Liber 13309, Folio 345
           Natural Resources

1913       Harold T. Meryman   Deed of Easement Date--May 2, 1994 
           and Mary Lane       Record Date--May 10, 1994
           Meryman             Liber 12602, Folio 415

<PAGE>

                                8

                   IV. HOWARD COUNTY, MARYLAND

       Brighton/High Ridge Transmission Line Right-of-Way
 
      The following parcels of land, being part of a 150-foot wide
right-of-way extending from Brighton Substation No. 66 in
Montgomery County, Maryland to Baltimore Gas and Electric Company's
High Ridge Substation in Howard County, Maryland:

Property  Name of Company's   Deed by which Acquired
  No.         Grantor             by the Company
--------  -----------------   ----------------------
1920.1    Guy J. Carson and   Deed of Exchange Date--August 3, 1993
          Kathryn D. Carson   Record Date--October 29, 1993
                              Liber 3034, Folio 106
  1932    Marie T. Spencer    Deed of Easement Date--March 30, 1994
                              Record Date--March 30, 1994
                              Liber 3206, Folio 0027 
  1943    Samuel F. Lyons     Deed of Easement Date--March 26, 1993
          Elsie K. Lyons      Record Date--March 31, 1993
          (Lot 1)             Liber 2815, Folio 468
  1943    Samuel F. Lyons     Deed of Easement Date--March 26, 1993
          Elsie K. Lyons      Record Date--March 31, 1993
          (Lot 2)             Liber 2815, Folio 473
  1943    Samuel F. Lyons     Deed of Easement Date--March 26, 1993
          Elsie K. Lyons      Record Date--March 31, 1993
          (Lot 3)             Liber 2815, Folio 478
  1943    Samuel F. Lyons     Deed of Easement Date--March 26, 1993
          Elsie K. Lyons      Record Date--March 31, 1993
          (Lot 4)             Liber 2815, Folio 483
  1943    Samuel F. Lyons     Deed of Easement Date--March 26, 1993
          Elsie K. Lyons      Record Date--March 31, 1993
          (Lot 5)             Liber 2815, Folio 488

<PAGE>

                                9

                 V. INDIANA COUNTY, PENNSYLVANIA

The Company's undivided 9.72% interest as tenant in common in the
following property located in Indiana County, Pennsylvania.

     Name of Company's                Deed by which Acquired
         Grantor                          by the Company
     -----------------                ----------------------

     American Trustee & Transfer      Deed Date--February 11, 1994
       Corporation, Trustee           Record Date--July 27, 1994
                                      Deed Book 1048, Page 425 
 
                             SECOND.

      Also all power houses, plants, buildings and other
structures, dams, dam sites and substations, together with all and
singular the electric and mechanical appliances appurtenant thereto
of every nature whatsoever, now owned by the Company or, subject to
the provisions of Article XII of the Original Indenture as amended,
which it may hereafter acquire, including all and singular the
machinery, engines, boilers, furnaces, generators, dynamos,
turbines and motors, and all and every character of mechanical
appliance for generating or producing electricity for light, heat,
cold, power or other purposes.

                             THIRD.

      Also all transmission and distribution systems used for the
transmission and distribution of electricity for light, heat, cold
or power or any other purpose whatsoever, whether underground or
overhead, surface or otherwise, now owned by the Company or,
subject to the provisions of Article XII of the Original Indenture
as amended, which it may hereafter acquire, including all poles,
towers, posts, wires, cables, conduits, manholes, pipes, tubes,
drains, furnaces, switchboards, transformers, conductors,
insulators, supports, meters, lamps, fuses, junction boxes and
other electric fixtures and apparatus.
 
      Also all inventions, patent rights and licenses used or
useful in connection with the generation, production, transmission
or distribution of electricity for light, heat, cold, power or
other purposes, now owned by the Company or, subject to the
provisions of Article XII of the Original Indenture as amended,
which it may hereafter acquire.

<PAGE>

                               10

                             FOURTH.
 
      Also all franchises and all permits, ordinances, easements,
privileges, immunities and licenses, all rights to construct,
maintain and operate overhead, surface and underground systems for
the distribution and transmission of electricity for the supply to
itself or others of light, heat, cold or power, all rights-of-way,
all waters, water rights and flowage rights and all grants and
consents, now owned or, subject to the provisions of Article XII of
the Original Indenture as amended, which it may hereafter acquire.

                             FIFTH.

      Also all improvements, extensions or additions purchased,
constructed or otherwise acquired by the Company to or about all
other property, real, personal and mixed (except as herein and in
the Original Indenture as amended expressly provided), of every
nature and kind wheresoever situated, as such property is described
in the Original Indenture as amended and indentures supplemental
thereto.

      Also, subject to the provisions of Article XII of the
Original Indenture as amended, all other property, real, personal
and mixed (except as herein expressly excepted) of every nature and
kind and wheresoever situated now or hereafter possessed by or
belonging to the Company, or to which it is now, or may at any time
hereafter be, in any manner entitled in law or in equity.

