RESTATED ARTICLES OF INCORPORATION

                         AND ARTICLES OF RESTATEMENT 

                                      OF

                        POTOMAC ELECTRIC POWER COMPANY


      These Restated Articles of Incorporation and Articles of
Restatement were duly adopted on December 21, 1992 by the Board of
Directors of Potomac Electric Power Company (hereinafter sometimes
called the "Company"), a District of Columbia corporation and a
domestic corporation of the Commonwealth of Virginia, in accordance
with the provisions of Section 58a of the District of Columbia
Business Corporation Act, D.C. Code Section 29-358.1, and Chapter
522 of the Virginia State Corporation Act, Va. Code Section
13.1-711 (1989 Replacement Volume).  The Company's Articles of
Incorporation were originally filed in the District of Columbia on
April 28, 1896, and Articles of Reincorporation of an Existing
Domestic Corporation were filed in the District of Columbia on
January 20, 1957.

      The Restated Articles of Incorporation and Articles of
Restatement only restate and integrate and do not further amend the
provisions of the Company's articles of incorporation as previously
amended or supplemented, and there is no discrepancy between those
provisions and the provisions of these restated articles.

      The Restated Articles of Incorporation and Articles of
Restatement of the Company are as follows:

I.    The name of the Company is 

                        POTOMAC ELECTRIC POWER COMPANY.

II.   The duration of the Company shall be perpetual.

III.  The purposes for which the Company is organized are:

            (A)   To manufacture, produce, generate, buy, sell,
     lease, deal in, transmit and distribute (i) power, light, energy
     and heat in the form of electricity or otherwise, (ii)
     by-products thereof and (iii) appliances, facilities and
     equipment for use in connection therewith;

            (B)   To acquire (by construction, purchase,
     condemnation, lease or otherwise), use, maintain, operate, deal
     in and dispose of, power plants, dams, substations, office
     buildings, service buildings, transmission lines, distribution
     lines, and all other buildings, machinery, property (real,
     personal or mixed) and facilities (including water power and
     other sites), and all fixtures, equipments and appliances,
     necessary, appropriate, incidental or convenient for its
     corporate purposes; and

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            (C)   To conduct business as a public service company,
     which business is briefly described as the purchase, manufacture,
     generation, transmission, distribution and sale, both at
     wholesale and at retail, of electricity or other power or energy
     for light, heat and power purposes in the District of Columbia,
     the Commonwealth of Virginia, the State of Maryland and
     elsewhere.

IV.   The aggregate number of shares which the Company shall have
authority to issue is 215,042,227 divided into three classes: the
first consisting of 6,242,227 shares of the par value of $50 each;
the second consisting of 8,800,000 shares of the par value of $25
each; and the third consisting of 200,000,000 shares of the par
value of $1 each.

V.    Said 6,242,227 shares of the par value of $50 each are
designated as Serial Preferred Stock;  said 8,800,000 shares of the
par value of $25 each are designated as Preference Stock; and said
200,000,000 shares of the par value of $1 each are designated as
Common Stock.  Such of said authorized shares of Serial Preferred
Stock, Preference Stock and Common Stock as are unissued at any
time may be issued, in whole or in part, at any time or from time
to time by action of the Board of Directors of the Company, subject
to the laws in force in the District of Columbia and the
Commonwealth of Virginia and the terms and conditions set forth in
the Articles of Incorporation, as amended, of the Company.

      The preferences, qualifications, limitations, and
restrictions, the special or relative rights, and the voting power
in respect of the shares of each said class are as follows:

                    (A) SERIAL PREFERRED STOCK

      (a)   Subject to the provisions hereafter in this subdivision
(A) set forth, the Serial Preferred Stock may be divided into and
issued, from time to time, in one or more series as the Board of
Directors may determine, and the Board of Directors is hereby
expressly authorized to adopt from time to time resolutions, in
respect of any unissued shares of Serial Preferred Stock, to fix
and determine:

            (1)   The division of such shares into series and the
     designation and authorized number of the shares of the particular
     series;

            (2)   The rate of dividend for the particular series;

            (3)   The price or prices at and the terms and
     conditions on which shares of the particular series may be
     redeemed;


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            (4)   The amount payable upon shares of the particular
     series in the event of voluntary liquidation;

            (5)   Sinking fund provisions (if any) for the
     redemption or purchase of shares of the particular series; and

            (6)   The terms and conditions (if any) on which the
     shares of the particular series may be converted into other
     classes of stock of the Company;

All shares of Serial Preferred Stock shall be of equal rank with
each other, regardless of series, and all shares thereof shall be
identical except as to the above listed relative rights and
preferences, in respect of any or all of which there may be
variations between different series as fixed and determined by the
Board of Directors in said resolutions.  All shares of the Serial
Preferred Stock of any one series shall be identical with each
other in all respects.

      (b)   The following terms, as used in this subdivision (A),
shall have the following meanings:

            (1)   The term senior stock shall mean any class of
     stock ranking in its claim to assets or dividends prior to the
     1,600,000 shares of Serial Preferred Stock created hereby;

            (2)   The term parity stock shall mean any class of
     stock ranking in its claim to assets or dividends on a parity
     with the Serial Preferred Stock, but shall not include any of the
     1,600,000 shares of Serial Preferred Stock created hereby, nor
     shall it include any increase in the authorized amount of the
     Serial Preferred Stock; and 

            (3)   The term junior stock shall mean the Common Stock
     and any other class of stock ranking in its claim to assets or
     dividends junior to the Serial Preferred Stock.

      (c)   The holders of the Serial Preferred Stock shall be
entitled to receive, but only when and as declared by the Board of
Directors, cumulative cash dividends in the case of each series at
the annual rate for such series theretofore fixed by the Board of
Directors as hereinbefore provided, payable quarter-yearly on the
first days of March, June, September and December in each year to
stockholders of record on the respective dates fixed for the
purpose by the Board of Directors as dividends are declared.

            No dividend shall be declared on any shares of the
Serial Preferred Stock unless there shall likewise be declared on
all shares of the

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Serial Preferred Stock at the time outstanding like dividends, ratably
in proportion to the respective annual dividend rates fixed therefor.

            The dividends on shares of the Serial Preferred Stock
shall be cumulative from the quarter-yearly dividend payment date
next preceding the date of issue of such shares, unless such shares
shall have been issued after the record date and before the payment
date for a particular dividend, in which case the dividends shall
be cumulative from the quarter-yearly dividend payment date next
ensuing after the date of issue of such shares.  Unless dividends
on all outstanding shares of the Serial Preferred Stock, at the
annual dividend rate or rates fixed therefor, shall have been paid
for all past quarter-yearly dividend periods to which they are
entitled, and the full dividend thereon at said rate or rates for
the quarter-yearly dividend period current at the time shall have
been paid or declared and set apart for payment, but without
interest on accumulated dividends, and unless all sinking fund
payments, if any, theretofore required to have been made shall have
been made or provided for, no dividends shall be declared and no
other distribution shall be made on any junior stock, and no junior
stock shall be purchased, retired or otherwise acquired for value
by the Company.  No dividend shall be declared on any junior stock
payable more than 120 days after the date of declaration.

            The holders of the Serial Preferred Stock shall not be
entitled to receive any dividends thereon other than the dividends
referred to in this subdivision (c).

      (d)   The Company, at the option of the Board of Directors or
by the operation of the sinking fund, if any, provided for the
Serial Preferred Stock of any series, may, from time to time,
subject to such terms and conditions, if any, as may be fixed by
the Board of Directors with respect to any series as hereinbefore
provided, redeem the whole or any part of such series at any time
outstanding, by paying in cash the applicable redemption price
therefor theretofore fixed by the Board of Directors as
hereinbefore provided.

            Notice of every such redemption shall be given by
publication at least once in each of two calendar weeks in each of
two daily newspapers printed in the English language, one published
and of general circulation in the City of Washington, District of
Columbia, and the other in the Borough of Manhattan, The City of
New York, the first publication to be at least thirty days and not
more than sixty days prior to the date fixed for such redemption. 
At least thirty days' and not more than sixty days' previous notice
of every such redemption shall also be mailed to the holders of
record of the shares so to be redeemed, at their respective
addresses as the same shall appear on the books of the Company; but
failure to mail such notice or any defect therein or in the mailing
thereof shall not affect the validity of the proceedings for the
redemption of any shares so to be redeemed.

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<PAGE>

            In case of the redemption of a part only of any series
of the Serial Preferred Stock at the time outstanding, the Company
or its duly authorized agent shall select by lot the shares so to
be redeemed.  The Board of Directors shall have full power and
authority, subject to the limitations and provisions herein
contained, to prescribe the manner in which the drawings by lot
shall be conducted and the terms and conditions upon which the
Serial Preferred Stock shall be redeemed from time to time.

            If such notice of redemption shall have been duly given
by publication, and if on or before the redemption date specified
therein the funds necessary for such redemption shall have been set
aside by the Company, separate and apart from its other funds, in
trust for the account of the holders of the shares so called for
redemption, so as to be and continue to be available therefor,
then, notwithstanding that any certificate for shares so called for
redemption shall not have been surrendered for cancellation, the
shares represented thereby shall no longer be deemed to be
outstanding on and after such redemption date, and all rights with
respect to such shares shall forthwith on such redemption date
cease and terminate, except only the right of the holders thereof
to receive the amount payable upon redemption thereof, without
interest.

            Provided, however, in the alternative, that, after
giving notice by publication of any such redemption as hereinbefore
provided or after giving to the bank or trust company referred to
below irrevocable authorization to give or complete such notice by
publication, and prior to the redemption date specified in such
notice, the Company may deposit in trust, for the account of the
holders of the shares of Serial Preferred Stock so to be redeemed,
the funds necessary for such redemption with a bank or trust
company in good standing, organized and doing business under the
laws of the United States or of any state or territory or of the
District of Columbia and having its principal office in the City of
Washington, District of Columbia, or in the Borough of Manhattan,
The City of New York, having capital, surplus and undivided profits
aggregating at least Ten Million Dollars, designated in such notice
of redemption, and thereupon all shares of the Serial Preferred
Stock with respect to which such deposit shall have been made shall
no longer be deemed to be outstanding, and all rights with respect
to such shares of Serial Preferred Stock shall forthwith upon such
deposit in trust cease and terminate, except only the right of the
holders thereof to receive from such bank or trust company at any
time after the time of such deposit the funds so deposited, without
interest and the right to exercise, on or before such redemption
date privileges of conversion or exchange, if any, not theretofore
expiring.

            Shares of Serial Preferred Stock purchased or redeemed
pursuant to any obligation of the Company to purchase or redeem
shares for a sinking fund, shares redeemed pursuant to the
provisions hereof or purchased and for

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which credit shall have been taken against any sinking fund
obligation, and shares surrendered pursuant to any conversion right,
shall not be reissued or otherwise disposed of and shall be canceled. 
Any other shares of Serial Preferred Stock redeemed or otherwise
acquired by the Company shall continue to be part of the authorized
capital stock of the Company and may thereafter, in the discretion of
the Board of Directors and to the extent permitted by law, be sold or
reissued from time to time, as part of the same or another series,
subject to the terms and conditions herein set forth.

            If and so long as the Company shall be in default in
the payment of any quarter-yearly dividend on shares of any series
of the Serial Preferred Stock, or shall be in default in the
payment of funds into or the setting aside of funds for any sinking
fund created for any series of the Serial Preferred Stock, the
Company may not (other than by the use of unapplied funds, if any,
paid into or set aside for a sinking fund or funds prior to such
default) (i) redeem any shares of the Serial Preferred Stock unless
all shares thereof are redeemed, or (ii) purchase or otherwise
acquire for a consideration any shares of the Serial Preferred
Stock, except pursuant to offers of sale made by holders of the
Serial Preferred Stock in response to an invitation for tenders
given simultaneously by the Company by mail to the holders of
record of all shares of the Serial Preferred Stock then
outstanding.

      (e)   In the event of any voluntary liquidation, dissolution
or winding up of the Company, then, before any distribution or
payment shall be made to the holders of any junior stock, the
holder of each share of the Serial Preferred Stock shall be
entitled to be paid in full in cash the amount fixed with respect
to such share by the Board of Directors as hereinbefore provided,
together with an amount computed at the annual dividend rate
therefor from the date upon which dividends thereon became
cumulative to the date fixed for the payment thereof, less the
aggregate of the dividends theretofore paid thereon.  If such
payments shall have been made in full to the holders of the Serial
Preferred Stock, the remaining assets and funds of the Company
shall be distributed among the holders of the Common Stock and any
other junior stock according to their respective rights,
preferences, restrictions, qualifications and shares.

            In the event of any involuntary liquidation,
dissolution or winding up of the Company, then, before any
distribution or payment shall be made to the holders of any junior
stock, the holder of each share of the Serial Preferred Stock shall
be entitled to be paid in full the par value thereof in cash,
together with an amount computed at the annual dividend rate
therefor from the date upon which dividends thereon became
cumulative to the date fixed for the payment thereof, less the
aggregate of the dividends theretofore paid thereon.  If such
payments shall have been made in full to the holders of the Serial
Preferred Stock, the remaining assets and funds of

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the Company shall be distributed among the holders of the Common Stock
and any other junior stock according to their respective rights,
preferences, restrictions, qualifications and shares.

            With respect to the payments to be made in the event of
voluntary or involuntary liquidation, dissolution or winding up of
the Company, all series of the Serial Preferred Stock shall rank
ratably according to their respective interests without preference
of any series thereof over any other series.

      (f)   Subject to the limitations hereinafter specified,
whenever the full dividends on the Serial Preferred Stock at the
time outstanding for all past quarter-yearly dividend periods shall
have been paid and the full dividend thereon for the quarter-yearly
dividend period then current shall have been paid or declared and
a sum sufficient for the payment thereof set apart, then such
dividends (payable in cash, stock or otherwise) as may be
determined by the Board of Directors may be declared on the Common
Stock and any other junior stock, and the Serial Preferred Stock
shall not be entitled to participate in any such dividends.

      (g)   So long as any shares of the Serial Preferred Stock are
outstanding, no amendment to the Articles of Incorporation of the
Company which would (i) create, change any junior stock into, or
increase the rights and preferences of, any senior or parity stock,
(ii) increase the authorized amount of the Serial Preferred Stock
in excess of the 1,600,000 shares created hereby or the authorized
amount of any senior or parity stock, or (iii) change the express
terms of the outstanding shares of Serial Preferred Stock in any
manner substantially prejudicial to the holders thereof, shall be
made without the affirmative consent (given in writing without a
meeting or by a vote at a meeting duly called for the purpose) of
the holders of more than two thirds of the aggregate number of
shares of the Serial Preferred Stock then outstanding; but any such
amendment may be made with such affirmative consent, together with
such additional vote or consent of stockholders as from time to
time may be required by law; provided, however, that if any such
amendment would change the express terms of the outstanding shares
of Serial Preferred Stock of any particular series in any manner
substantially prejudicial to the holders thereof without
correspondingly affecting the holders of the outstanding shares of
Serial Preferred Stock of all series, then, in lieu of such consent
of the holders of Serial Preferred Stock (or, if such consent of
the holders of the outstanding shares of Serial Preferred Stock is
required by law, in addition thereto), a like affirmative consent
of the holders of more than two thirds of the Serial Preferred
Stock of the affected series at the time outstanding shall be
necessary for making such amendment.

