|SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C.  20549                                                                                                                                                                                                            
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|Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934                                                                                                                                                                                    
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|For Quarter Ended                                                                                                                                                                                                                                                    
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|Commission File Number                                                                                                                                                                                                                                               
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|Potomac Electric Power Company(Exact name of registrant as specified in its charter)                                                                                                                                                                                 
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|District of Columbia and Virginia(State or other jurisdiction of
 incorporation or organization)                                                                                                                                                                     
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|1900 Pennsylvania Avenue, N.W., Washington, D.C.(Address of principal executive office)                                                                                                                                                                              
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|202-872-2000
(Registrant's telephone number, including area code)                                                                                                                                                                                                    
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|Indicate by check mark whether the registrant (1) has filed all reports required to be 
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months and (2) has been subject to such filing requirements for the past 90 days.
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|Indicate the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.                                                                                                                                        
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|Class                                                                                                                                                                                                                                                                
|Common Stock, $1 par value                                                                                                                                                                                                                                           

TABLE OF CONTENTS

|PART I - Financial Information                                                                                                | Page
|----------------------------------------------------------------------------------------------------------------------------- | ----
|Item 1. - Consolidated Financial Statements                                                                                   |     
|Consolidated Statements of Earnings and Retained Income                                                                       | 2   
|Consolidated Balance Sheets                                                                                                   | 3   
|Consolidated Statements of Cash Flows                                                                                         | 4   
|Notes to Consolidated Financial Statements                                                                                    | 5   
|(1)  Organization and Segment Information                                                                                     | 5   
|(2)  Summary of Significant Accounting Policies                                                                               | 9   
|(3)  Treasury Stock Transactions                                                                                              | 10  
|(4)  Commitments and Contingencies                                                                                            | 10  
|Report of Independent Accountants on Review of Interim Financial Information                                                  | 12  
|Item 2. - Management's Discussion and Analysis of Consolidated Results of 
                Operations and Financial Condition |     
|Safe Harbor Statements                                                                                                        | 13  
|Consolidated Results of Operations                                                                                            | 14  
|Capital Resources and Liquidity                                                                                               | 17  
|Item 3. - Quantitative and Qualitative Disclosures About Market Risk                                                          | 17  
|PART II - Other Information                                                                                                   |     
|Item 1. - Legal Proceedings                                                                                                   | 17  
|Item 5. - Other Information                                                                                                   | 18  
|Item 6. - Exhibits and Reports on Form 8-K                                                                                    | 20  
|Signatures                                                                                                                    | 21  
|Computation of Ratios - Utility Operations Only                                                                               | 22  
|Computation of Ratios - Consolidated Basis                                                                                    | 23  
|Independent Accountants Awareness Letter                                                                                      | 24  





|PART I     FINANCIAL INFORMATION                                                                                 
|-----------------------------------------------------------------------------------------------------------------
|Item 1.    CONSOLIDATED FINANCIAL STATEMENTS                                                                     
|                                                                                                                 
|POTOMAC ELECTRIC POWER COMPANY AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED INCOME(Unaudited)
|                                                                                                                 
|                                                                                                                 
|(Millions of Dollars, except per share data)                                                                     
|                                                                                                                 
|Operating Revenue                                                                                                
|Utility                                                                                                          
|Competitive                                                                                                      
|Gain on divestiture of generation assets                                                                         
|Total Operating Revenue                                                                                          
|                                                                                                                 
|Operating Expenses                                                                                               
|Fuel and purchased energy                                                                                        
|Other operation and maintenance                                                                                  
|Depreciation and amortization                                                                                    
|Other taxes                                                                                                      
|Total Operating Expenses                                                                                         
|                                                                                                                 
|Operating Income                                                                                                 
|                                                                                                                 
|Other Income (Expenses)                                                                                          
|Interest and dividend income                                                                                     
|Interest expense                                                                                                 
|Loss from Equity Investments, Principally
          a Telecommunication Entity                                   
|Other income                                                                                                     
|Total Other Expenses                                                                                             
|                                                                                                                 
|Distributions on Preferred Securities of 
    Subsidiary Trust                                                   
|                                                                                                                 
|Income Tax Expense                                                                                               
|                                                                                                                 
|Net Income                                                                                                       
|                                                                                                                 
|Dividends on Preferred Stock                                                                                     
|                                                                                                                 
|Earnings Available for Common Stock                                                                              
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|Retained Income at Beginning of Period                                                                           
|Dividends on Common Stock                                                                                        
|Other Comprehensive Income,
    Net of Tax                                                                       
|Retained Income at End of Period                                                                                 
|                                                                                                                 
|Basic Average Common Shares Outstanding                                                                          
|Basic Earnings Per Share of Common Stock                                                                         
|Diluted Average Common Shares Outstanding                                                                        
|Diluted Earnings Per Share of Common Stock                                                                       
|Cash Dividends Per Share of Common Stock                                                                         
|                                                                                                                 
|The accompanying Notes are an integral part of these Consolidated Financial Statements.                          