                             SIXTH.

      Also any and all property of any kind or description which
may from time to time after the date of this Supplemental Indenture
by delivery or by writing of any kind be conveyed, mortgaged,
pledged, assigned or transferred to the Trustee by the Company or
by any person, copartnership or corporation, with the consent of
the Company or otherwise as expressly permitted by the terms of the
Original Indenture as amended, and accepted by the Trustee, to be
held as part of the mortgaged property; and the Trustee is hereby
authorized to accept and receive any such property and any such
conveyance, mortgage, pledge, assignment and transfer, as and for
additional security hereunder, and to hold and apply any and all
such property subject to and in accordance with the terms and
provisions upon which such conveyance, mortgage, pledge, assignment
or transfer shall be made.

<PAGE>

                               11

                            SEVENTH.

      Together with all and singular the tenements, hereditaments
and appurtenances belonging or in anywise appertaining to the
aforesaid property or any part thereof; with the reversion and
reversions, remainder and remainders, tolls, rents, revenues,
issues, income, product and profits thereof, and all the estate,
right, title, interest and claim whatsoever, at law as well as in
equity, which the Company now has or hereafter acquires in and to
the aforesaid property and franchises and every part and parcel
thereof.

      EXPRESSLY EXCEPTING AND EXCLUDING, HOWEVER, from this
Supplemental Indenture and from the lien and operation hereof:

      (a)   All bills, notes and accounts receivable, cash on hand
or in bank, contracts, operating agreements, existing leases in
which the Company is lessor and leases hereafter made of portions
of the mortgaged property in which the Company is lessor;

      (b)   All shares of stock and other certificates or evidences
of interest therein, and all bonds, notes and other evidences of
indebtedness or certificates of interest therein and other
securities now owned or hereafter acquired or possessed by the
Company (except securities or obligations required to be pledged by
the terms of the Original Indenture as amended);
 
      (c)   All equipment and materials not installed as a part of
the fixed property of the Company and merchandise and supplies
acquired by the Company for the purpose of resale or leasing to its
customers in the ordinary course and conduct of its business ; and

      (d)   All electric energy and other materials or products
generated, manufactured, produced or purchased by the Company for
sale, distribution or use in the ordinary course and conduct of its
business.

<PAGE>

                               12

      AND FURTHER EXPRESSLY EXCEPTING AND EXCLUDING from this
Supplemental Indenture and from the lien and operation hereof, all
property, permits and franchises of any other corporation of
whatever character, shares of stock or securities whereof, or
obligations secured by lien upon the properties and franchises
whereof, which may be now owned or hereafter acquired or possessed
by the Company, notwithstanding the fact that the Company may own
or hereafter acquire all or substantially all of the shares of
stock or other securities issued by, or secured by lien upon
property of, any such corporation, or that any such corporation may
be incorporated or organized at the instance of or for the account
of the Company, or that all or any part of the shares of stock or
other securities of such corporation may be subjected to the lien
hereof by the Company.

      TO HAVE AND TO HOLD all said properties, real, personal and
mixed, mortgaged, pledged and conveyed by the Company as aforesaid,
or intended so to be, unto the Trustee, its successors in the Trust
created by the Indenture and its and their assigns forever;

      SUBJECT, HOWEVER, to the exceptions and reservations and
matters hereinabove recited, to existing leases, to existing
mortgages or other liens upon easements or rights-of-way for
transmission or distribution line purposes, as defined in Article
I of the Original Indenture as amended, and any extensions thereof,
and subject to existing easements for streets, alleys, highways,
rights-of-way and railroad purposes over, upon, and across any of
the Property hereinbefore described, and subject also to all terms,
conditions, agreements, covenants, exceptions and reservations
expressed or provided in the deeds or other instruments
respectively under and by virtue of which the Company now owns or
may hereafter acquire any property subject to the lien hereof, and
to undetermined liens and charges, if any, incidental to
construction or other existing permitted liens as defined in
Article I of the Original Indenture as amended;

      IN TRUST NEVERTHELESS, upon the terms and trusts in the
Original Indenture and the indentures supplemental thereto,
including this Supplemental Indenture, set forth, for the further,
equal and proportionate benefit, security, and protection of all
present and future holders of the Bonds and coupons issued and to
be issued thereunder, or any of them, without preference of any of
said Bonds and coupons of any particular series over the Bonds and
coupons of any other series, by reason of priority in the time of
issue, sale or negotiation thereof, or by reason of the purpose of
issue or otherwise howsoever, except as otherwise provided in
Section 2 of Article IV of the

<PAGE>

                               13

Original Indenture as amended;

      And Potomac Electric Power Company hereby covenants, declares
and agrees with the Trustee and its successors in the trust under
the Original Indenture as amended, for the benefit of those who
hold the Bonds and coupons, or any of them, issued or to be issued
hereunder or under the Original Indenture as amended, as follows:

                             PART I.

                      DESCRIPTION OF BONDS.