      (h)   So long as any shares of the Serial Preferred Stock are
outstanding, the Company shall not, without the affirmative consent
(given in

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writing without a meeting or by a vote at a meeting duly
called for the purpose) of the holders of at least a majority of
the aggregate number of shares of the Serial Preferred Stock then
outstanding:

            (1)   issue any shares of the Serial Preferred Stock,
     in excess of 300,000 shares thereof at any one time
     outstanding, or issue any shares of senior or parity
     stock (either directly or by reclassification), unless
     for a period of twelve consecutive calendar months within
     the fifteen calendar months next preceding the date on
     which such shares are to be issued net earnings (after
     depreciation and taxes but before deducting interest) have
     been at least one and one-half times the annual interest charges
     and dividend requirements on all indebtedness of the Company and
     on all shares of Serial Preferred Stock and senior and parity
     stock which shall then be outstanding; for the purpose of such
     computation, the shares and any indebtedness proposed to be
     issued in connection with such issue shall be included, but any
     indebtedness or shares proposed to be retired in connection with
     such issue shall be excluded, and in determining such net
     earnings, the Board of Directors of the Company shall make such
     adjustments, by way of increase or decrease in such net earnings,
     as shall in their opinion be necessary to give effect, for the
     entire twelve months for which such net earnings are determined,
     to any acquisition or disposition of property the earnings of
     which can be separately ascertained, and to any issue, sale,
     assumption or retirement of securities, which shall have occurred
     after the commencement of such twelve months' period and prior to
     or in connection with the issue of the shares of the Serial
     Preferred Stock or senior or parity stock; or

            (2)   issue any shares of the Serial Preferred Stock,
     in excess of 300,000 shares thereof at any one time outstanding,
     or issue any shares of senior or parity stock (either directly or
     by reclassification), unless immediately after such proposed
     issue the aggregate of (i) the capital of the Company applicable
     to its stock ranking junior as to assets and dividends and (ii)
     the surplus of the Company shall be not less than the aggregate
     amount payable upon involuntary liquidation to the holders of the
     Serial Preferred Stock and of senior and parity stock then to be
     outstanding, excluding from such computation all stock to be
     retired through such proposed issue; or

            (3)   issue any unsecured notes, debentures or other
     securities representing unsecured indebtedness, or assume or
     guarantee any such unsecured securities, other than for the
     extension, renewal or refunding of outstanding debt securities
     theretofore issued or assumed, or for the redemption or
     retirement of shares of the Serial Preferred Stock or of any
     senior or parity stock, if immediately after such issue or
     assumption the total principal amount of such unsecured
     securities then

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     outstanding would exceed twenty-five per cent of the aggregate of
     (i) the total principal amount of all bonds or other securities
     representing secured indebtedness issued, assumed or guaranteed
     by the Company and then to be outstanding and (ii) the capital
     and surplus of the Company as then stated on its books less any
     known excess of book value of the Company's physical property
     which is devoted to public use over (I) the actual cost thereof
     to the Company and (II) as to such property as was not acquired
     as the result of arm's length negotiations, the actual cost
     thereof to the one first devoting the same to public use; or

            (4)   merge or consolidate with or into any other
     corporation or corporations or sell or lease all or substantially
     all of its assets, unless such merger, consolidation, sale or
     lease, or the issue and assumption of all securities to be issued
     or assumed in connection with any such merger, consolidation,
     sale or lease shall have been ordered, approved or permitted by
     the regulatory authority or authorities having jurisdiction in
     the premises; provided that the provisions of this clause (4)
     shall not apply to a purchase, lease or other acquisition by the
     Company of the franchises or assets of another corporation, or
     otherwise apply in any manner which does not involve a merger or
     consolidation or sale or lease by the Company of all or
     substantially all of its assets.

      (i)   So long as any shares of the Serial Preferred Stock are
outstanding, the Company shall not pay any dividends on its Common
Stock (other than dividends payable in Common Stock) or make any
distribution on, or purchase or otherwise acquire for value, any of
its Common Stock (each such payment, distribution, purchase and/or
acquisition being herein referred to as a "Common Stock dividend"),
except to the extent permitted by the following provisions:

            (1)   No Common Stock dividend shall be declared or
     paid in an amount which, together with all other Common Stock
     dividends declared in the year ending on (and including) the date
     of the declaration of such Common Stock dividend, would in the
     aggregate exceed 50% of the net earnings of the Company for the
     period consisting of the twelve consecutive calendar months
     ending on the last day of the calendar month next preceding the
     declaration of such Common Stock dividend, after deducting from
     such net earnings dividends accruing on any stock other than
     Common Stock of the Company during such period, if at the end of
     such period, the ratio (herein referred to as the "capitalization
     ratio") of the sum of (i) the capital represented by the Common
     Stock (including premiums on Common Stock) and (ii) the surplus
     accounts of the Company, to the sum of (I) the total capital and
     (II) the surplus accounts of the Company (after adjustment in
     each case of the surplus

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     accounts to reflect payment of such Common Stock dividend) would
     be less than 20%.

            (2)   If such capitalization ratio, determined as
     aforesaid, shall be 20% or more, but less than 25%, no Common
     Stock dividend shall be declared or paid in an amount which,
     together with all other Common Stock dividends declared in the
     year ending on (and including) the date of the declaration of
     such Common Stock dividend, would in the aggregate exceed 75% of
     the net earnings of the Company for the period consisting of the
     twelve consecutive calendar months ending on the last day of the
     calendar month next preceding the declaration of such Common
     Stock dividend after deducting from such net earnings dividends
     accruing on any stock other than the Common Stock of the Company
     during such period; and

            (3)   If such capitalization ratio, determined as
     aforesaid, shall be in excess of 25%, no Common Stock dividend
     shall be declared or paid which would reduce such capitalization
     ratio to less than 25% except to the extent permitted by the next
     preceding subparagraphs (1) and (2).

      For the purposes of this subdivision (i) the total capital of
the Company shall be deemed to consist of the aggregate of (x) the
principal amount of all outstanding indebtedness of the Company
represented by bonds, notes or other evidences of indebtedness
maturing by their terms one year or more after the date of the
issue thereof and (y) the par or stated value of all outstanding
capital stock (including premiums on capital stock) of all classes
of the Company.  All indebtedness and shares of stock of the
Company acquired by the Company and held in its treasury shall be
excluded in determining total capital.

      Purchases or other acquisitions of Common Stock shall be
deemed, for the purposes of the foregoing provisions of this
subdivision (i), to have been declared as dividends as of the date
on which such purchases or acquisitions are consummated.

      (j)   No holder of Serial Preferred Stock shall be entitled
as such as a matter of right to subscribe for or purchase any part
of any new or additional issue of stock, or securities convertible
into, or carrying or evidencing any right to purchase, stock, of
any class whatever, whether now or hereafter authorized, and
whether issued for cash, property, services or otherwise.

      (k)   Except as otherwise in subdivisions (g) and (h) of this
subdivision (A) or by statute specifically provided, the Serial
Preferred Stock shall have no voting power unless and until
dividends payable thereon are in default in an amount equivalent to
four full quarter-yearly dividends

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on the Serial Preferred Stock at the time outstanding.  In such event
and until such default shall have been remedied as hereinafter
provided, the holders of Serial Preferred Stock, voting separately,
shall become entitled to elect twenty-five percent of the Board of
Directors, or the smallest number of directors that exceeds
twenty-five percent of the Board, but in no event less than two
directors, and the other stockholders then entitled to vote for the
election of directors, voting separately by classes if so required by
the provisions applicable to such classes, shall be entitled to elect
the remaining directors of the Company.  Upon the accrual of such
special right to the holders of Serial Preferred Stock a meeting of
the stockholders then entitled to vote for the election of directors
shall be held upon notice promptly given, as provided in the By-Laws
for a special meeting, by the President or the Chairman of the Board
of the Company.  If within fifteen days after the accrual of such
special right to the holders of Serial Preferred Stock, the
President and the Chairman of the Board of the Company shall fail
to call such meeting, then such meeting shall be held upon notice,
as provided in the By-Laws for a special meeting, given by the
holders of not less than five hundred shares of Serial Preferred
Stock after filing with the Company notice of their intention so to
do.  The terms of office of all persons who may be directors of the
Company at the time shall terminate upon the election of directors
by the holders of Serial Preferred Stock, whether or not at the
time of such termination the remaining directors of the Company
shall have been elected; and thereafter and during the continuance
of such special right of the holders of Serial Preferred Stock, the
Board of Directors shall be divided into two or more classes, one
class consisting of the directors to be elected by the holders of
Serial Preferred Stock and the other class or classes consisting of
the directors to be elected by the other stockholders entitled to
vote for the election of directors, and the directors of each such
class elected at such meeting, or at any adjournment thereof, and
the directors of each such class elected at any subsequent annual
meeting for the election of directors, held during the continuance
of such special right, shall hold office until the next succeeding
annual election and until their respective successors by classes
are elected and qualified.

      However, if and when all dividends then in default on the
Serial Preferred Stock shall be paid (and such dividends shall be
declared and paid as soon as reasonably practicable out of surplus
or net profits, but without diminishing the amount of capital of
the Company), the holders of Serial Preferred Stock shall be
divested of such special right, but subject always to the same
provisions for the revesting of such special right in the holders
of Serial Preferred Stock in the case of any similar future default
or defaults.  Whenever the holders of Serial Preferred Stock shall
be so divested of such special right, the method of election of the
Board of Directors by the vote of the other stockholders entitled
to vote for the election of directors exclusively shall be
restored, and the election of directors shall take place

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at the next succeeding annual meeting for the election of directors,
or at any adjournment thereof.

      (l)   Except as hereinafter provided, during the continuance
of the special right of the holders of Serial Preferred Stock to
elect directors as provided in subdivision (k) of this subdivision
(A), at all meetings for the election of directors the presence in
person or by proxy of the holders of record of a majority of the
outstanding shares of Serial Preferred Stock shall be necessary to
constitute a quorum for the election of directors whom the holders
of Serial Preferred Stock are entitled to elect, and the presence
in person or by proxy of the holders of record of a majority of the
outstanding shares of each other class of stock then entitled to
vote for the election of directors shall be necessary to constitute
a quorum for the election of the directors whom the holders of such
class of stock are entitled to elect.  In the absence of such a
quorum of the holders of stock of any particular class then
entitled to vote for the election of directors, the holders of a
majority of the shares of the stock of such class so present in
person or represented by proxy may adjourn from time to time the
meeting for the election of directors to be elected by such stock,
without notice other than announcement at the meeting, until the
requisite quorum of holders of such stock shall be obtained. 
However, at the first meeting for the election of directors after
any accrual of the special right of the holders of Serial Preferred
Stock, and at any subsequent annual meeting for the election of
directors held during the continuance of such special right, if
there shall not be such a quorum of the holders of Serial Preferred
Stock the meeting shall be adjourned from time to time as above
provided until such quorum shall have been obtained; provided that,
if such quorum shall not have been obtained within ninety days from
the date of such meeting as originally called (or, in the case of
any annual meeting held during the continuance of such special
right, from the date fixed for such annual meeting), the presence
in person or by proxy of the holders of record of one third of the
outstanding shares of Serial Preferred Stock shall then be
sufficient to constitute a quorum for the election of the directors
whom the holders of Serial Preferred Stock are then entitled to
elect.  The absence of a quorum of the holders of any class of
stock then entitled to vote for the election of directors shall
not, except as hereinafter provided, prevent or invalidate the
election by the other class or classes of stockholders of the
directors which they are entitled to elect, if the necessary quorum
of stockholders of such other class or classes is present in person
or represented by proxy at any such meeting or any adjournment
thereof.  However, at the first meeting for the election of
directors after any accrual of the special right of the holders of
Serial Preferred Stock to elect directors as provided in
subdivision (k) of this subdivision (A), the absence of a quorum
of the holders of Serial Preferred Stock shall prevent the election
of directors by the holders of Common Stock until the election of
directors by the holders of Serial Preferred Stock after a quorum
of the holders of Serial Preferred Stock shall have been obtained.

                               12

<PAGE>

                       (B) PREFERENCE STOCK

      (a)   Subject to the provisions hereafter in this subdivision
(B) set forth, the Preference Stock may be divided into and issued,
from time to time, in one or more series as the Board of Directors
may determine, and the Board of Directors is hereby expressly
authorized to adopt from time to time resolutions, in respect of
any unissued shares of Preference Stock, to fix and determine:

            (1)   The division of such shares into series and the
     designation and authorized number of shares of the particular
     series;

            (2)   The rate of dividend and the time of payment for
     the particular series and the dates from which dividends on all
     shares of such series issued prior to the record date for the
     first dividend on shares of such series shall be cumulative;

            (3)   The price or prices at and the terms and
     conditions on which shares of the particular series may be
     redeemed;

            (4)   The amount payable upon shares of the particular
     series in the event of voluntary liquidation;

            (5)   Sinking fund provisions (if any) for the
     redemption or purchase of shares of the particular series; and 

            (6)   The terms and conditions (if any) on which the
     shares of the particular series may be converted into other
     classes of stock of the Company.

All shares of Preference Stock shall be of equal rank with each
other, regardless of series, and all shares thereof shall be
identical except as to the above listed relative rights and
preferences, in respect of any or all of which there may be
variations between different series as fixed and determined by the
Board of Directors in said resolutions.  All shares of the
Preference Stock of any one series shall be identical with each
other in all respects.  All shares of the Preference Stock shall be
subject to the prior rights and preferences of the Serial Preferred
Stock as defined in subdivision (A) above and any other senior
stock as defined in subdivision (b) (1) below hereafter authorized.

      (b)   The following terms, as used in this subdivision (B),
shall have the following meanings:

            (1)   The term senior stock as used in this subdivision
     (B) shall mean the Serial Preferred Stock and any other class
     of stock ranking in

                               13

<PAGE>

     its claim to assets or dividends prior to the 5,000,000 shares of
     Preference Stock created hereby;

            (2)   The term parity stock as used in this subdivision
     (B) shall mean any class of stock ranking in its claim to assets
     or dividends on a parity with the Preference Stock, but shall not
     include any of the 8,800,000 shares of Preference Stock provided
     for hereby, nor shall it include any increase in the authorized
     amount of the Preference Stock; and

            (3)   The term junior stock as used in this subdivision
     (B) shall mean the Common Stock and any other class of stock
     ranking in its claim to assets or dividends junior to the
     Preference Stock.