|POTOMAC ELECTRIC POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS(Unaudited at 
March 31, 2001)                                                 
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|ASSETS                                                                                                                                                    
|                                                                                                                                                          
|CURRENT ASSETS                                                                                                                                            
|Cash and cash equivalents                                                                                                                                 
|Marketable securities                                                                                                                                     
|Accounts receivable, less allowance
      for uncollectible  accounts of
      $10.1 and $9.1                                                             
|Fuel, materials and supplies -
      at average cost                                                                                                      
|Prepaid expenses                                                                                                                                          
|Total Current Assets                                                                                                                                      
|                                                                                                                                                          
|INVESTMENTS AND OTHER ASSETS                                                                                                                              
|Investment in finance leases                                                                                                                              
|Operating lease equipment -
      net of accumulated
      depreciation of $141.4 and $135.4,
      respectively                                          
|Other                                                                                                                                                     
|Total Investments and Other Assets                                                                                                                        
|                                                                                                                                                          
|PROPERTY, PLANT AND EQUIPMENT                                                                                                                             
|Property, plant and equipment                                                                                                                             
|Accumulated depreciation                                                                                                                                  
|Net Property, Plant and Equipment                                                                                                                         
|                                                                                                                                                          
|TOTAL ASSETS                                                                                                                                              
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|LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                                                      
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|CURRENT LIABILITIES                                                                                                                                       
|Short-term debt                                                                                                                                           
|Accounts payable and accrued payroll                                                                                                                      
|Capital lease obligations due within
      one year                                                                                                       
|Interest and taxes accrued                                                                                                                                
|Other                                                                                                                                                     
|Total Current Liabilities                                                                                                                                 
|                                                                                                                                                          
|DEFERRED CREDITS                                                                                                                                          
|Regulatory liabilities, net                                                                                                                               
|Income taxes                                                                                                                                              
|Investment tax credits                                                                                                                                    
|Other                                                                                                                                                     
|Total Deferred Credits                                                                                                                                    
|                                                                                                                                                          
|LONG-TERM DEBT AND CAPITAL LEASE 
     OBLIGATIONS                                                                                                        
|                                                                                                                                                          
|COMPANY OBLIGATED MANDATORILY
    REDEEMABLE PREFERRED SECURITIES
    OF SUBSIDIARY TRUST WHICH HOLDS
    SOLELY PARENT JUNIOR SUBORDINATED
    DEBENTURES
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|PREFERRED STOCK                                                                                                                                           
|Serial preferred stock                                                                                                                                    
|Redeemable serial preferred stock                                                                                                                         
|Total Preferred Stock                                                                                                                                     
|                                                                                                                                                          
|COMMITMENTS AND CONTINGENCIES                                                                                                                             
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|SHAREHOLDERS' EQUITY                                                                                                                                      
|Common stock, $1 par value -
       authorized 200,000,000 shares,
       issued 118,544,883 and 118,530,802
       shares, respectively                  
|Premium on stock and other capital
       contributions                                                                                                   
|Capital stock expense                                                                                                                                     
|Accumulated other comprehensive loss                                                                                                                      
|Retained income                                                                                                                                           
|Total Shareholders' Equity                                                                                                                                
|                                                                                                                                                          
|Less cost of shares of common stock
        in treasury ( 9,645,707 shares and
        7,792,907 shares, respectively)                                    
|                                                                                                                                                          
|                                                                                                                                                          
|TOTAL LIABILITIES AND 
             SHAREHOLDERS' EQUITY                                                                                                  
|                                                                                                                                                          
|The accompanying Notes are an integral part of these Consolidated Financial Statements.                                                                   