      SECTION 1. The Bonds of 2007 Series shall, subject to the
provisions of Section 1 of Article II of the Original Indenture as
amended, be designated as "First Mortgage Bonds, 6-1/4% Series due
2007" of the Company.  The Bonds of 2007 Series shall be executed,
authenticated and delivered in accordance with the provisions of,
and shall in all respects be subject to, all of the terms,
conditions and covenants of the Original Indenture as amended,
except in so far as the terms and provisions of the Original
Indenture as amended are amended or modified by this Supplemental
Indenture.

      The Bonds of 2007 Series shall mature October 15, 2007, and
shall bear interest from the date of initial issuance at the rate
of six and one-quarter percent (6-1/4%) per annum, payable
semiannually, commencing April 15, 1998, on the fifteenth day of
April and the fifteenth day of October in each year (each such
April 15th and October 15th being hereinafter called an "interest
payment date"). The Bonds of 2007 Series shall be payable as to
principal and interest in lawful money of the United States of
America, and shall be payable (as well the interest as the
principal thereof) at the agency of the Company in the Borough of
Manhattan, The City of New York.

      The interest so payable on any interest payment date shall be
paid to the persons in whose names the Bonds of 2007 Series are
registered at the close of business on the last business day
(hereinafter called the "record date") which is more than ten days
prior to such interest payment date, a "business  day" being any
day that is not a day on which banks in the City of New York are
authorized by law to close; except that if the Company shall
default in the payment of any interest due on such interest payment
date, such defaulted interest shall be paid to the persons in whose
names the Bonds of 2007 Series are registered on the date of
payment of such defaulted interest, or in

<PAGE>

                               14

accordance with the regulations of any securities exchange on which
the Bonds of 2007 Series are listed.

      Except as provided hereinafter, every Bond of 2007 Series
shall be dated as of the date of its authentication and delivery,
or if that is an interest payment date, the next day, and shall
bear interest from the interest payment date next preceding its
date or the date of delivery of the initial Bonds of 2007 Series,
whichever is later. Notwithstanding Section 6 of Article II of the
Original Indenture, any Bond of 2007 Series authenticated and
delivered by the Trustee after the close of business  on the record
date with respect to any interest payment date and prior to such
interest payment date shall be dated as of the date next following
such interest payment date and shall bear interest from such
interest payment date; except that if the Company shall default in
the payment of any interest due on such interest payment date, such
Bond shall bear interest from the next preceding interest payment
date or the date of delivery of the initial Bonds of 2007 Series,
whichever is later.

      SECTION 2. The Bonds of 2007 Series, and the Trustee's
certificate to be endorsed on the Bonds of 2007 Series, shall be
substantially in the following forms, respectively:

              [FORM OF FACE OF BOND OF 2007 SERIES]

                 POTOMAC ELECTRIC POWER COMPANY
        (A District of Columbia and Virginia corporation)

            First Mortgage Bond, 6-1/4% Series Due 2007

No.                                                    $

POTOMAC ELECTRIC POWER COMPANY, a corporation organized and
existing under the laws of the District of Columbia and a domestic
corporation of the Commonwealth of Virginia (hereinafter called the
"Company", which term shall include any successor corporation as
defined in the Amended Indenture hereinafter referred to), for
value received, hereby promises to pay to ................... or
registered assigns, the sum of ..................dollars, on the
Fifteenth day of October 2007 , in lawful money of the United
States of America, and to pay interest thereon in like money from
the later of the date of delivery of the initial Bonds of 2007
Series or the interest payment date April 15 or October 15 next
preceding the date of this Bond, or if the Company shall default in
the

<PAGE>

                               15

payment of interest due on such interest payment date, then from
the next preceding interest payment date or the date of delivery of
the initial Bonds of 2007 Series, whichever is later, at the rate
of six and one-quarter percent (61/4) per annum, payable
semiannually, commencing April 15, 1998, on the fifteenth day of
April and October in each year until maturity, or, if the Company
shall default in the  payment of the principal hereof, until the
Company's obligation with respect to the payment of such principal
shall be discharged as provided in the Amended Indenture.  The
interest so payable on any April 15 or October 15  will, subject to
certain exceptions provided in the indenture dated as of October 2,
1997 supplemental to the Amended Indenture, be paid to the person
in whose name this Bond is registered at the close of business on
the last business  day which is more than ten days prior to such
April 15 or October 15.  Both principal of, and interest on, this
Bond are payable at the agency of the Company in the Borough of
Manhattan, The City of New York.

      Reference is made to the further provisions of this Bond set
forth on the reverse hereof, and such further provisions shall for
all purposes have the same effect as though fully set forth at this
place.

      This Bond shall not be entitled to any benefit under the
Amended Indenture or any indenture supplemental thereto, or become
valid or obligatory for any purpose, until The Bank of New York,
the Trustee under the Amended Indenture, or a successor trustee
thereto under the Amended Indenture, shall have signed the form of
certificate endorsed hereon.