      (c)   The holders of the Preference Stock shall be entitled,
subject to the prior rights and preferences of senior stock, to
receive, but only when and as declared by the Board of Directors,
cumulative cash dividends in the case of each series at the annual
rate for such series theretofore fixed by the Board of Directors as
hereinbefore provided, payable quarter-yearly on the first days of
March, June, September and December (or such other quarter-yearly
dates for a particular series as the Board of Directors may
determine prior to the issue thereof as hereinbefore provided) in
each year to stockholders of record on the respective dates fixed
for the purpose by the Board of Directors as dividends are
declared.

            No dividend shall be declared on any shares of
Preference Stock of any series for any particular dividend period
unless dividends in full have been paid or declared and set apart
for payment or are contemporaneously declared and set apart for
payment on the Preference Stock of all series then outstanding for
all dividend periods terminating at or before the end of the
particular dividend period.  When dividends at the respective
annual dividend rates are not paid in full on any shares of
Preference Stock, the shares of all series of Preference Stock
shall share ratably in the payment of dividends including
accumulations, if any, in accordance with the sums which would be
payable on such shares if all dividends were declared and paid in
full.

            The dividends on shares of Preference Stock shall be
cumulative in the case of all shares of each particular series (a)
if issued prior to the record date for the first dividend on shares
of such series, then from the date theretofore fixed for the
purpose by the Board of Directors as hereinbefore provided, or, if
no such date is so fixed, then from the date on which the shares of
such series shall have been originally issued, (b) if issued after
the record date for a dividend on shares of such series and before
the payment date for such dividend then from such dividend payment
date; and (c) otherwise from the quarterly dividend payment date
next preceding the date of issue of such shares.  Unless dividends
on all

                               14

<PAGE>

outstanding shares of the Preference Stock, at the annual dividend
rate or rates fixed therefor, shall have been paid for all past
quarter-yearly dividend periods to which they are entitled, and the
full dividend thereon at said rate or rates for the quarter-yearly
dividend periods current at the time shall have been paid or declared
and set apart for payment, but without interest on accumulated
dividends, and unless all sinking fund payments, if any, theretofore
required to have been made shall have been made or provided for, no
dividends shall be declared and no other distribution shall be made on
any junior stock, and no junior stock shall be purchased, retired or
otherwise acquired for value by the Company.  No dividend shall be
declared on any junior stock payable more than 120 days after the date
of declaration.

            The holders of the Preference Stock shall not be
entitled to receive any dividends thereon other than the dividends
referred to in this subdivision (c).

      (d)   The Company, at the option of the Board of Directors or
by the operation of the sinking fund, if any, provided for the
Preference Stock of any series, may, from time to time, subject to
such terms and conditions, if any, as may be fixed by the Board of
Directors with respect to any series as hereinbefore provided, and
subject to the prior rights and preferences of senior stock, redeem
the whole or any part of such series at any time outstanding, by
paying in cash the applicable redemption price theretofore fixed by
the Board of Directors as hereinbefore provided.

            Notice of every such redemption shall be given by
publication at least once in each of two calendar weeks in each of
two daily newspapers printed in the English language, one published
and of general circulation in the City of Washington, District of
Columbia, and the other in the Borough of Manhattan, The City of
New York, the first publication to be at least thirty days and not
more than sixty days prior to the date fixed for such redemption. 
At least thirty days' and not more than sixty days' previous notice
of every such redemption shall also be mailed to the holders of
record of the shares so to be redeemed, at their respective
addresses as the same shall appear on the books of the Company; but
failure to mail such notice or any defect therein or in the mailing
thereof shall not affect the validity of the proceedings for the
redemption of any shares so to be redeemed.

            In case of the redemption of a part only of any series
of the Preference Stock at the time outstanding, the Company or its
duly authorized agent shall select by lot the shares so to be
redeemed.  The Board of Directors shall have full power and
authority, subject to the limitations and provisions herein
contained, to prescribe the manner in which the drawings by lot
shall be conducted and the terms and conditions upon which the
Preference Stock shall be redeemed from time to time.

                               15

<PAGE>

            If such notice of redemption shall have been duly given
by publication, and if on or before the redemption date specified
therein the funds necessary for such redemption shall have been set
aside by the Company, separate and apart from its other funds, in
trust for the account of the holders of the shares so called for
redemption so as to be and continue to be available therefor, then,
notwithstanding that any certificate for shares so called for
redemption shall not have been surrendered for cancellation, the
shares represented thereby shall no longer be deemed to be
outstanding on and after such redemption date, and all rights with
respect to such shares shall forthwith on such redemption date
cease and terminate, except only the right of the holders thereof
to receive the amount payable upon redemption thereof, without
interest.

            Provided, however, in the alternative, that after
giving notice by publication of any such redemption as hereinbefore
provided or after giving to the bank or trust company referred to
below irrevocable authorization to give or complete such notice by
publication, and prior to the redemption date specified in such
notice, the Company may deposit in trust, for the account of the
holders of the shares of Preference Stock so to be redeemed, the
funds necessary for such redemption with a bank or trust company in
good standing, organized and doing business under the laws of the
United States or of any state or territory or of the District of
Columbia and having its principal office in the City of Washington,
District of Columbia, or in the Borough of Manhattan, The City of
New York, having capital, surplus and undivided profits aggregating
at least Ten Million Dollars, designated in such notice of
redemption, and thereupon all shares of the Preference Stock with
respect to which such deposit shall have been made shall no longer
be deemed to be outstanding, and all rights with respect to such
shares of Preference Stock shall forthwith upon such deposit in
trust cease and terminate, except only the right of the holders
thereof to receive from such bank or trust company at any time
after the time of such deposit the funds so deposited, without
interest and the right to exercise, on or before such redemption
date privileges of conversion or exchange, if any, not theretofore
expiring.

            Shares of Preference Stock purchased or redeemed
pursuant to any obligation of the Company to purchase or redeem
shares for a sinking fund, shares redeemed pursuant to the
provisions hereof or purchased and for which credit shall have been
taken against any sinking fund obligation, and shares surrendered
pursuant to any conversion right, shall not be reissued or
otherwise disposed of and shall be cancelled.  Any other shares of
Preference Stock redeemed or otherwise acquired by the Company
shall continue to be part of the authorized capital stock of the
Company and may thereafter, in the discretion of the Board of
Directors and to the extent permitted by law, be sold or reissued
from time to time, as part of the same or another series, subject
to the terms and conditions herein set forth.

                               16

<PAGE>

            If and so long as the Company shall be in default in
the payment of any quarter-yearly dividend on shares of any series
of the Preference Stock, or shall be in default in the payment of
funds into or the setting aside of funds for any sinking fund
created for any series of the Preference Stock, the Company may not
(other than by the use of unapplied funds, if any, paid into or set
aside for a sinking fund or funds prior to such default) (i) redeem
any shares of the Preference Stock unless all shares thereof are
redeemed, or (ii) purchase or otherwise acquire for a consideration
any shares of the Preference Stock, except pursuant to offers of
sale made by holders of the Preference Stock in response to an
invitation for tenders given simultaneously by the Company by mail
to the holders of record of all shares of the Preference Stock then
outstanding.

      (e)   In the event of any voluntary liquidation, dissolution
or winding up of the Company, then, before any distribution or
payment shall be made to the holders of any junior stock, the
holder of each share of the Preference Stock shall be entitled,
subject to the prior rights and preferences of senior stock, to be
paid in full in cash the amount fixed with respect to such share by
the Board of Directors as hereinbefore provided, together with an
amount computed at the annual dividend rate therefor from the date
upon which dividends thereon became cumulative to the date fixed
for the payment thereof, less the aggregate of the dividends
theretofore paid thereon.  If such payments shall have been made in
full to the holders of the Preference Stock, the remaining assets
and funds of the Company shall be distributed among the holders of
the Common Stock and any other junior stock according to their
respective rights, preferences, restrictions, qualifications and
shares.

            In the event of any involuntary liquidation,
dissolution or winding up of the Company, then, before any
distribution or payment shall be made to the holders of any junior
stock, the holder of each share of the Preference Stock shall be
entitled, subject to the prior rights and preferences of senior
stock, to be paid in full the par value thereof in cash, together
with an amount computed at the annual dividend rate therefor from
the date upon which dividends thereon became cumulative to the date
fixed for the payment thereof, less the aggregate of the dividends
theretofore paid thereon.  If such payments shall have been made in
full to the holders of the Preference Stock, the remaining assets
and funds of the Company shall be distributed among the holders of
the Common Stock and any other junior stock according to their
respective rights, preferences, restrictions, qualifications and
shares.

            With respect to the payments to be made in the event of
voluntary or involuntary liquidation, dissolution or winding up of
the Company, all series of the Preference Stock shall rank ratably
according to their respective interests without preference of any
series thereof over any other series.

                               17

<PAGE>

      (f)   Whenever the full dividends on the Preference Stock at
the time outstanding for all past quarter-yearly dividend periods
shall have been paid and the full dividend thereon for the quarter-
yearly dividend period then current shall have been paid or
declared and a sum sufficient for the payment thereof set apart,
then such dividends (payable in cash, stock or otherwise) as may be
determined by the Board of Directors may be declared on the Common
Stock and any other junior stock, and the Preference Stock shall
not be entitled to participate in any such dividends.

      (g)   So long as any shares of the Preference Stock are
outstanding, no amendment to the Articles of Incorporation of the
Company which would (i) create, change any junior stock into, or
increase the rights and preferences of, any senior or parity stock,
(ii) increase the authorized amount of the Preference Stock in
excess of the 5,000,000 shares created hereby or the authorized
amount of any senior or parity stock, or (iii) change the express
terms of the outstanding shares of Preference Stock in any manner
substantially prejudicial to the holders thereof, shall be made
without the affirmative consent (given in writing without a meeting
or by a vote at a meeting duly called for the purpose) of the
holders of more than two thirds of the aggregate number of shares
of the Preference Stock then outstanding; but any such amendment
may be made with such affirmative consent, together with such
additional vote or consent of stockholders as from time to time may
be required by law; provided, however, that if any such amendment
would change the express terms of the outstanding shares of
Preference Stock of any particular series in any manner
substantially prejudicial to the holders thereof without
correspondingly affecting the holders of the outstanding shares of
Preference Stock of all series, then, in lieu of such consent of
the holders of Preference Stock (or, if such consent of the holders
of the outstanding shares of Preference Stock is required by law,
in addition thereto), a like affirmative consent of the holders of
more than two thirds of the Preference Stock of the affected series
at the time outstanding shall be necessary for making such
amendment.

      (h)   So long as any shares of the Preference Stock are
outstanding, the Company shall not, without the affirmative consent
(given in writing without a meeting or by a vote at a meeting duly
called for the purpose) of the holders of at least a majority of
the aggregate number of shares of the Preference Stock then
outstanding, merge or consolidate with or into any other
corporation or corporations or sell or lease all or substantially
all of its assets, unless such merger, consolidation, sale or
lease, or the issue and assumption of all securities to be issued
or assumed in connection with any such merger, consolidation, sale
or lease shall have been ordered, approved or permitted by the
regulatory authority or authorities having jurisdiction in the
premises; provided that the provisions of this subdivision (h)
shall not apply to a purchase, lease or other acquisition by the
Company of the franchises or assets of another corporation, or
otherwise apply in any manner

                               18

<PAGE>

which does not involve a merger or consolidation or sale or lease by
the Company of all or substantially all of its assets.

      (i)   No holder of Preference Stock shall be entitled as such
as a matter of right to subscribe for or purchase any part of any
new or additional issue of stock, or securities convertible into,
or carrying or evidencing any right to purchase, stock, of any
class whatever, whether now or hereafter authorized, and whether
issued for cash, property, services or otherwise. 

      (j)   Except as otherwise in subdivisions (g) and (h) of this
subdivision (B) or by statute specifically provided, the Preference
Stock shall have no voting power unless and until dividends payable
thereon are in default in an amount equivalent to six full quarter-
yearly dividends on the Preference Stock at the time outstanding. 
In such event and until such default shall have been remedied as
hereinafter provided, the holders of Preference Stock, voting
separately, shall become entitled to elect two directors of the
Company at the next meeting of stockholders for the election of
directors (unless all dividends then in default on the Preference
Stock shall have been paid), and the other stockholders then
entitled to vote for the election of directors, voting separately
by classes if so required by the provisions applicable to such
classes, shall be entitled to elect the remaining directors of the
Company.  During the continuance of such special right of the
holders of Preference Stock, the Board of Directors shall be
divided into two or more classes, one consisting of the directors
to be elected by the holders of Preference Stock and the other
class or classes consisting of the directors to be elected by the
other stockholders entitled to vote for the election of directors,
and the directors of each such class elected at any meeting for the
election of directors, held during the continuance of such special
right, shall hold office, subject to the rights of any senior
stock, until the next succeeding annual election and until their
respective successors by classes are elected and qualified.

            However, if and when all dividends then in default on
the Preference Stock shall be paid (and such dividends shall be
declared and paid as soon as reasonably practicable out of surplus
or net profits, but without diminishing the amount of capital of
the Company), the holders of Preference Stock shall be divested of
such special right, but subject always to the same provisions for
the revesting of such special right in the holders of Preference
Stock in the case of any similar future default or defaults. 
Whenever the holders of Preference Stock shall be so divested of
such special right, the method of election of the Board of
Directors by the vote of the other stockholders entitled to vote
for the election of directors exclusively shall be restored and the
election of directors shall take place at the next succeeding
annual meeting for the election of directors, or at any adjournment
thereof.

                               19

<PAGE>

      (k)   Except as hereinafter provided, during the continuance
of the special right of the holders of Preference Stock to elect
directors as provided in subdivision (j) of this subdivision (B),
at all meetings for the election of directors the presence in
person or by proxy of the holders of record of a majority of the
outstanding shares of Preference Stock shall be necessary to
constitute a quorum for the election of directors whom the holders
of Preference Stock are entitled to elect, and the presence in
person or by proxy of the holders of record of a majority of the
outstanding shares of each other class of stock then entitled to
vote for the election of directors shall, except as otherwise
provided in subdivision (1) of subdivision (A), be necessary to
constitute a quorum for the election of the directors whom the
holders of such class of stock are entitled to elect.  In the
absence of such a quorum of the holders of stock of any particular
class then entitled to vote for the election of directors, the
holders of a majority of the shares of the stock of such class so
present in person or represented by proxy may adjourn from time to
time the meeting for the election of directors to be elected by
such stock, without notice other than announcement at the meeting,
until the requisite quorum of holders of such stock shall be
obtained.  The absence of a quorum of the holders of any class of
stock then entitled to vote for the election of directors shall
not, except as hereinbefore provided, prevent or invalidate the
election by the other class or classes of stockholders of the
directors which they are entitled to elect, if the necessary quorum
of stockholders of such other class or classes is present in person
or represented by proxy at any such meeting or any adjournment
thereof.