      IN WITNESS WHEREOF, Potomac Electric Power Company has caused
this Bond to be signed in its name by the signature (or a facsimile
thereof) of its President or a Vice President, and its corporate
seal (or a facsimile thereof) to be hereto affixed and attested by
the facsimile signature of its Secretary or an Assistant Secretary.

      Dated,
                                     POTOMAC ELECTRIC POWER COMPANY

                                       By .........................
                                                Vice President
Attest:

 .......................
     Secretary

<PAGE>

                               16

                 [FORM OF TRUSTEE'S CERTIFICATE]

       This Bond is one of the Bonds, of the series designated
therein, described in the within-mentioned Amended Indenture and
the Supplemental Indenture dated as of October 2, 1997.

                                            THE BANK OF NEW YORK
                                                        Trustee.

                                       By ......................
                                           Authorized Signatory


     [TEXT APPEARING ON REVERSE SIDE OF BOND OF 2007 SERIES]

      This Bond is one of a duly authorized issue of Bonds of the
Company (herein after called the "Bonds") in unlimited aggregate
principal amount, of the series hereinafter specified, all issued
and to be issued under and equally secured (except in so far as any
purchase or sinking fund or analogous provisions for any particular
series of Bonds, established by any indenture supplemental to the
Amended Indenture hereinafter mentioned, may afford additional
security for such Bonds) by a mortgage and deed of trust, dated
July 1, 1936, executed by the Company to The Bank of New York as
successor to The Riggs National Bank of Washington, D.C. (herein
called the "Trustee"), as trustee, as amended by indentures
supplemental thereto dated December 10, 1939, August 10, 1942,
October 15, 1942, April 1, 1966, June 16, 1981, June 17, 1981,
December 1, 1981, August 1, 1982, October 1, 1982, April 15, 1983,
November 1, 1985, March 1, 1986, November 1, 1986, March 1, 1987,
September 16, 1987, May 1, 1989, August 1, 1989, April 5, 1990, May
21, 1991, May 7, 1992, September 1, 1992, November 1, 1992, March
1, 1993, March 2, 1993, July 1, 1993, August 20, 1993, September
29, 1993, September 30, 1993, October 1, 1993, February 10, 1994,
February 11, 1994, March 10, 1995, September 6, 1995 and September
7, 1995 (said mortgage and deed of trust, as so amended, being
herein called the "Amended Indenture") and all indentures
supplemental thereto, to which Amended Indenture and supplemental
indentures reference is hereby made for a description of the
properties mortgaged and pledged, the nature and extent of the
security, the rights of the owners of the Bonds and of the Trustee
in respect thereto, and the terms and conditions upon which the
Bonds are, and are to be, secured.  To the extent permitted by, and
as provided in, the Amended Indenture,

<PAGE>

                               17

modifications or alterations of the Amended Indenture, or of any
indenture supplemental thereto, and of the rights and obligations
of the Company and of the holders of the Bonds may be made with the
consent of the Company by an affirmative vote of not less than 80%
in amount of the Bonds entitled to vote then outstanding, at a
meeting of Bondholders called and held as provided in the Amended
Indenture, and by an affirmative vote of not less than 80% in
amount of the Bonds of any series entitled to vote then outstanding
and affected by such modification or alteration, in case one or
more but less than all of the series of Bonds then outstanding
under the Amended Indenture are so affected; provided, however,
that no such modification or alteration shall be made which will
affect the terms of payment of the principal of, or interest on,
this Bond, which are unconditional, or which reduces the percentage
of Bonds the affirmative vote of which is required for the making
of such modifications or alterations. The Company is proposing an
amendment to the Amended Indenture which would replace "80%" with
"60%" in the preceding sentence, which amendment will become
effective upon the consent or agreement thereto of the holders of
all the outstanding Bonds. The holder of this Bond will be deemed
to have approved such amendment. The Bonds may be issued in series,
for various principal sums, may mature at different times, may bear
interest at different rates and may otherwise vary as in the
Amended Indenture provided.

      This Bond is one of a series designated as the "First
Mortgage Bonds, 6-1/4% Series due 2007" (herein called the "Bonds of
2007 Series") of the Company, issued under and secured by the
Amended Indenture and all indentures supplemental thereto and
described in the indenture (herein called the "New Supplemental
Indenture"), dated as of October 2, 1997, between the Company and
the Trustee, supplemental to the Amended Indenture.

      The Bonds of 2007 Series are not subject to redemption at the
option of the Company prior to maturity.