                        (C)  COMMON STOCK

      (a)   No holder of Common Stock shall be entitled as such as
a matter of right to subscribe for or purchase any part of any new
or additional issue of stock, or securities convertible into, or
carrying or evidencing any right to purchase, stock, of any class
whatever, whether now or hereafter authorized, and whether issued
for cash, property, services or otherwise.

      (b)   Except as otherwise provided by statute or by this
Article V, voting rights for all purposes shall be vested
exclusively in the holders of the Common Stock, who shall have one
vote for each share held by them. 

VI.   The following provisions are set forth herein for the
regulation of the internal affairs of the Company:

            At the date hereof, the Company has issued and
     outstanding $120,000,000 aggregate principal amount of First
     Mortgage Bonds issued under and secured by the lien of the
     Company's Mortgage and Deed of Trust dated July 1, 1936, as
     amended and supplemented, heretofore made by the Company to The
     Riggs National Bank of Washington, D.C., as 

                              20

<PAGE>

     Trustee, which Mortgage and Deed of Trust, as amended and
     supplemented, constitutes a lien on substantially all the
     properties and franchises of the Company, other than cash,
     accounts receivable and other liquid assets, securities, leases
     by the Company as lessor, equipment and materials not installed
     as part of the fixed property, and electric energy and other
     materials, merchandise or supplies produced or purchased by the
     Company for sale, distribution or use.  The Board of Directors of
     the Company may from time to time cause to be issued additional
     First Mortgage Bonds to be secured by said Mortgage and Deed of
     Trust, as heretofore or hereafter amended and supplemented,
     without limitation as to principal amount and without action by
     or approval of the Company's shareholders, and in connection
     therewith may cause to be executed and delivered by the Company
     such supplemental indentures, containing such additional
     covenants, as the Board may approve.

            Without the assent of the shareholders of any class the
     stated capital of the Company may, from time to time, be reduced
     in respect of shares of its Serial Preferred Stock reacquired in
     conversion and cancelled.

VII.  The address of the Company's registered office in the
District of Columbia is 1900 Pennsylvania Avenue, N. W.; and the
name of its registered agent at such address is Jack E. Strausman.

      The address of the Company's registered office in Virginia is
8280 Greensboro Drive, #900, P.O. Box 9346, Tyson's Corner, McLean,
Virginia 22102; and the name of its registered agent at such
address is John S. Stump, who is a resident of Virginia and a
member of the Virginia State Bar.

VIII.       Unless otherwise provided in the By-Laws, the number of
directors of the Company shall be twelve (12).

IX.   The business and affairs of the Company shall be managed by
or under the direction of the Board of Directors.  The number of
directors shall be determined in accordance with the provisions of
Article VIII.  The directors shall be divided into three classes,
designated Class I, Class II and Class III.  Each class shall
consist, as nearly as may be possible, of one-third of the total
number of directors constituting the entire Board of Directors.  At
the 1987 annual meeting of shareholders, Class I directors shall be
elected for a one-year term, Class II directors for a two-year
term, and Class III directors for a three-year term.  At each
succeeding annual meeting of shareholders beginning in 1988,
successors to the class of directors whose term expires at that
annual meeting shall be elected for a three-year term.  If the
number of directors is changed in accordance with the provisions of
Article VIII, any increase or decrease shall be apportioned among
the classes so as to maintain the number of directors in each class
as nearly equal as

                               21

<PAGE>

possible, and any additional director of any class elected to fill a
vacancy resulting from an increase in such class shall hold office for
a term that shall coincide with the remaining term of that class, but
in no case will a decrease in the number of directors shorten the term
of any incumbent director.  A director shall hold office until the
annual meeting for the year in which his term expires and until his
successor shall be elected and shall qualify, subject, however, to
prior death, resignation, retirement, age and service limitations as
may be set forth in the By-Laws, disqualification or removal from
office.  Any vacancy on the Board of Directors that results from other
than an increase in the number of directors may be filled by a
majority of the Board of Directors then in office even if less than a
quorum, or by a sole remaining director.  The term of any director
elected by the Board of Directors to fill a vacancy not resulting from
an increase in the number of directors shall expire at the next
shareholders' meeting at which directors are elected, and the
remainder of such term, if any, shall be filled by a director elected
at such meeting. 

      Notwithstanding the foregoing, whenever the holders of any
class of stock issued by the Company shall have the right, voting
separately by class or series, to elect directors at an annual or
special meeting of shareholders, the election, term of office,
filling of vacancies and other features of such directorships shall
be governed by the terms of the Articles of Incorporation
applicable thereto, and such directors so elected shall not be
divided into classes pursuant to this Article IX unless expressly
provided by such terms.

      Subject to the provisions of the preceding paragraphs,
directors elected pursuant to this Article IX may be removed only
for cause.

X.    In addition to any other vote that may be required by law or
these Articles of Incorporation or the By-Laws of the Company, the
affirmative vote of the holders of four-fifths of all the capital
stock entitled to vote shall be required to amend, alter, or repeal
Articles IX and X of these Articles of Incorporation, and Article
I, Section 1, the second through the fourth paragraphs, Article I,
Section 2, and Article II, Section 1 of the By-Laws of the Company;
provided, however, that the power of the Board of Directors to
amend, alter, or repeal the By-Laws shall not be affected by this
Article X.

XI.   (A)   In addition to any affirmative vote required by law or
these Articles of Incorporation or the By-Laws of the Company, and
except as otherwise expressly provided in Paragraph (B) of this
Article XI, a Business Combination (as hereinafter defined) shall
require the affirmative vote of not less than sixty-six and two-
thirds percent (66-2/3%) of the votes entitled to be cast by the
holders of all the then outstanding shares of Voting Stock (as
hereinafter defined), voting together as a single class, excluding
Voting Stock beneficially owned by any Interested Shareholder (as
hereinafter defined).  Such affirmative vote shall be required
notwithstanding the fact

                               22

<PAGE>

that no vote may be required, or that a lesser percentage or separate
class vote may be specified, by law or in any agreement with any
national securities exchange or otherwise. 

      (B)   The provisions of the preceding Paragraph (A) shall not
be applicable to any particular Business Combination, and such
Business Combination shall require only such affirmative vote, if
any, as is required by law or by any other provision of these
Articles of Incorporation or the By-Laws of the Company, or any
agreement with any national securities exchange, if all of the
conditions specified in either of the following Paragraphs (1) or
(2) are met or, in the case of a Business Combination not involving
the payment of consideration to the holders of the Company's
outstanding Capital Stock (as hereinafter defined), if the
condition specified in the following Paragraph (1) is met:

            (1)   The Business Combination shall have been approved
     by a majority (whether such approval is made prior to or
     subsequent to the acquisition of beneficial ownership of the
     Voting Stock that caused the Interested Shareholder to become an
     Interested Shareholder) of the Continuing Directors (as
     hereinafter defined).

            (2)   All of the following conditions shall have been
     met with respect to every class or series of outstanding Capital
     Stock, whether or not the Interested Shareholder has previously
     acquired beneficial ownership of any shares of a particular class
     or series of Capital Stock:

                  (a)   The aggregate amount of cash and the Fair
          Market Value (as hereinafter defined), as of the date of the
          consummation of the Business Combination, of consideration
          other than cash to be received per share by holders of
          Common Stock in such Business Combination shall be at least
          equal to the highest amount determined under clauses (i),
          (ii), (iii), and (iv) below:

                        (i)   (if applicable) the highest per share
               price (including any brokerage commissions, transfer
               taxes and soliciting dealers' fees) paid by or on
               behalf of the Interested Shareholder for any share of
               Common Stock in connection with the acquisition by the
               Interested Shareholder of beneficial ownership of
               shares of Common Stock (x) within the two-year period
               immediately prior to the first public announcement of
               the proposed Business Combination (the "Announcement
               Date") or (y) in the transaction in which it became an
               Interested Shareholder, whichever is higher, in either
               case as adjusted for any

                               23

<PAGE>

               subsequent stock split, stock dividend, subdivision or
               reclassification with respect to Common Stock;

                        (ii)  the Fair Market Value per share of
               Common Stock on the Announcement Date or on the date
               on which the Interested Shareholder became an
               Interested Shareholder (the "Determination Date"),
               whichever is higher, as adjusted for any subsequent
               stock split, stock dividend, subdivision or
               reclassification with respect to Common Stock; 

                        (iii)       (if applicable) the price per
               share equal to the Fair Market Value per share
               of Common Stock determined pursuant to the immediately
               preceding clause (ii), multiplied by the ratio of (x)
               the highest per share price (including any brokerage
               commissions, transfer taxes and soliciting dealers'
               fees) paid by or on behalf of the Interested
               Shareholder for any share of Common Stock in
               connection with the acquisition by the Interested
               Shareholder of beneficial ownership of shares of
               Common Stock within the two-year period immediately
               prior to the Announcement Date, as adjusted for any
               subsequent stock split, stock dividend, subdivision or
               reclassification with respect to Common Stock to (y)
               the Fair Market Value per share of Common Stock
               on the first day in such two-year period on which the
               Interested Shareholder acquired beneficial ownership
               of any share of Common Stock, as adjusted for any
               subsequent stock split, stock dividend, subdivision or
               reclassification with respect to Common Stock; and

                        (iv)  the Company's net income per share of
               Common Stock for the four full consecutive fiscal
               quarters immediately preceding the Announcement Date,
               multiplied by the higher of the then price/earnings
               multiple (if any) of such Interested Shareholder or
               the highest price/earnings multiple of the Company
               within the two-year period immediately preceding the
               Announcement Date (such price/earnings multiples being
               determined by dividing the highest price per share
               during a day as reported in the Wall Street Journal
               from the Composite Tape for the New York Stock
               Exchange by the immediately preceding publicly
               reported twelve-months earnings per share).

                (b)   The aggregate amount of cash and the Fair Market
          Value, as of the date of the consummation of the Business
          Combination, of

                               24

<PAGE>

          consideration other than cash to be received per
          share by holders of shares of any class or series of
          outstanding Capital Stock, other than Common Stock, shall be
          at least equal to the highest amount determined under
          clauses (i), (ii), (iii), and (iv) below:

                        (i)   (if applicable) the highest per share
               price (including any brokerage commissions, transfer
               taxes and soliciting dealers' fees) paid by or on
               behalf of the Interested Shareholder for any share of
               such class or series of Capital Stock in connection
               with the acquisition by the Interested Shareholder of
               beneficial ownership of shares of such class or series
               of Capital Stock (x) within the two-year period
               immediately prior to the Announcement Date or (y) in
               the transaction in which it became an Interested
               Shareholder, whichever is higher, in either case as
               adjusted for any subsequent stock split, stock
               dividend, subdivision or reclassification with respect
               to such class or series of Capital Stock;

                        (ii)  the Fair Market Value per share of
               such class or series of Capital Stock on the
               Announcement Date or on the Determination Date,
               whichever is higher, as adjusted for any subsequent
               stock split, stock dividend, subdivision or
               reclassification with respect to such class or series
               of Capital Stock;

                        (iii)  (if applicable) the price per
               share equal to the Fair Market Value per share of such
               class or series of Capital Stock determined pursuant
               to the immediately preceding clause (ii), multiplied
               by the ratio of (x) the highest per share price
               (including any brokerage commissions, transfer 
               taxes and soliciting dealers' fees) paid by or on
               behalf of the Interested Shareholder for any share of
               such class or series of Capital Stock in connection
               with the acquisition by the Interested Shareholder of
               beneficial ownership of shares of such class or
               series of Capital Stock within the two-year period
               immediately prior to the Announcement Date, as
               adjusted for any subsequent stock split, stock
               dividend, subdivision or reclassification with
               respect to such class or series of Capital Stock to
               (y) the Fair Market Value per share of such class or
               series of Capital Stock on the first day in such
               two-year period on which the Interested Shareholder
               acquired beneficial ownership of any share of such
               class or series of Capital Stock, as adjusted for any
               subsequent stock split, stock dividend, subdivision or 

                                25

<PAGE>

               reclassification with respect to such class or series
               of Capital Stock; and 

                        (iv)  (if applicable) the highest
               preferential amount per share to which the holders of
               shares of such class or series of Capital Stock would
               be entitled in the event of any voluntary or
               involuntary liquidation, dissolution or winding up of
               the affairs of the Company regardless of whether the
               Business Combination to be consummated constitutes
               such an event.

                (c)   The consideration to be received by holders
          of a particular class or series of outstanding Capital Stock
          shall be in cash or in the same form as previously has been
          paid by or on behalf of the Interested Shareholder in
          connection with its direct or indirect acquisition of
          beneficial ownership of shares of such class or series of
          Capital Stock.  If the consideration previously paid by the
          Interested Shareholder to acquire shares of any class or
          series of Capital Stock varied among the recipients thereof
          as to form, the form of consideration to be paid for such
          class or series of Capital Stock in connection with the
          Business Combination shall be either cash or the form used
          to acquire beneficial ownership of the largest number of
          shares of such class or series of Capital Stock previously
          acquired by the Interested Shareholder.

                  (d)   After the Determination Date and prior to
          the consummation of such Business Combination:  (i) except
          as approved by a majority of the Continuing Directors, there
          shall have been no failure to declare and pay at the regular
          date therefor any full quarterly dividends (whether or not
          cumulative) payable in accordance with the terms of any
          outstanding Capital Stock; (ii) there shall have been no
          reduction in the annual rate of dividends paid on the Common
          Stock (except as necessary to reflect any stock split, stock
          dividend or subdivision of the Common Stock), except as
          approved by a majority of the Continuing Directors; (iii)
          there shall have been an increase in the annual rate of
          dividends paid on the Common Stock as necessary to reflect
          any reclassification (including any reverse stock split),
          recapitalization, reorganization or any similar transaction
          that has the effect of reducing the number of outstanding
          shares of Common Stock, unless the failure so to increase
          such annual rate is approved by a majority of the Continuing
          Directors; and (iv) such Interested Shareholder shall not
          have become the beneficial owner of any additional shares of
          Capital Stock except as part of the transaction that results
          in such Interested Shareholder becoming 

                               26

<PAGE>

          an Interested Shareholder and except in a transaction that,
          after giving effect thereto, would not result in an
          increase in the Interested Shareholder's percentage of
          beneficial ownership of any class or series of Capital
          Stock.

                  (e)   After the Determination Date, such
          Interested Shareholder shall not have received the benefit,
          directly or indirectly (except proportionately as a
          shareholder of the Company), of any loans, advances,
          guarantees, pledges or other financial assistance or any tax
          credits or other tax advantages provided by the Company,
          whether in anticipation of or in connection with such
          Business Combination or otherwise. 

                  (f)   A proxy or information statement describing
          the proposed Business Combination and complying with the
          requirements of the Securities Exchange Act of 1934, as
          amended, and the rules and regulations thereunder (the
          "Act") (or any subsequent provisions replacing such Act,
          rules or regulations) shall be mailed to all shareholders of
          the Company at least 30 days prior to the consummation of
          such Business Combination (whether or not such proxy or
          information statement is required to be mailed pursuant to
          such Act or subsequent provisions).  The proxy or
          information statement shall contain on the first page
          thereof, in a prominent place, any statement as to the
          advisability (or inadvisability) of the Business Combination
          that the Continuing Directors, or any of them, may choose to
          make and, if deemed advisable by a majority of the
          Continuing Directors, the opinion of an investment banking
          firm selected by a majority of the Continuing Directors as
          to the fairness (or not) of the terms of the Business
          Combination from a financial point of view to the holders of
          the outstanding shares of Capital Stock other than the
          Interested Shareholder and its Affiliates or Associates (as
          hereinafter defined), such investment banking firm to be
          paid a reasonable fee for its services by the Company. 

                  (g)   Such Interested Shareholder shall not have
          made any major change in the Company's business or equity
          capital structure without the approval of a majority of the
          Continuing Directors.

      (C)   The following definitions shall apply with respect to
this Article XI:

            (1)   The term "Business Combination" shall mean: 

                  (a)   any merger or consolidation of the Company
          or any Subsidiary (as hereinafter defined) with (i) any
          Interested

                               27

<PAGE>

          Shareholder or (ii) any other company (whether or not itself
          an Interested Shareholder) which is or after such merger or
          consolidation would be an Affiliate or Associate of an
          Interested Shareholder; or

                  (b)   any sale, lease, exchange, mortgage,
          pledge, transfer or other disposition or security
          arrangement, investment, loan, advance, guarantee, agreement
          to purchase, agreement to pay, extension of credit, joint
          venture participation or other arrangement (in one
          transaction or a series of transactions) with or for the
          benefit of any Interested Shareholder or any Affiliate or
          Associate of any Interested Shareholder involving any
          assets, securities or commitments of the Company or any
          Subsidiary having an aggregate Fair Market Value and/or
          involving aggregate commitments of $10,000,000 or more or
          constituting more than 5 percent of the book value of the
          total assets (in the case of transactions involving assets
          or commitments other than Capital Stock) or 5 percent of the
          shareholders' equity (in the case of transactions in Capital
          Stock) of the entity in question (the "Substantial Part"),
          as reflected in the most recent fiscal year-end consolidated
          balance sheet of such entity existing at the time the
          shareholders of the Company would be required, pursuant to
          Paragraph A of this Article XI, to approve or authorize
          the Business Combination involving the assets, securities
          and/or commitments constituting any Substantial Part; or

                  (c)   the adoption of any plan or proposal for
          the liquidation or dissolution of the Company which is voted
          for or consented to by any Interested Shareholder or any
          Affiliate or Associate thereof; or 

                  (d)   any reclassification of securities
          (including any reverse stock split), or recapitalization of
          the Company, or any merger or consolidation of the Company
          with any of its Subsidiaries or any other transaction
          (whether or not with or otherwise involving an Interested
          Shareholder) that has the effect, directly or indirectly, of
          increasing the proportionate share of any class or series of
          Capital Stock, or any securities convertible into Capital
          Stock or into equity securities of any Subsidiary, that is
          beneficially owned by any Interested Shareholder or any
          Affiliate or Associate of any Interested Shareholder; or

                  (e)   any agreement, contract or other
          arrangement providing for any one or more of the actions
          specified in the foregoing clauses (a) to (d).

                               28

<PAGE>

            (2)   The term "Capital Stock" shall mean all capital
     stock of the Company authorized to be issued from time to time
     under Article IV of these Articles of Incorporation, and the term
     "Voting Stock" shall mean all Capital Stock that by its terms may
     be voted on all matters submitted to shareholders of the Company
     generally.

            (3)   The term "person" shall mean any individual,
     firm, company or other entity and shall include any group
     comprised of any person and any other person with whom such
     person or any Affiliate or Associate of such person has any
     agreement, arrangement or understanding, directly or indirectly,
     for the purpose of acquiring, holding, voting or disposing of
     Capital Stock.

            (4)   The term "Interested Shareholder" shall mean any
     person (other than the Company or any Subsidiary and other than
     any profit-sharing, employee stock ownership or other employee
     benefit plan of the Company or any Subsidiary or any trustee of
     or fiduciary with respect to any such plan when acting in such
     capacity) who (a) is the beneficial owner of Voting Stock
     representing ten percent (10%) or more of the votes entitled to
     be cast by the holders of all then outstanding shares of Voting
     Stock; or (b) is an Affiliate or Associate of the Company and at
     any time within the two-year period immediately prior to the
     Announcement Date was the beneficial owner of Voting Stock
     representing ten percent (10%) or more of the votes entitled to
     be cast by the holders of all then outstanding shares of Voting
     Stock.

            (5)   A person shall be a "beneficial owner" of any
     Capital Stock (a) which such person or any of its Affiliates or
     Associates beneficially owns, directly or indirectly; (b) which
     such person or any of its Affiliates or Associates has, directly
     or indirectly, (i) the right to acquire (whether such right is
     exercisable immediately or subject only to the passage of time),
     pursuant to any agreement, arrangement or understanding or upon
     the exercise of conversion rights, exchange rights, warrants or 
     options, or otherwise, or (ii) the right to vote pursuant to any
     agreement, arrangement or understanding; or (c) which is
     beneficially owned, directly or indirectly, by any other person
     with which such person or any of its Affiliates or Associates has
     any agreement, arrangement or understanding for the purpose of
     acquiring, holding, voting or disposing of any shares of Capital
     Stock.  For purposes of determining whether a person is an
     Interested Shareholder pursuant to Paragraph (4) of this Section
     (C), the number of shares of Capital Stock deemed to be
     outstanding shall include shares deemed beneficially owned by
     such person through application of this Paragraph (5) of Section
     (C), but shall not include any other shares of Capital Stock that
     may be issuable pursuant to any agreement, arrangement or

                               29

<PAGE>

     understanding, or upon exercise of conversion rights, warrants or
     options, or otherwise.

            (6)   The terms "Affiliate" and "Associate" shall have
     the respective meanings ascribed to such terms in Rule 12b-2
     under the Act as in effect on the date that Article XI is
     approved by the Board (the term "registrant" in said Rule 12b-2
     meaning in this case the Company).

            (7)   The term "Subsidiary" means any company of which 
     a majority of any class of equity security is beneficially owned
     by the Company; provided, however, that for the purposes of the
     definition of Interested Shareholder set forth in Paragraph (4)
     of this Section (C), the term "Subsidiary" shall mean only a
     company of which a majority of each class of equity security is
     beneficially owned by the Company.

            (8)   The term "Continuing Director" means any member
     of the Board of Directors of the Company (the "Board of
     Directors"), while such person is a member of the Board of
     Directors, who is not an Affiliate or Associate or representative
     of the Interested Shareholder and was a member of the Board of
     Directors prior to the time that the Interested Shareholder
     became an Interested Shareholder, and any successor of a
     Continuing Director while such successor is a member of the Board
     of Directors, who is not an Affiliate or Associate or
     representative of the Interested Shareholder and is recommended
     or elected to succeed the Continuing Director by a majority of
     Continuing Directors.

            (9)   The term "Fair Market Value" means (a) in the
     case of cash, the amount of such cash; (b) in the case of stock,
     the highest closing sale price during the 30-day period
     immediately preceding the date in question of a share of such
     stock on the Composite Tape for New York Stock Exchange-Listed
     Stocks, or, if such stock is not quoted on the Composite Tape, on
     the New York Stock Exchange, or, if such stock is not listed on
     such Exchange, on the principal United States securities exchange
     registered under the Act on which such stock is listed, or, if
     such stock is not listed on any such exchange, the highest
     closing bid quotation with respect to a share of such stock
     during the 30-day period preceding the date in question on the
     National Association of Securities Dealers, Inc. Automated
     Quotations System or any similar system then in use, or if no
     such quotations are available, the fair market value on the date
     in question of a share of such stock as determined by a majority
     of the Continuing Directors in good faith; and (c) in the case of
     property other than cash or stock, the fair market value of such
     property on the date in question as determined in good faith by a
     majority of the Continuing Directors.

                               30

<PAGE>

           (10)   In the event of any Business Combination in which
the Company survives, the phrase "consideration other than cash to
be received" as used in Paragraphs (2)(a) and (2)(b) of Section (B)
of this Article XI shall include the shares of Common Stock and/or
the shares of any other class or series of Capital Stock retained
by the holders of such shares.

      (D)   A majority of the Continuing Directors shall have the
power and duty to determine for the purposes of this Article XI, on
the basis of information known to them after reasonable inquiry,
(a) whether a person is an Interested Shareholder, (b) the number
of shares of Capital Stock or other securities beneficially owned
by any person, (c) whether a person is an Affiliate or Associate of
another, (d) whether the assets that are the subject of any
Business Combination have, or the consideration to be received for
the issuance or transfer of securities by the Company or any
Subsidiary in any Business Combination has, an aggregate Fair
Market Value of $10,000,000 or more, and (e) whether the assets or
securities that are the subject of any Business Combination
constitute a Substantial Part.  Any such determination made in good
faith shall be binding and conclusive on all parties.

      (E)   Nothing contained in this Article XI shall be construed
to relieve any Interested Shareholder from any fiduciary obligation
imposed by law. 

      (F)   The fact that any Business Combination complies with
the provisions of Section (B) of this Article XI shall not be
construed to impose any fiduciary duty, obligation or
responsibility on the Board of Directors, or any member thereof, to
approve such Business Combination or recommend its adoption or
approval to the shareholders of the Company, nor shall such
compliance limit, prohibit or otherwise restrict in any manner the
Board of Directors, or any member thereof, with respect to
evaluations of or actions and responses taken with respect to such
Business Combination.

      (G)   Notwithstanding any other provisions of these Articles
of Incorporation or the By-Laws of the Company (and notwithstanding
the fact that a lesser percentage or separate class vote may be
specified by law, these Articles of Incorporation or the By-Laws of
the Company), the affirmative vote of the holders of not less than
four-fifths of the votes entitled to be cast by the holders of all
the then outstanding shares of Voting Stock, voting together as a
single class, shall be required to amend or repeal, or adopt any
provisions inconsistent with, this Article XI; provided, however,
that this Section (G) shall not apply to, and such four-fifths vote
shall not be required for, any amendment, repeal or adoption
unanimously recommended by the Board of Directors if all of such
directors are persons who would be eligible to serve as Continuing
Directors within the meaning of Section (C), Paragraph (8) of this
Article XI.

                                31

<PAGE>

      IN WITNESS WHEREOF, Potomac Electric Power Company has duly
caused these Restated Articles of Incorporation to be duly executed
(in duplicate) in its name by Dennis R. Wraase, one of its Senior
Vice Presidents, and by Betty K. Cauley, its Secretary, and its
corporate seal to be hereunto affixed and duly attested by Betty K.
Cauley, its Secretary, all as of the 22nd day of December, 1992.

                                    POTOMAC ELECTRIC POWER COMPANY
[Corporate Seal]
Attest:                             By      /s/ D. R. WRAASE
                                            Dennis R. Wraase
                                         Senior Vice President

 /s/ BETTY K. CAULEY                By      /s/ BETTY K. CAULEY
     Betty K. Cauley                            Betty K. Cauley
       Secretary                                   Secretary

DISTRICT OF COLUMBIA, ss.:

      I, Indiana C. Shepp, a notary public, do hereby certify that
on this 22nd day of December, 1992, personally appeared before me
Dennis R. Wraase, who, being by me first duly sworn, declared that
he is a Senior Vice President of Potomac Electric Power Company,
that he signed the foregoing document as Senior Vice President of
the corporation, and that the statements therein contained are
true.

                                            /s/ INDIANA C. SHEPP
[NOTARIAL SEAL]                               Notary Public, D. C.

                              My commission expires: June 14, 1992.

                                32

<PAGE>

                               CERTIFICATE OF
                        POTOMAC ELECTRIC POWER COMPANY

      Pursuant to Virginia Code Section 13.1-711 D., Potomac

Electric Power Company, through Betty K. Cauley, it Secretary and

Associate General Counsel, hereby certifies that the accompanying

Restated Articles of Incorporation and Articles of Restatement do

not contain an amendment to the Articles of Incorporation requiring

shareholder approval and were duly adopted by the Board of

Directors of the Company on December 21, 1992. 

      WHEREFORE, this Certificate has been duly executed this 22nd

day of December, 1992.

                              POTOMAC ELECTRIC POWER COMPANY

                              By:  /s/ BETTY K. CAULEY
                                       Betty K. Cauley
                            Secretary and Associate General Counsel


<PAGE>
                             ARTICLES OF AMENDMENT

                                    TO THE

                           ARTICLES OF INCORPORATION

                                      OF

                        POTOMAC ELECTRIC POWER COMPANY


      Pursuant to the provisions of Section 29-356 of Title 29 of
the District of Columbia Code (Section 56 of the District of
Columbia Business Corporation Act, as amended) and Section 13.1-710
of the Code of Virginia (chapter 522 of the Virginia Stock
Corporation Act), the undersigned corporation adopts these Articles
of Amendment to its Articles of Incorporation.

FIRST:

      The name of the Company is Potomac Electric Power Company.

SECOND:

      The following amendment to the Articles of Incorporation
was adopted by the shareholders of the corporation in the manner
prescribed by the District of Columbia Business Corporation Act and
the Virginia State Corporation Act:

      Article IV of the Articles of Incorporation is hereby amended
to read as follows:

            IV.  The aggregate number of shares which the Company
      shall have authority to issue is 220,042,227 divided into three
      classes:  the first consisting of 11,242,227 shares of the par
      value of $50 each; the second consisting of 8,800,000 shares of
      the par value of $25 each; and the third consisting of
      200,000,000 shares of the par value of $1 each.

      The first paragraph of Article V of the Articles of
Incorporation is hereby amended to read as follows:

            V.  Said 11,242,227 shares of the par value of $50 each
      are designated as Serial Preferred Stock; said 8,800,000 shares
      of the par value of $25 each are designated as Preference Stock;
      and said 200,000,000 shares of the par value of $1 each are
      designated as Common Stock.  Such of said authorized shares of
      Serial Preferred Stock, Preference Stock and Common Stock as are
      unissued at any time may be issued, in whole or in part, at such
      time, or from time to time, by action of the Board of Directors
      of the Company, subject to the laws in force in the District of
      Columbia and the Commonwealth of Virginia and the terms and 
      conditions set forth in the Articles of Incorporation, as
      amended of the Company.