      The Bonds of 2007 Series will be repayable on October 15,
2004, at the option of the holders thereof, at 100% of their
principal amount, together with accrued and unpaid interest to
October 15, 2004.  In order for a Bond of 2007 Series to be repaid,
the Company must receive at the corporate trust office of the
Trustee during the period from and including August 16, 2004 to and
including the close of business  on September 15, 2004 (or if
August 16, 2004 or September 15, 2004 is not a business day, the
next succeeding business day): (i) the Bond of 2007 Series (the
"Redeemable Bond") with the form entitled "Option to Elect
Repayment" on, or otherwise accompanying, the 

<PAGE>

                               18

Redeemable Bond duly completed or (ii) a telegram, telex, facsimile
transmission or letter from a member of a national securities
exchange or the National Association of Securities Dealers, Inc. or
a commercial bank or trust company in the United States of America
setting forth the name of the holder of the Redeemable Bond, the
principal amount of the Redeemable Bond, the principal amount of
the Redeemable Bond to be repaid, a statement that the option to
elect repayment is being exercised thereby and a guarantee that the
Redeemable Bond to be repaid (with the form entitled "Option to
Elect Repayment" on, or otherwise accompanying, the Redeemable Bond
duly completed) will be received at the Trustee's corporate trust
office not later than five business days after the date of such
telegram, telex, facsimile transmission or letter, and such
Redeemable Bond and form duly completed are received at the
Trustee's office by such fifth business day.  Effective exercise of
the repayment option by the holder of any Redeemable Bond shall be
irrevocable.  No transfer or exchange of any Redeemable Bond (or,
in the event that any Redeemable Bond is to be repaid in part, such
portion of the Redeemable Bond to be repaid) will be permitted
after exercise of the repayment option.  The repayment option may
be exercised by the holder of a Redeemable Bond for less than the
entire principal amount of the Redeemable Bond, provided the
principal amount which is to be repaid is set forth on the form
entitled "Option to Elect Repayment" and is equal to $1,000 or any
integral multiple thereof.  All questions as to the validity,
eligibility (including time of receipt) and acceptance of any
Redeemable Bond for repayment will be determined by the Company,
whose determination will be final, binding and non-appealable. 
Upon timely delivery of a Redeemable Bond to the Trustee with the
"Option to Elect Repayment" form completed in accordance with the
foregoing, the outstanding principal amount of such Redeemable Bond
(or portion thereof indicated on the "Option to Elect Repayment")
shall become due and payable on October 15, 2004, at the price
equal to 100% of the principal amount to be repaid, plus accrued
and unpaid interest to October 15, 2004.  For purposes of this
provision, "business day" means any day that is not a day on which
banks in the City of New York are authorized by law to close.

      In case an event of default, as defined in the Amended
Indenture, shall occur, the principal of all the Bonds at any such
time outstanding under the Amended Indenture may be declared or may
become due and payable, upon the conditions and in the manner and
with the effect provided in the Amended Indenture.  The Amended 
Indenture provides that such declaration may in certain events be
waived by the holders of a majority in principal amount of the
Bonds entitled to vote then outstanding.

<PAGE>

                               19

      This Bond is transferable by the registered owner hereof, in
person or by duly authorized attorney, on the books of the Company
to be kept for that purpose at the agency of the Company in the
Borough of Manhattan, The City of New York, upon surrender and
cancellation of this Bond and on presentation of a duly executed
written instrument of transfer, and thereupon a new Bond or Bonds
of the same series, of the same aggregate principal amount and in
authorized denominations will be issued to the transferee or
transferees in exchange therefor; and this Bond, with or without
others of the same series, may in like manner be exchanged for one
or more new Bonds of the same series of other authorized
denominations but of the same aggregate principal amount; all
subject to the terms and conditions set forth in the Amended
Indenture.

      No recourse shall be had for the payment of the principal of,
or the interest on, this Bond, or for any claim based hereon or
otherwise in respect hereof or of the Amended Indenture or any
indenture supplemental thereto, against any incorporator, or
against any stockholder, director or officer, past, present or
future, of the Company or of any predecessor or successor
corporation, either directly or through the Company or any such
predecessor or successor corporation, whether for amounts unpaid on
stock subscriptions or by virtue of any constitution, statute or
rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such liability, whether at common law, in equity, by
any constitution, statute or otherwise, of  incorporators,
stockholders, directors or officers being released by every owner 
hereof by the acceptance of this Bond and as part of the
consideration  for the issue hereof, and being likewise released by
the terms of the Amended Indenture.

      SECTION 3.   The Bonds of 2007 Series shall be registered
Bonds without coupons in denominations of any multiple of $1,000,
numbered consecutively upwards from R1.

      SECTION 4.   Until Bonds of 2007 Series in definitive form
are ready for delivery, the Company may execute, and upon its
request in writing the Trustee shall authenticate and deliver, in
lieu thereof, Bonds for such series in temporary form, as provided
in Section 9 of Article II of the Original Indenture as amended.

<PAGE>

                               20

                            PART II.

                         ISSUE OF BONDS.

      SECTION 1.   Except for Bonds of 2007 Series issued pursuant
to Section 13 of Article II of the Original Indenture as amended,
the principal amount of Bonds of 2007 Series which may be
authenticated and delivered hereunder is limited to $175,000,000
aggregate principal amount.