<PAGE>

      The number of shares of Serial Preferred Stock appearing in
Article V, Section (A), subparagraphs (b)(1) and (2) and (g) is
hereby amended to read 11,242,227.

THIRD:

      The amendment to increase by 5,000,000 shares the authorized
number of shares of Serial Preferred Stock was proposed and
recommended by the Board of Directors of the corporation and
submitted to and approved by its shareholders in accordance with
the corporation's Articles of Incorporation and applicable law. 

FOURTH:  

      The amendment was adopted by the shareholders on May 20,
1993.  The number of shares of the corporation outstanding at the
time of such adoption was 120,430,936.  The number of shares
entitled to vote at such time on the amendment was 119,962,841, the
designation and number of which shares of each class were as
follows:

        Class                      Number of Shares
        -----                      ----------------

      Common Stock                      114,471,011

      Serial Preferred Stock              5,491,830

The number of shares of each class entitled to vote on the
amendment that were voted for and against the amendment were:

                                        Number of Shares Voted
         Class                          For              Against 
         -----                      ----------          ---------

      Common Stock                  78,854,276          7,415,274

      Serial Preferred Stock         4,263,996            234,178

FIFTH:

      The amendment does not provide for an exchange,
reclassification, or cancellation of issued shares. 


SIXTH:

      The amendment does not effect a change in the amount of
stated capital, or paid-in surplus, or both, of the corporation.

                               -2-

<PAGE>

      IN WITNESS WHEREOF, the Potomac Electric Power Company has
caused these Articles of Amendment to be duly executed (in
duplicate) in its name by William T. Torgerson, one of its Vice
Presidents, and by Mary T. Howard, one of its Assistant
Secretaries, and its corporate seal to be hereunto affixed and
duly attested by Mary T. Howard, one of its Assistant
Secretaries, all as of the 20th day of May, 1993.

                              POTOMAC ELECTRIC POWER COMPANY
(Corporate Seal)
                              By: /s/ WILLIAM T. TORGERSON
                                      Vice President
ATTEST:

/s/ M. T. HOWARD              By: /s/ M. T. HOWARD
Assistant Secretary               Assistant Secretary



DISTRICT OF COLUMBIA, ss.:

      I, Indiana C. Shepp, a notary public, do hereby certify that
on this 20th day of May, 1993, personally appeared before me
William T. Torgerson, who, being by me first duly sworn, declared
that he is a Vice President of Potomac Electric Power Company, that
he signed the foregoing document as Vice President of the
corporation, and that the statements therein are true.

                              /s/ INDIANA C. SHEPP
                               Notary Public, D. C.
[NOTARIAL SEAL]
                              My commission expires: June 14, 1995

                               -3-

<PAGE>

                             DISTRICT OF COLUMBIA
                                 STATEMENT OF
                       CANCELLATION OF REDEEMABLE SHARES
                                      OF
                        POTOMAC ELECTRIC POWER COMPANY


      Under the provisions of Section 29-359 of Chapter 3 of Title
29 of the District of Columbia Code, 1981 Edition (Section 59 of
the District of Columbia Business Corporation Act, as amended), the
undersigned corporation submits this statement of cancellation,
pursuant to the provisions of its articles of incorporation, of
redeemable shares of the corporation reacquired by it subsequent to
the close of business on December 17, 1992, and prior to the close
of business on December 16, 1993, through their conversion, in
accordance with their terms, into shares of its common stock, and
through redemption subsequent to the close of business on December
17, 1992, and prior to the close of business on December 16, 1993
of 30,000 shares of Serial Preferred Stock, $3.37 Series of 1987:

FIRST:      The name of the corporation is Potomac Electric Power

            Company.

SECOND:     The aggregate number of shares which the corporation

            had authority to issue is 220,042,227*, itemized as

            follows: 

     CLASS                     SERIES              NUMBER OF SHARES
----------------        -------------------------  ----------------
Common Stock                       -                    200,000,000

Preference Stock        Undesignated as to series         8,800,000

Serial Preferred
  Stock                 $2.44 Series of 1957                300,000
                        $2.46 Series of 1958                300,000
                        $2.28 Series of 1965                400,000
                        $2.44 Convertible
                          Series of 1966                     10,027
                        $3.82 Series of 1969                500,000
                        $3.37 Series of 1987                982,200

                        Auction Series A                  1,000,000
                        $3.89 Series of 1991              1,000,000
                        $3.40 Series of 1992              1,000,000
                        Undesignated as to series         5,750,000


_____________________
      *Includes additional shares authorized in Articles of Amendment
to the Articles of Incorporation dated May 20, 1993.

<PAGE>

THIRD:      The number of shares of the corporation so cancelled is

            31,183 itemized as follows:

     CLASS             SERIES                        NUMBER OF SHARES
----------------   --------------------------------  ----------------
Serial Preferred
  Stock            $2.44 Convertible Series of 1966           1,183
                   $3.37 Series of 1987                      30,000

FOURTH:     The number of shares which the corporation has

            authority to issue after giving effect to such

            cancellation is 220,011,044, itemized as follows:

     CLASS                     SERIES              NUMBER OF SHARES
----------------        -------------------------  ----------------
Common Stock                        -                   200,000,000

Preference Stock        Undesignated as to series         8,800,000

Serial Preferred
  Stock                 $2.44 Series of 1957                300,000
                        $2.46 Series of 1958                300,000
                        $2.28 Series of 1965                400,000
                        $2.44 Convertible
                          Series of 1966                      8,844
                        $3.82 Series of 1969                500,000
                        $3.37 Series of 1987                952,200
                        Auction Series A                  1,000,000
                        $3.89 Series of 1991              1,000,000
                        $3.40 Series of 1992              1,000,000
                        Undesignated as to series         5,750,000

FIFTH:      The aggregate number of issued shares of the corporation

            after giving effect to such cancellation is 122,926,152

            itemized as follows:

     CLASS                      SERIES             NUMBER OF SHARES
----------------        ----------------------     ----------------
Common Stock                      -                     117,465,108


Preference Stock                  -                        NONE

Serial Preferred
  Stock                  $2.44 Series of 1957               300,000
                         $2.46 Series of 1958               300,000
                         $2.28 Series of 1965               400,000
                         $2.44 Convertible
                           Series of 1966                     8,844
                         $3.82 Series of 1969               500,000
                         $3.37 Series of 1987               952,200
                         Auction Series A                 1,000,000
                         $3.89 Series of 1991             1,000,000
                         $3.40 Series of 1992             1,000,000

                                2

<PAGE>

SIXTH:      After giving effect to such cancellation, the amounts

            of the stated capital and paid-in surplus of the

            corporation, computed in accordance with the provisions

            of the District of Columbia Business Corporation Act, 

            as amended, are $390,517,308 and $989,419,430.89,

            respectively.

DATED:  December 21, 1993
                                     POTOMAC ELECTRIC POWER COMPANY

                                     By    /s/ H. L. DAVIS
                                            H. Lowell Davis
                                           Vice Chairman and
                                        Chief Financial Officer
[Corporate Seal]
Attest:

/s/ M. T. HOWARD
    M. T. Howard
Assistant Secretary

DISTRICT OF COLUMBIA, ss.:

      I, Lisa A. Poole, a Notary Public, do hereby certify that on
this 21st day of December, 1993, personally appeared before me
H. Lowell Davis, who, being by me first duly sworn, declared that
he is Vice Chairman and Chief Financial Officer of Potomac Electric
Power Company, that he signed the foregoing document as Vice
Chairman and Chief Financial Officer of the corporation, and that
the statements therein contained are true.

                                            /s/ LISA A. POOLE
                                          Notary Public, D. C.
[Notarial Seal]

                                3

<PAGE>


                             ARTICLES OF AMENDMENT

                                      OF
                        POTOMAC ELECTRIC POWER COMPANY


      Under the provisions of Section 13.1-652 of the Code of

Virginia, as amended, the undersigned corporation submits these

Articles of Amendment.

FIRST:      The name of the corporation is Potomac Electric Power

            Company.

SECOND:     The reduction in the number of authorized shares of the

            corporation is  31,183, itemized as follows: 

     CLASS                    SERIES               NUMBER OF SHARES
----------------    --------------------           ----------------
Serial Preferred
  Stock             $2.44 Convertible
                      Series of 1966                          1,183
                    $3.37 Series of 1987                     30,000

THIRD:      The total number of authorized shares of the

            corporation remaining after giving effect to such

            reduction is 220,011,044, itemized as follows:

     CLASS                   SERIES                NUMBER OF SHARES
----------------   -------------------------       ----------------
Common Stock                     -                      200,000,000

Preference Stock   Undesignated as to series              8,800,000

Serial Preferred
  Stock            $2.44 Series of 1957                     300,000
                   $2.46 Series of 1958                     300,000
                   $2.28 Series of 1965                     400,000
                   $2.44 Convertible
                     Series of 1966                           8,844
                   $3.82 Series of 1969                     500,000
                   $3.37 Series of 1987                     952,200
                   Auction Series A                       1,000,000

                   $3.89 Series of 1991                   1,000,000
                   $3.40 Series of 1992                   1,000,000
                   Undesignated as to series              5,750,000

            The Articles of Incorporation prohibit the reissuance of

            acquired shares.

<PAGE>

FOURTH:     The reduction in the number of authorized shares was

            duly authorized by the Board of Directors on 

            December 20, 1993.


DATED:  December 21, 1993
                                     POTOMAC ELECTRIC POWER COMPANY

                                     By    /s/ H. L. DAVIS
                                           H. Lowell Davis
                                          Vice Chairman and
                                       Chief Financial Officer
[Corporate Seal]
Attest:

  /s/ M. T. HOWARD
      M. T. Howard
  Assistant Secretary

                                2
<PAGE>

                             DISTRICT OF COLUMBIA
                                 STATEMENT OF
                       CANCELLATION OF REDEEMABLE SHARES
                                      OF
                        POTOMAC ELECTRIC POWER COMPANY


      Under the provisions of Section 29-359 of Chapter 3 of Title
29 of the District of Columbia Code, 1981 Edition (Section 59 of
the District of Columbia Business Corporation Act, as amended), the
undersigned corporation submits this statement of cancellation,
pursuant to the provisions of its articles of incorporation, of
redeemable shares of the corporation reacquired by it subsequent to
the close of business on December 16, 1993, and prior to the close
of business on December 12, 1994, through their conversion, in
accordance with their terms, into shares of its common stock, and
through redemption subsequent to the close of business on
December 16, 1993, and prior to the close of business on
December 12, 1994 of 50,949 shares of Serial Preferred Stock, $3.37
Series of 1987:

FIRST:      The name of the corporation is Potomac Electric Power

            Company.

SECOND:     The aggregate number of shares which the corporation

            had authority to issue is 220,011,044, itemized as

            follows:

     CLASS                   SERIES                NUMBER OF SHARES
----------------  -------------------------        ----------------
Common Stock                    -                       200,000,000

Preference Stock  Undesignated as to series               8,800,000

Serial Preferred
  Stock           $2.44 Series of 1957                      300,000
                  $2.46 Series of 1958                      300,000
                   $2.28 Series of 1965                     400,000
                  $2.44 Convertible Series of 1966            8,844
                  $3.82 Series of 1969                      500,000
                  $3.37 Series of 1987                      952,200
                  Auction Series A                        1,000,000
                  $3.89 Series of 1991                    1,000,000
                   $3.40 Series of 1992                   1,000,000
                   Undesignated as to series              5,750,000

<PAGE>

THIRD:      The number of shares of the corporation so cancelled is

            51,610 itemized as follows:

     CLASS                    SERIES               NUMBER OF SHARES
---------------- --------------------------------  ----------------
Serial Preferred
  Stock          $2.44 Convertible Series of 1966               661
                 $3.37 Series of 1987                        50,949

FOURTH:     The number of shares which the corporation has

            authority to issue after giving effect to such

            cancellation is 219,959,434, itemized as follows:

     CLASS                  SERIES                 NUMBER OF SHARES
----------------    -------------------------      ----------------
Common Stock                             -              200,000,000

Preference Stock    Undesignated as to series             8,800,000

Serial Preferred
  Stock             $2.44 Series of 1957                    300,000
                    $2.46 Series of 1958                    300,000
                    $2.28 Series of 1965                    400,000
                     $2.44 Convertible Series of 1966         8,183
                     $3.82 Series of 1969                   500,000
                     $3.37 Series of 1987                   901,251
                     Auction Series A                     1,000,000
                     $3.89 Series of 1991                 1,000,000
                     $3.40 Series of 1992                 1,000,000
                     Undesignated as to series            5,750,000

FIFTH:      The aggregate number of issued shares of the

            corporation after giving effect to such cancellation

            is 123,557,532 itemized as follows:


     CLASS                      SERIES               NUMBER OF SHARES
----------------   --------------------------------  ----------------
Common Stock                        -                   118,148,098

Preference Stock                    -                          NONE

Serial Preferred
  Stock            $2.44 Series of 1957                     300,000
                   $2.46 Series of 1958                     300,000
                   $2.28 Series of 1965                     400,000
                   $2.44 Convertible Series of 1966           8,183
                   $3.82 Series of 1969                     500,000
                   $3.37 Series of 1987                     901,251
                   Auction Series A                       1,000,000
                   $3.89 Series of 1991                   1,000,000
                   $3.40 Series of 1992                   1,000,000

                                2

<PAGE>

SIXTH:      After giving effect to such cancellation, the amounts

            of the stated capital and paid-in surplus of the

            corporation, computed in accordance with the provisions

            of the District of Columbia Business Corporation Act,

            as amended, are $388,619,798 and $1,004,683,941.72,

            respectively.


DATED:      December 16, 1994

                                   POTOMAC ELECTRIC POWER COMPANY

                                   By      /s/ H. L. DAVIS
                                          H. Lowell Davis
                                         Vice Chairman and
                                      Chief Financial Officer

[Corporate Seal]
Attest:

  /s/ M. T. HOWARD
      M. T. Howard
   Assistant Secretary

DISTRICT OF COLUMBIA, ss.:

      I, Indiana C. Shepp, a Notary Public, do hereby certify that
on this 16th day of December, 1994, personally appeared before me
H. Lowell Davis, who, being by me first duly sworn, declared that
he is Vice Chairman and Chief Financial Officer of Potomac Electric
Power Company, that he signed the foregoing document as Vice
Chairman and Chief Financial Officer of the corporation, and that
the statements therein contained are true.

                              /s/ INDIANA C. SHEPP
                               Notary Public, D. C.

[Notarial Seal]             My commission expires:  June 14, 1995


                                3

<PAGE>


                             ARTICLES OF AMENDMENT

                                      OF

                        POTOMAC ELECTRIC POWER COMPANY

      Under the provisions of Section 13.1-652 of the Code of

Virginia, as amended, the undersigned corporation submits these

Articles of Amendment.

FIRST:      The name of the corporation is Potomac Electric Power

            Company.

SECOND:     The reduction in the number of authorized shares of the

            corporation is 51,610, itemized as follows:

     CLASS                  SERIES                  NUMBER OF SHARES
----------------  --------------------------------  ----------------
Serial Preferred
  Stock           $2.44 Convertible Series of 1966               661
                  $3.37 Series of 1987                        50,949

THIRD:      The total number of authorized shares of the

            corporation remaining after giving effect to such

            reduction is 219,959,434, itemized as follows: 


     CLASS                   SERIES                NUMBER OF SHARES
----------------   -------------------------       ----------------
Common Stock                    -                       200,000,000

Preference Stock   Undesignated as to series              8,800,000

Serial Preferred
  Stock            $2.44 Series of 1957                     300,000
                   $2.46 Series of 1958                     300,000
                   $2.28 Series of 1965                     400,000
                   $2.44 Convertible Series of 1966           8,183
                   $3.82 Series of 1969                     500,000
                   $3.37 Series of 1987                     901,251
                   Auction Series A                       1,000,000
                   $3.89 Series of 1991                   1,000,000
                    $3.40 Series of 1992                  1,000,000
                    Undesignated as to series             5,750,000

            The Articles of Incorporation prohibit the reissuance of

            acquired shares.

<PAGE>

FOURTH:     The reduction in the number of authorized shares was

            duly authorized by the Board of Directors on December 15,

            1994.


DATED:      December 16, 1994

                                   POTOMAC ELECTRIC POWER COMPANY

                                       By     /s/ H. L. DAVIS
                                              H. Lowell Davis
                                             Vice Chairman and
                                          Chief Financial Officer
[Corporate Seal]

Attest:

  /s/ M. T. HOWARD
      M. T. Howard
  Assistant Secretary

                                2

<PAGE>

                             DISTRICT OF COLUMBIA
                                 STATEMENT OF
                       CANCELLATION OF REDEEMABLE SHARES
                                      OF
                        POTOMAC ELECTRIC POWER COMPANY



      Under the provisions of Section 29-359 of Chapter 3 of Title
29 of the District of Columbia Code, 1981 Edition (Section 59 of
the District of Columbia Business Corporation Act, as amended), the
undersigned corporation submits this statement of cancellation,
pursuant to the provisions of its articles of incorporation, of
redeemable shares of the corporation reacquired by it subsequent to
the close of business on December 12, 1994, and prior to the close
of business on December 14, 1995, through their conversion, in
accordance with their terms, into shares of its common stock, and
through redemption subsequent to the close of business on December
12, 1994, and prior to the close of business on December 14, 1995
of 31,555 shares of Serial Preferred Stock, $3.37 Series of 1987:

FIRST:      The name of the corporation is Potomac Electric Power

            Company.

SECOND:     The aggregate number of shares which the corporation

            had authority to issue is 219,959,434 itemized as follows:

     CLASS                     SERIES                NUMBER OF SHARES
----------------    -----------------------------    ----------------
Common Stock                    -                     200,000,000

Preference          Undesignated as to series           8,800,000

Serial Preferred
  Stock             $2.44 Series of 1957                  300,000
                    $2.46 Series of 1958                  300,000
                    $2.28 Series of 1965                  400,000
                    $2.44 Convertible Series of 1966        8,183
                    $3.82 Series of 1969                  500,000
                    $3.37 Series of 1987                  901,251
                    Auction Series A                    1,000,000
                    $3.89 Series of 1991                1,000,000
                    $3.40 Series of 1992                1,000,000
                    Undesignated as to series           5,750,000

THIRD:      The number of shares of the corporation so cancelled is

            33,212 itemized as follows:

     CLASS                   SERIES                   NUMBER OF SHARES
----------------   --------------------------------   ----------------
Serial Preferred
  Stock            $2.44 Convertible Series of 1966          1,657
                   $3.37 Series of 1987                     31,555

<PAGE>

FOURTH:     The number of shares which the corporation has

            authority to issue after giving effect to such

            cancellation is 219,926,222, itemized as follows:

     CLASS                   SERIES                  NUMBER OF SHARES
----------------   --------------------------------  ----------------
Common Stock                    -                      200,000,000

Preference Stock   Undesignated as to series             8,800,000

Serial Preferred
  Stock            $2.44 Series of 1957                    300,000
                   $2.46 Series of 1958                    300,000
                   $2.28 Series of 1965                    400,000
                   $2.44 Convertible Series of 1966          6,526
                   $3.82 Series of 1969                    500,000
                   $3.37 Series of 1987                    869,696
                   Auction Series A                      1,000,000
                   $3.89 Series of 1991                  1,000,000
                   $3.40 Series of 1992                  1,000,000
                   Undesignated as to series             5,750,000

FIFTH:      The aggregate number of issued shares of the 

            corporation after giving effect of such cancellation

            is 123,870,682 itemized as follows:

     CLASS                    SERIES                 NUMBER OF SHARES
----------------   --------------------------------  ----------------
Common Stock                 -                          118,494,460

Preference Stock             -                              NONE
   
Serial Preferred
  Stock            $2.44 Series of 1957                     300,000
                   $2.46 Series of 1958                     300,000
                   $2.28 Series of 1965                     400,000
                   $2.44 Convertible Series of 1966           6,526
                   $3.82 Series of 1969                     500,000
                   $3.37 Series of 1987                     869,696
                   Auction Series A                       1,000,000
                   $3.89 Series of 1991                   1,000,000
                   $3.40 Series of 1992                   1,000,000

                              - 2 -

<PAGE>

SIXTH:      After giving effect to such cancellation, the amounts

            of the stated capital and paid-in surplus of the

            corporation, computed in accordance with the provisions

            of the District of Columbia Business Corporation Act,

            as amended, are $387,305,560 and $1,010,531,171.08,

            respectively.


DATED:  December 20, 1995

                                    POTOMAC ELECTRIC POWER COMPANY


                                    By        /s/ H. L. DAVIS
                                               H. Lowell Davis
                                              Vice Chairman and
                                           Chief Financial Officer

[Corporate Seal]

Attest:


/s/ ELLEN SHERIFF ROGERS
   Ellen Sheriff Rogers
   Assistant Secretary


DISTRICT OF COLUMBIA, ss.:

      I, Michelle T. Brown, a Notary Public, do hereby certify that
on this 20th day of December, 1995, personally appeared before me 
H. Lowell Davis, who, being by first duly sworn, declared that he 
is Vice Chairman and Chief Financial Officer of Potomac Electric 
Power Company, that he signed the foregoing document as Vice 
Chairman and Chief Financial Officer of the corporation, and that
the statements therein contained are true.




                                         /s/ MICHELLE T. BROWN    
                                           Notary Public, D. C.

[Notarial Seal]                   My commission expires:  11-14-97


                              - 3 -

<PAGE>



                             ARTICLES OF AMENDMENT

                                      OF

                        POTOMAC ELECTRIC POWER COMPANY



      Under the provisions of Section 13.1-652 of the Code of
Virginia, as amended, the undersigned corporation submits these
Articles of Amendment.

FIRST:      The name of the corporation is Potomac Electric Power

            Company.

SECOND:     The reduction in the number of authorized shares of 

            the corporation is 33,212, itemized as follows:

     CLASS                       SERIES           NUMBER OF SHARES
----------------      --------------------        ----------------
Serial Preferred
  Stock               $2.44 Convertible
                        Series of 1966                       1,657
                      $3.37 Series of 1987                  31,555

THIRD:      The total number of authorized shares of the

            corporation remaining after giving effect to such

            reduction is 219,926,222, itemized as follows:

     CLASS                    SERIES                 NUMBER OF SHARES
----------------   --------------------------------  ----------------
Common Stock                    -                         200,000,000

Preference Stock   Undesignated as to series                8,800,000

Serial Preferred
  Stock            $2.44 Series of 1957                       300,000
                   $2.46 Series of 1958                       300,000
                   $2.28 Series of 1965                       400,000
                   $2.44 Convertible Series of 1966             6,526
                   $3.82 Series of 1969                       500,000
                   $3.37 Series of 1987                       869,696
                   Auction Series A                         1,000,000
                   $3.89 Series of 1991                     1,000,000
                   $3.40 Series of 1992                     1,000,000
                   Undesignated as to series                5,750,000

           The Articles of Incorporation prohibit the reissuance of

           acquired shares. 

<PAGE>


FOURTH:     The reduction in the number of authorized shares was

            duly authorized by the Board of Directors on 

            December 18, 1995.

DATED:  December 20, 1995

                                    POTOMAC ELECTRIC POWER COMPANY



                                    By      /s/ H. LOWELL DAVIS   
                                              H. Lowell Davis     
                                             Vice Chairman and    
                                          Chief Financial Officer

[Corporate Seal]

Attest:


/s/ ELLEN SHERIFF ROGERS
   Ellen Sheriff Rogers
   Assistant Secretary             


<PAGE>


                             DISTRICT OF COLUMBIA
                                 STATEMENT OF
                       CANCELLATION OF REDEEMABLE SHARES
                                      OF
                        POTOMAC ELECTRIC POWER COMPANY



      Under the provisions of Section 29-359 of Chapter 3 of Title
29 of the District of Columbia Code, 1981 Edition (Section 59 of
the District of Columbia Business Corporation Act, as amended), the
undersigned corporation submits this statement of cancellation,
pursuant to the provisions of its articles of incorporation, of
redeemable shares of the corporation reacquired by it subsequent to
the close of business on December 14, 1995, and prior to the close
of business on December 12, 1996, through their conversion, in
accordance with their terms, into shares of its common stock:

FIRST:      The name of the corporation is Potomac Electric Power

            Company.

SECOND:     The aggregate number of shares which the corporation

            had authority to issue is 219,926,222 itemized as

            follows:

     CLASS                  SERIES                   NUMBER OF SHARES
----------------   --------------------------------  ----------------
Common Stock                   -                        200,000,000

Preference         Undesignated as to series              8,800,000

Serial Preferred
  Stock            $2.44 Series of 1957                     300,000
                   $2.46 Series of 1958                     300,000
                   $2.28 Series of 1965                     400,000
                   $2.44 Convertible Series of 1966           6,526
                   $3.82 Series of 1969                     500,000
                   $3.37 Series of 1987                     869,696
                   Auction Series A                       1,000,000
                   $3.89 Series of 1991                   1,000,000
                   $3.40 Series of 1992                   1,000,000
                   Undesignated as to series              5,750,000

THIRD:      The number of shares of the corporation so cancelled is

            573 itemized as follows:

     CLASS                  SERIES               NUMBER OF SHARES
----------------      -----------------          ----------------
Serial Preferred
  Stock               $2.44 Convertible
                         Series of 1966                      573


<PAGE>


FOURTH:     The number of shares which the corporation has

            authority to issue after giving effect to such

            cancellation is 219,925,649, itemized as follows:

     CLASS                  SERIES                    NUMBER OF SHARES
----------------   -------------------------          ----------------
Common Stock                    -                         200,000,000

Preference Stock   Undesignated as to series                8,800,000

Serial Preferred
  Stock            $2.44 Series of 1957                       300,000
                   $2.46 Series of 1958                       300,000
                   $2.28 Series of 1965                       400,000
                   $2.44 Convertible Series of 1966             5,953
                   $3.82 Series of 1969                       500,000
                   $3.37 Series of 1987                       869,696
                   Auction Series A                         1,000,000
                   $3.89 Series of 1991                     1,000,000
                   $3.40 Series of 1992                     1,000,000
                   Undesignated as to series                5,750,000

FIFTH:      The aggregate number of issued shares of the

            corporation after giving effect of such cancellation

           is 123,875,670 itemized as follows:

     CLASS               SERIES                       NUMBER OF SHARES
----------------   --------------------------------   ----------------
Common Stock                    -                        118,500,021

Preference Stock                -                           NONE

Serial Preferred
  Stock            $2.44 Series of 1957                      300,000
                   $2.46 Series of 1958                      300,000
                   $2.28 Series of 1965                      400,000
                   $2.44 Convertible Series of 1966            5,953
                   $3.82 Series of 1969                      500,000
                   $3.37 Series of 1987                      869,696
                   Auction Series A                        1,000,000
                   $3.89 Series of 1991                    1,000,000
                   $3.40 Series of 1992                    1,000,000


                              - 2 -

<PAGE>


SIXTH:      After giving effect to such cancellation, the amounts

            of the stated capital and paid-in surplus of the

            corporation, computed in accordance with the provisions

            of the District of Columbia Business Corporation Act,

            as amended, are $387,282,471 and $1,010,424,927.80,

            respectively.


DATED:  December 17, 1996

                                   POTOMAC ELECTRIC POWER COMPANY



                                    By  /s/ D. R. WRAASE
                                          Dennis R. Wraase
                                       Senior Vice President and
                                        Chief Financial Officer

[Corporate Seal]

Attest:


/s/ ELLEN SHERIFF ROGERS
   Ellen Sheriff Rogers
       Secretary


DISTRICT OF COLUMBIA, ss.:

      I, Lisa A. Poole, a Notary Public, do hereby certify that on
this 17th day of December, 1996, personally appeared before me
Dennis R. Wraase, who, being by me first duly sworn, declared that
he is Senior Vice President and Chief Financial Officer of Potomac
Electric Power Company, that he signed the foregoing document as
Senior Vice President and Chief Financial Officer of the
corporation, and that the statements therein contained are true.




                                          /s/ LISA A. POOLE
                                          Notary Public, D. C.

[Notarial Seal]                    My commission expires:  7-31-97

                              - 3 -

<PAGE>



                             ARTICLES OF AMENDMENT

                                      OF

                        POTOMAC ELECTRIC POWER COMPANY


      Under the provisions of Section 13.1-652 of the Code of
Virginia, as amended, the undersigned corporation submits these
Articles of Amendment.

FIRST:      The name of the corporation is Potomac Electric Power

            Company.

SECOND:     The reduction in the number of authorized shares of the

            corporation is 573, itemized as follows:

     CLASS                  SERIES               NUMBER OF SHARES
----------------      -----------------          ----------------
Serial Preferred
  Stock               $2.44 Convertible
                         Series of 1966                     573

THIRD:      The total number of authorized shares of the

            corporation remaining after giving effect to such

            reduction is 219,925,649, itemized as follows:

     CLASS                   SERIES                  NUMBER OF SHARES
----------------  --------------------------------   ----------------
Common Stock                    -                      200,000,000

Preference Stock  Undesignated as to series              8,800,000

Serial Preferred
  Stock           $2.44 Series of 1957                     300,000
                  $2.46 Series of 1958                     300,000
                  $2.28 Series of 1965                     400,000
                  $2.44 Convertible Series of 1966           5,953
                  $3.82 Series of 1969                     500,000
                  $3.37 Series of 1987                     869,696
                  Auction Series A                       1,000,000
                  $3.89 Series of 1991                   1,000,000
                  $3.40 Series of 1992                   1,000,000
                  Undesignated as to series              5,750,000

           The Articles of Incorporation prohibit the reissuance of

           acquired shares.