      SECTION 2.   Bonds of 2007 Series in the aggregate principal
amount permitted in Section 1 of this Part II, may at any time
subsequent to the execution hereof be executed by the Company and
delivered to the Trustee and shall be authenticated by the Trustee
and delivered (either before or after the recording hereof) to or
upon the order of the Company evidenced by a writing or writings,
signed by its President or one of its Vice Presidents and its
Treasurer or one of its Assistant Treasurers, at such time or times
as may be requested by the Company subsequent to the receipt by the
Trustee of

      (1)  the certified resolution and the officers' certificate
required by Section 3(a) and Section 3(b) of Article III of the
Original Indenture as amended; 

      (2)   the opinion of counsel required by Section 3(c) of
Article III of the Original Indenture as amended;

      (3)    cash, if any, in the amount required to be deposited
by Section 3(d) of  Article III of the Original Indenture as
amended, which shall be held and applied by the Trustee as provided
in said Section 3(d);

      (4)    the certificates, instruments, opinions of counsel,
prior lien bonds and cash, if any, required by Section 4 of Article
III of the Original Indenture as amended, except that, as required
by Part V of this Supplemental Indenture, property additions
purchased, constructed or otherwise acquired on or before December
31, 1946 shall not be made the basis for the authentication and
delivery of Bonds of 2007 Series; and

      (5)    the certificates and opinions required by Article
XVIII of the Original Indenture as amended.

<PAGE>

                               21

                            PART III.

                REDEMPTION AT OPTION OF COMPANY.

      The Bonds of 2007 Series are not redeemable at the option of
the Company prior to maturity.

                            PART IV.

                 REPAYMENT AT OPTION OF HOLDERS

      SECTION 1.  The Bonds of 2007 Series shall be repayable on
October 15, 2004, at the option of the respective holders thereof,
at 100% of their principal amount, together with accrued and unpaid
interest to October 15, 2004, in accordance with the procedures set
forth in the form of Bond of 2007 Series contained in Section 2 of
Part I hereof.

      SECTION 2.  All Bonds of 2007 Series repaid pursuant to the
provisions of this Part IV shall forthwith be canceled.

                             PART V.

         ADDITIONAL PARTICULAR COVENANTS OF THE COMPANY.

       The Company hereby covenants, warrants and agrees that so
long as any Bonds of 2007 Series are outstanding:

      SECTION 1.  The Company will not withdraw, pursuant to the
provisions of Section 2 of Article VIII of the Original Indenture
as amended, any moneys held by the Trustee as part of the trust
estate in excess of an amount equal to the aggregate principal
amount of such of the refundable Bonds as were theretofore issued
by the Company; and that upon any such withdrawal by the Company
refundable Bonds equal in aggregate principal amount to the amount
so withdrawn shall be deemed to have been made the basis of such
withdrawal.

      SECTION 2. Property additions purchased, constructed or
otherwise

<PAGE>

                               22

acquired on or before December 31, 1946 shall not be made the basis
for the authentication and delivery of Bonds, or the withdrawal of
cash, or the reduction of the amount of cash required to be paid to
the Trustee under any provision of the Indenture.

                            PART VI.

         AMENDMENT OF INDENTURE TO PERMIT QUALIFICATION
               UNDER TRUST INDENTURE ACT OF 1939.

       The Company and the Trustee, from time to time and at any
time, without any vote or consent of the holders of the Bonds of
2007 Series, may enter into such indentures supplemental to the
Original Indenture as may or shall by them be deemed necessary or
desirable to add to or modify or amend any of the provisions of the
Original Indenture so as to permit the qualification of the
Original Indenture under the Trust Indenture Act of 1939.

       Except to the extent specifically provided herein, no
provision of this Supplemental Indenture is intended to modify, and
the parties hereto do hereby adopt and confirm, the provisions of
Section 318(c) of the Trust Indenture Act of 1939 which amend and
supersede provisions of the Original Indenture, as supplemented, in
effect prior to November 15, 1990.

                            PART VII.

                AMENDMENT OF ORIGINAL INDENTURE.

Notwithstanding any other provisions of the Original Indenture as
amended, the holders of the Bonds of 2007 Series, by their holding
of such Bonds, are deemed to have approved the following amendment
to the Original Indenture as amended and to have authorized the
Trustee to take any action necessary to evidence or effectuate such
approval:

      Sections 5 and 6 of Article XV of the Original Indenture as
      amended are hereby amended by changing the words and figures
      "eighty percent.  (80%)" to the words and figures "sixty
      percent. (60%)" wherever in such Sections such words and
      figures occur.

<PAGE>

                               23

                           PART VIII.

                          THE TRUSTEE.

      The Trustee hereby accepts the trusts hereby declared and
provided and agrees to perform the same upon the terms and
conditions in the Original Indenture as amended set forth and upon
the following terms and conditions:

      The Trustee shall not be responsible in any manner whatsoever
for or in respect of the validity or sufficiency of this
Supplemental Indenture or the due execution hereof by the Company
or for or in respect of the recitals contained herein, all of which
recitals are made by the Company solely.  In general, each and
every term and condition contained in Article XIII of the Original
Indenture as amended shall apply to this Supplemental Indenture
with the same force and effect as if the same were herein set forth
in full, with such omissions, variations and modifications thereof
as may be appropriate to make the same conform to this Supplemental
Indenture.

                            PART IX.

                    MISCELLANEOUS PROVISIONS.

      This Supplemental Indenture may be simultaneously executed in
any number of counterparts, each of which when so executed shall be
deemed to be an original; but such counterparts shall together
constitute but one and the same instrument.

      Potomac Electric Power Company hereby constitutes and
appoints Dennis R. Wraase, one of its Senior Vice Presidents, to be
its true and lawful attorney-in-fact, for it and in its name to
appear before any officer authorized by law to take and certify
acknowledgments of deeds to be recorded in the District of
Columbia, in the State of Maryland, in the Commonwealth of
Virginia, and in the Commonwealth of Pennsylvania and to
acknowledge and deliver these presents as the act and deed of said
Potomac Electric Power Company.

      The Bank of New York, hereby constitutes and appoints
Frederick W. Clark, one of its Vice Presidents, to be its true and
lawful attorney-in-fact, for it and in its name to appear before
any officer authorized by law to take and certify acknowledgments
of deeds to be recorded in the District of Columbia,

<PAGE>

                               24

in the State of Maryland, in the Commonwealth of Virginia, and in
the Commonwealth of Pennsylvania and to acknowledge and deliver
these presents as the act and deed of said The Bank of New York.

      IN WITNESS WHEREOF, said Potomac Electric Power Company has
caused this Supplemental Indenture to be executed on its behalf by
its President or one of its Vice Presidents and its corporate seal
to be hereto affixed and said seal and this Supplemental Indenture
to be attested by its Secretary or one of its Assistant
Secretaries; and said The Bank of New York, in evidence of its
acceptance of the trust hereby created, has caused this
Supplemental Indenture to be executed on its behalf by its
President or one of its Vice Presidents, and its corporate seal to
be hereto affixed and said seal and this Supplemental Indenture to
be attested by one of its Assistant Vice Presidents, all as of the
2nd day of October, One thousand nine hundred and ninety-seven.

                                     POTOMAC ELECTRIC POWER COMPANY
(CORPORATE SEAL)
                                          /S/ D. R. WRAASE
                                      By ..........................
                                              DENNIS R. WRAASE,
                                            Senior Vice President
Attested:

/S/ ELLEN SHERIFF ROGERS
 ..........................
   ELLEN SHERIFF ROGERS,
       Secretary
Signed, sealed and delivered by
Potomac Electric Power Company in
       the presence of:
 
/S/ D. GARDNER    
 ...........................
/S/ MARK J. JEWELL 
    
 ...........................
               As Witnesses

<PAGE>

                               25


                                         THE BANK OF NEW YORK
                                                      

                                            /S/ F. CLARK
(Corporate Seal)                         By .....................
                                             FREDERICK W. CLARK
                                               Vice President
Attested:

/S/ ROBERT F. McINTYRE
 ...........................
  ROBERT F. McINTYRE
    Vice President
Signed, sealed and delivered by The
Bank of New York  in the presence of:

/S/ MARK J. JEWELL
 ...........................
/S/ D. GARDNER
 ...........................
             As Witnesses

<PAGE>

                               26

CITY OF WASHINGTON,
DISTRICT OF COLUMBIA,                    SS.:

      I, LISA A. POOLE, a Notary Public in and for the District of
Columbia, United States of America, whose commission as such will
expire July 31, 2002, do hereby certify that DENNIS R. WRAASE and
ELLEN SHERIFF ROGERS, whose names as Senior Vice President and
Secretary, respectively, of POTOMAC ELECTRIC POWER COMPANY, a
corporation, are signed to the foregoing and hereto attached deed,
bearing date as of the 2nd day of October, personally appeared this
day before me in my District aforesaid and acknowledged themselves
to be, respectively, a Senior Vice President and the Secretary of
Potomac Electric Power Company, and that they as such, being
authorized so to do, executed the said deed by signing the name of
Potomac Electric Power Company by Dennis R. Wraase, as Senior Vice
President, and attested by Ellen Sheriff Rogers, as Secretary, and
acknowledged the same before me in my District aforesaid and
acknowledged the foregoing instrument to be the act and deed of
Potomac Electric Power Company.

       Given under my hand and official seal this 2nd day of
October, 1997.