<PAGE>

FOURTH:     The reduction in the number of authorized shares was

            duly authorized by the Board of Directors on

            December 16, 1996.

DATED:  December 17, 1996

                                    POTOMAC ELECTRIC POWER COMPANY

                                    By  /s/ D. R. WRAASE
                                           Dennis R. Wraase
                                        Senior Vice President and
                                         Chief Financial Officer

[Corporate Seal]

Attest:

  /s/ ELLEN SHERIFF ROGERS
   Ellen Sheriff Rogers
        Secretary             


<PAGE>

                      DISTRICT OF COLUMBIA
                          STATEMENT OF
                CANCELLATION OF REDEEMABLE SHARES
                               OF
                 POTOMAC ELECTRIC POWER COMPANY



     Under the provisions of Section 29-359 of Chapter 3 of Title
29 of the District of Columbia Code, 1981 Edition (Section 59 of
the District of Columbia Business Corporation Act, as amended), the
undersigned corporation submits this statement of cancellation,
pursuant to the provisions of its articles of incorporation, of
redeemable shares of the corporation reacquired by it subsequent to
the close of business on December 12, 1996, and prior to the close
of business on December 11, 1997, through their conversion, in
accordance with their terms, into shares of its common stock, and
through redemption subsequent to the close of business on December
12, 1996, and prior to the close of business on December 11, 1997
of 30,000 shares of Serial Preferred Stock, $3.37 Series of 1987.

FIRST:    The name of the corporation is Potomac Electric Power

          Company.

SECOND:   The aggregate number of shares which the corporation had

          authority to issue is 219,925,649 itemized as follows:

     CLASS                    SERIES                 NUMBER OF SHARES
----------------   --------------------------------  ----------------
Common Stock                    -                       200,000,000

Preference         Undesignated as to series              8,800,000

Serial Preferred
  Stock            $2.44 Series of 1957                     300,000
                   $2.46 Series of 1958                     300,000
                   $2.28 Series of 1965                     400,000
                   $2.44 Convertible Series of 1966           5,953
                   $3.82 Series of 1969                     500,000
                   $3.37 Series of 1987                     869,696
                   Auction Series A                       1,000,000
                   $3.89 Series of 1991                   1,000,000
                   $3.40 Series of 1992                   1,000,000
                   Undesignated as to series              5,750,000

THIRD:    The number of shares of the corporation so cancelled is

          30,148 itemized as follows:

     CLASS                   SERIES                 NUMBER OF SHARES
----------------  --------------------------------  ----------------
Serial Preferred
  Stock           $2.44 Convertible Series of 1966             148
                  $3.37 Series of 1987                      30,000

<PAGE>

FOURTH:   The number of shares which the corporation has authority

          to issue after giving effect to such cancellation is

          219,895,501, itemized as follows:

     CLASS                       SERIES               NUMBER OF SHARES
----------------   --------------------------------   ----------------
Common Stock                    -                        200,000,000

Preference Stock   Undesignated as to series               8,800,000

Serial Preferred
  Stock            $2.44 Series of 1957                      300,000
                   $2.46 Series of 1958                      300,000
                   $2.28 Series of 1965                      400,000
                   $2.44 Convertible Series of 1966            5,805
                   $3.82 Series of 1969                      500,000
                   $3.37 Series of 1987                      839,696
                   Auction Series A                        1,000,000
                   $3.89 Series of 1991                    1,000,000
                   $3.40 Series of 1992                    1,000,000
                   Undesignated as to series               5,750,000

FIFTH:    The aggregate number of issued shares of the corporation

          after giving effect of such cancellation is 123,846,381

          itemized as follows:

     CLASS                    SERIES                  NUMBER OF SHARES
----------------   --------------------------------   ----------------
Common Stock                    -                        118,500,880

Preference Stock                -                               NONE   

Serial Preferred
  Stock            $2.44 Series of 1957                      300,000
                   $2.46 Series of 1958                      300,000
                   $2.28 Series of 1965                      400,000
                   $2.44 Convertible Series of 1966            5,805
                   $3.82 Series of 1969                      500,000
                   $3.37 Series of 1987                      839,696
                   Auction Series A                        1,000,000
                   $3.89 Series of 1991                    1,000,000
                   $3.40 Series of 1992                    1,000,000

                              - 2 -

<PAGE>


SIXTH:    After giving effect to such cancellation, the amounts of

          the stated capital and paid-in surplus of the corporation,

          computed in accordance with the provisions of the District

          of Columbia Business Corporation Act, as amended, are

          $385,775,930 and $1,010,219,386.21, respectively.


DATED:  December 17, 1997

                                     POTOMAC ELECTRIC POWER COMPANY



                                       By:  /S/  D. R. WRAASE
                                            Dennis R. Wraase
                                        Senior Vice President and
                                         Chief Financial Officer

[Corporate Seal]

Attest:


/S/ ELLEN SHERIFF ROGERS
   Ellen Sheriff Rogers
       Secretary


DISTRICT OF COLUMBIA, ss.:

     I, Loretta S. Thompson, a Notary Public, do hereby certify
that on this 17th day of December, 1997, personally appeared before
me Dennis R. Wraase, who, being by me first duly sworn, declared
that he is Senior Vice President and Chief Financial Officer of
Potomac Electric Power Company, that he signed the foregoing
document as Senior Vice President and Chief Financial Officer of
the corporation, and that the statements therein contained are
true.




                                   /S/ LORETTA S. THOMPSON
                                       Notary Public, D. C.

[Notarial Seal]                 My commission expires:  12/31/2002


                              - 3 -

<PAGE>


                      ARTICLES OF AMENDMENT
                               OF
                 POTOMAC ELECTRIC POWER COMPANY


     Under the provisions of Section 13.1-652 of the Code of
Virginia, as amended, the undersigned corporation submits these
Articles of Amendment.

FIRST:    The name of the corporation is Potomac Electric Power

          Company.

SECOND:   The reduction in the number of authorized shares of the

          corporation is 30,148, itemized as follows:

     CLASS                     SERIES               NUMBER OF SHARES
----------------  --------------------------------  ----------------
Serial Preferred
  Stock           $2.44 Convertible Series of 1966         148
                  $3.37 Series of 1987                  30,000

THIRD:    The total number of authorized shares of the corporation

          remaining after giving effect to such reduction is

          219,895,501, itemized as follows:

     CLASS                    SERIES                 NUMBER OF SHARES
----------------   --------------------------------  ----------------
Common Stock                 -                         200,000,000

Preference Stock   Undesignated as to series             8,800,000

Serial Preferred
  Stock            $2.44 Series of 1957                    300,000
                   $2.46 Series of 1958                    300,000
                   $2.28 Series of 1965                    400,000
                   $2.44 Convertible Series of 1966          5,805
                   $3.82 Series of 1969                    500,000
                   $3.37 Series of 1987                    839,696
                   Auction Series A                      1,000,000
                   $3.89 Series of 1991                  1,000,000
                   $3.40 Series of 1992                  1,000,000
                   Undesignated as to series             5,750,000

          The Articles of Incorporation prohibit the reissuance of

          acquired shares.

FOURTH:   The reduction in the number of authorized shares was duly

          authorized by the Board of Directors on December 15, 1997.


DATED:  December 17, 1997


[Corporate Seal]                      POTOMAC ELECTRIC POWER COMPANY
Attest:


/S/ ELLEN SHERIFF ROGERS                    /S/ D. R. WRAASE
   Ellen Sheriff Rogers                     Dennis R. Wraase
        Secretary                        Senior Vice President and
                                           Chief Financial Officer

<PAGE>

                       DISTRICT OF COLUMBIA
                           STATEMENT OF
                CANCELLATION OF REDEEMABLE SHARES
                                OF
                  POTOMAC ELECTRIC POWER COMPANY



     Under the provisions of Section 29-359 of Chapter 3 of Title 29
of the District of Columbia Code, 1981 Edition (Section 59 of the
District of Columbia Business Corporation Act, as amended), the
undersigned corporation submits this statement of cancellation,
pursuant to the provisions of its articles of incorporation, of
redeemable shares of the corporation reacquired by it subsequent to
the close of business on December 12, 1997, and prior to the close of
business on December 11, 1998, through their conversion, in accordance
with their terms, into shares of its common stock, and through
redemption subsequent to the close of business on December 12, 1997,
and prior to the close of business on December 11, 1998 of 1,278
shares of Serial Preferred Stock, $2.44 Convertible Series of 1966,
500,000 shares of Serial Preferred Stock, $3.82 Series of 1969,
839,696 shares of Serial Preferred Stock, $3.37 Series of 1987 and
1,000,000 shares of Serial Preferred Stock, $3.89 Series of 1991.

FIRST:    The name of the corporation is Potomac Electric Power

          Company.

SECOND:   The aggregate number of shares which the corporation had

          authority to issue is 219,895,501 itemized as follows:

     CLASS                    SERIES                 NUMBER OF SHARES
----------------   --------------------------------  ----------------

Common Stock                    -                      200,000,000

Preference         Undesignated as to series             8,800,000

Serial Preferred
  Stock            $2.44 Series of 1957                    300,000
                   $2.46 Series of 1958                    300,000
                   $2.28 Series of 1965                    400,000
                   $2.44 Convertible Series of 1966          5,805
                   $3.82 Series of 1969                    500,000
                   $3.37 Series of 1987                    839,696
                   Auction Series A                      1,000,000
                   $3.89 Series of 1991                  1,000,000
                   $3.40 Series of 1992                  1,000,000
                   Undesignated as to series             5,750,000

<PAGE>

THIRD:    The number of shares of the corporation so cancelled is

          2,345,501 itemized as follows:

     CLASS                      SERIES                NUMBER OF SHARES
----------------   --------------------------------   ----------------

Serial Preferred
  Stock            $2.44 Convertible Series of 1966           5,805
                   $3.82 Series of 1969                     500,000
                   $3.37 Series of 1987                     839,696
                   $3.89 Series of 1991                   1,000,000

FOURTH:   The number of shares which the corporation has authority 

          to issue after giving effect to such cancellation is

          217,550,000, itemized as follows:

     CLASS                    SERIES             NUMBER OF SHARES
----------------   -------------------------     ----------------

Common Stock                    -                     200,000,000

Preference Stock   Undesignated as to series            8,800,000

Serial Preferred
  Stock            $2.44 Series of 1957                   300,000
                   $2.46 Series of 1958                   300,000
                   $2.28 Series of 1965                   400,000
                   Auction Series A                     1,000,000
                   $3.40 Series of 1992                 1,000,000
                   Undesignated as to series            5,750,000


                              - 2 -

<PAGE>

FIFTH:    The aggregate number of issued shares of the corporation

          after giving effect of such cancellation is 121,527,287

          itemized as follows:

     CLASS                 SERIES                 NUMBER OF SHARES
----------------   --------------------           ----------------

Common Stock                    -                      118,527,287

Preference Stock                -                             NONE   

Serial Preferred
  Stock            $2.44 Series of 1957                    300,000
                   $2.46 Series of 1958                    300,000
                   $2.28 Series of 1965                    400,000
                   Auction Series A                      1,000,000
                   $3.40 Series of 1992                  1,000,000

SIXTH:    After giving effect to such cancellation, the amounts of

          the stated capital and paid-in surplus of the corporation,

          computed in accordance with the provisions of the District

          of Columbia Business Corporation Act, as amended, are

          $268,527,287 and $1,011,568,625.09, respectively.


DATED:  December 16, 1998

(Corporate Seal)                   POTOMAC ELECTRIC POWER COMPANY
Attest:

/s/ ELLEN SHERIFF ROGERS                 /s/ D. R. WRAASE
__________________________              By __________________________
    Ellen Sheriff Rogers                      Dennis R. Wraase
        Secretary                        Senior Vice President and
                                          Chief Financial Officer

                              - 3 -

<PAGE>

DISTRICT OF COLUMBIA, ss.:

     I, Lisa A. Poole, a Notary Public, do hereby certify that on this
16th day of December, 1998 personally appeared before me Dennis R.
Wraase, who, being by me first duly sworn, declared that he is Senior
Vice President and Chief Financial Officer of Potomac Electric Power
Company, that he signed the foregoing document as Senior Vice
President and Chief Financial Officer of the corporation, and that the
statements therein contained are true.


                                        /s/ LISA A. POOLE
                                                                 
                                           Notary Public, D. C.

[Notarial Seal]                       My commission expires:  7-31-02


                              - 4 -

<PAGE>



                       ARTICLES OF AMENDMENT
                                 OF
                   POTOMAC ELECTRIC POWER COMPANY




     Under the provisions of Section 13.1-652 of the Code of Virginia,
as amended, the undersigned corporation submits these Articles of
Amendment.

FIRST:    The name of the corporation is Potomac Electric Power

          Company.

SECOND:   The reduction in the number of authorized shares of the

          corporation is 2,345,501, itemized as follows:

     CLASS                      SERIES                NUMBER OF SHARES
----------------   --------------------------------   ----------------

Serial Preferred
  Stock            $2.44 Convertible Series of 1966           5,805
                   $3.82 Series of 1969                     500,000
                   $3.37 Series of 1987                     839,696
                   $3.89 Series of 1991                   1,000,000

THIRD:    The total number of authorized shares of the corporation

          remaining after giving effect to such reduction is

          217,550,000, itemized as follows:


     CLASS                       SERIES              NUMBER OF SHARES
----------------      -------------------------      ----------------

Common Stock                    -                         200,000,000

Preference Stock      Undesignated as to series             8,800,000

Serial Preferred
  Stock               $2.44 Series of 1957                    300,000
                      $2.46 Series of 1958                    300,000
                      $2.28 Series of 1965                    400,000
                      Auction Series A                      1,000,000
                      $3.40 Series of 1992                  1,000,000
                      Undesignated as to series             5,750,000

          The Articles of Incorporation prohibit the reissuance of

          acquired shares.

<PAGE>

FOURTH:   The reduction in the number of authorized shares

          was duly authorized by the Board of Directors on 

          December 14, 1998.


DATED:  December 16, 1998


[Corporate Seal]                   POTOMAC ELECTRIC POWER COMPANY
Attest:

    /s/ ELLEN SHERIFF ROGERS                 /s/ D. R. WRAASE
____________________________          By ___________________________
   Ellen Sheriff Rogers                      Dennis R. Wraase
        Secretary                         Senior Vice President and
                                            Chief Financial Officer

<PAGE>