(NOTARIAL SEAL)
 
                                            /S/ LISA A. POOLE
                                         .........................
                                               Notary Public
                                            District of Columbia

<PAGE>

                               27

CITY OF WASHINGTON,
DISTRICT OF COLUMBIA,                 SS.:

      I, LISA A. POOLE, a Notary Public in and for the District of
Columbia, United States of America, do hereby certify that DENNIS
R. WRAASE, a Senior Vice President of POTOMAC ELECTRIC POWER
COMPANY, a corporation, one of the parties to the foregoing
instrument bearing date as of the 2nd day of October, and hereto
annexed, this day personally appeared before me in the City of
Washington, the said Dennis R. Wraase being personally well known
to me as the person who executed the said instrument as a Senior
Vice President of and on behalf of said Potomac Electric Power
Company and known to me to be the attorney-in-fact duly appointed
therein to acknowledge and deliver said instrument on behalf of
said corporation, and, as such attorney-in-fact, he acknowledged
said instrument to be the act and deed of said Potomac Electric
Power Company, and delivered the same as such.  I further certify 
that the said Dennis R. Wraase, being by me duly sworn, did depose
and say that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal and was so
affixed by order of the Board of Directors of said corporation; and
that he signed his name thereto by like order.  My commission
expires July 31, 2002.

      Given under my hand and official seal this 2nd day of
October, 1997.
 
(NOTARIAL SEAL)
 
                                            /S/ LISA A. POOLE
                                         .........................
                                               Notary Public
                                            District of Columbia

<PAGE>

                               28

CITY OF WASHINGTON,
DISTRICT OF COLUMBIA,          SS.:

      I, LISA A. POOLE, a Notary Public in and for the District of
Columbia, United States of America, do hereby certify that
FREDERICK W. CLARK and ROBERT F. McINTYRE, whose names as Vice
Presidents, of THE BANK OF NEW YORK, a corporation, are signed to
the foregoing and hereto attached deed, bearing date as of the 2nd
day of October, 1997, personally appeared before me this day in my
District aforesaid and acknowledged themselves to be, respectively,
Vice Presidents of The Bank of New York, and that they as such,
being authorized so to do, executed the said deed by signing the
name of The Bank of New York, by FREDERICK W. CLARK as Vice
President, and attested by ROBERT F. McINTYRE as Vice President,
and acknowledged the same before me in my District aforesaid and
acknowledged the foregoing instrument to be the act and deed of The
Bank of New York, as therein set forth.
 
       Given under my hand and notarial seal this 2nd day of
October, 1997.

(NOTARIAL SEAL)
 
                                            /S/ LISA A. POOLE
                                         .........................
                                               Notary Public
                                            District of Columbia

                               My Commission Expires July 31, 2002.



<PAGE>

                               29

CITY OF WASHINGTON,
DISTRICT OF COLUMBIA,          SS.:

      FREDERICK W. CLARK, of full age, being sworn according to
law, on his oath deposes and says that he is a Vice President of
THE BANK OF NEW YORK, the Trustee named in the foregoing
Supplemental Indenture, dated as of the 2nd day of October, 1997,
that he is the agent of said Trustee for the purpose of perfecting
such Supplemental Indenture and that the consideration in the
Original Indenture referred to therein and in all indentures
supplemental to said Original Indenture, including the foregoing
Supplemental Indenture, is true and bona fide as therein set forth.


                                         /S/ F. CLARK
                                       ............................
                                            FREDERICK W. CLARK

Subscribed and sworn to before me
  this 2nd day of October, 1997.

  /S/ LISA A. POOLE 
 .................................
        Notary Public

My Commission Expires July 31, 2002.

(NOTARIAL SEAL)


<PAGE>

                               30

CITY OF WASHINGTON,
DISTRICT OF COLUMBIA,          SS.:

      I, LISA A. POOLE, a Notary Public in and for the District of
Columbia, United States of America, do hereby certify that
FREDERICK W. CLARK, a Vice President of THE BANK OF NEW YORK, a
corporation, one of the parties to the foregoing instrument bearing
date as of the 2nd day of October, 1997, and hereto annexed, this
day personally appeared before me in the City of Washington, the
said FREDERICK W. CLARK , being personally well known to me as the
person who executed the said instrument as a Vice President of and
on behalf of said The Bank of New York, and known to me to be the
attorney-in-fact duly appointed therein to acknowledge and deliver
said instrument on behalf of said corporation, and, as such
attorney-in-fact, he acknowledged said instrument to be the act and
deed of said The Bank of New York, and delivered the same as such.
I further certify that the said FREDERICK W. CLARK , being by me
duly sworn, did depose and say that he knows the seal of said
corporation; that the seal affixed to said instrument is such
corporate seal and was so affixed by order of the Board of
Directors of said corporation; and that he signed his name thereto
by like order.

      Given under my hand and official seal this 2nd day of
October, 1997.

(NOTARIAL SEAL)
 
                                            /S/ LISA A. POOLE
                                         .........................
                                               Notary Public
                                            District of Columbia

                               My Commission Expires July 31, 2002.

<PAGE>

                               31

                    CERTIFICATE OF RESIDENCE

The Bank of New York, Mortgagee and Trustee within named, hereby
certifies that its precise residence is 101 Barclay Street, New
York, NY  10286.

                                    THE BANK OF NEW YORK

                                          /S/ F. CLARK
                                    By .........................
                                          FREDERICK W. CLARK,
                                            Vice President