|POTOMAC ELECTRIC POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)
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|OPERATING ACTIVITIES                                                                            
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|Net income                                                                                      
|Adjustments to reconcile net income to net cash
   (used by) from operating activities:         
|Depreciation and amortization                                                                   
|Gain on divestiture of generation assets                                                        
|Changes in:                                                                                     
|Accounts receivable and unbilled revenue                                                        
|Regulatory assets/liabilities, net                                                              
|Contract termination fee                                                                        
|Prepaid expenses                                                                                
|Accounts payable and accrued payroll                                                            
|Interest and taxes accrued                                                                      
|Net other operating activities                                                                  
|Net Cash (Used By) From Operating Activities                                                    
|                                                                                                
|INVESTING ACTIVITIES                                                                            
|                                                                                                
|Net investment in property, plant and equipment                                                 
|Proceeds from:                                                                                  
|Divestiture of generation assets                                                                
|Sales of marketable securities, net of purchases                                                
|Sales of leased equipment, net of additions                                                     
|Sales of other investments, net of purchases                                                    
|Net other investing activities                                                                  
|Net Cash From (Used by) Investing Activities                                                    
|                                                                                                
|FINANCING ACTIVITIES                                                                            
|                                                                                                
|Dividends paid on preferred and common stock                                                    
|Redemption of preferred stock                                                                   
|Reacquisition of the Company's common stock                                                     
|Reacquisition of debt, net of issuances                                                         
|Other financing activities                                                                      
|Net Cash Used By Financing Activities                                                           
|                                                                                                
|Net Decrease In Cash and Cash Equivalents                                                       
|Cash and Cash Equivalents at Beginning of Year                                                  
|                                                                                                
|CASH AND CASH EQUIVALENTS AT END OF YEAR                                                        
|                                                                                                
|Cash paid for interest (net of capitalized
    interest of $1.4 and $.8) and income taxes:      
|Interest                                                                                        
|Income taxes                                                                                    
|                                                                                                
|The accompanying Notes are an integral part of these Consolidated Financial Statements.         



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          For additional information, other than the information discussed in the Notes to 
Consolidated Financial Statements section herein, refer to Item 8. Financial Statements 
and Supplementary Data of the Company's 2000 Form 10-K.(1)     Organization and Segment InformationOrganization          Potomac Electric Power Company (Pepco or the Company) is engaged in three 
principal lines of business.  These business lines consist of (1) the provision of regulated 
electric utility transmission and distribution services, (2) the supply of 
telecommunications services including local and long distance telephone, high speed 
Internet and cable television, and (3) the supply of energy products and services in 
competitive retail markets.  The Company's regulated electric utility activities are referred 
to herein as the "Utility" or "Utility Operations," and its telecommunications services and 
competitive energy activities are referred to herein as "Competitive Operations."  
Competitive Operations are derived from Pepco Holdings, Inc. (PHI), a wholly owned 
subsidiary of the Company, and PHI's wholly owned subsidiaries, Potomac Capital 
Investment Corporation (PCI) and Pepco Energy Services, Inc. (Pepco Energy Services).   
The Company also has a wholly owned Delaware statutory business trust, Potomac 
Electric Power Company Trust I (Trust) and a wholly owned Delaware Investment 
Holding Company, Edison Capital Reserves Corporation (Edison).
          On May 19, 2000, the Company reached an agreement with PPL Global, Inc., and 
Allegheny Energy Supply Company, LLC, to sell its 9.72 percent interest in the 
Conemaugh Generating Station (Conemaugh) for approximately $156 million. 
Conemaugh is located near Johnstown, Pennsylvania, and consists of two baseload units 
totaling approximately 1,700 megawatts of capacity.  The Conemaugh sale closed on 
January 8, 2001, and resulted in the recognition of a pre-tax gain of $50.2 million ($22.4 
million after-tax) during the first quarter of 2001.
          Additionally, as discussed in Item 7. Management's Discussion and Analysis of 
Consolidated Results of Operations and Financial Condition of the Company's 2000 
Form 10-K, on February 12, 2001, the Company and Conectiv announced that each 
company's board of directors approved an agreement for a strategic transaction whereby 
the Company will effectively acquire Conectiv for a combination of cash and stock 
valued at approximately $2.2 billion.  Both companies will become subsidiaries of a new 
holding company to be named at a later date.  The combination will be accounted for as a 
purchase and is expected to be completed in approximately 12 months.  Completion of 
the acquisition is subject to customary closing conditions, including shareholder approval 
by both companies, receipt of all regulatory approvals, and making all necessary 
governmental filings.Segment Information
          The Company has identified the Utility's operations including the Trust (Utility 
Segment) and PHI's operations (Competitive Segment) as its two reportable segments.  
The following tables present condensed financial information for the three months ended 
March 31, 2001 and 2000, respectively.

|                                                                                                                                                                                                                                                                                                        | Competitive Segment                
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------
|                                                                                                                                                                                                                                                                                                        |                                    
|                                                                                                                                                                                                                                                                                                        |                                    
|                                                                                                                                                                                                                                                                                                        | Utility                            
|Three Months Ended:                                                                                                                                                                                                                                                                                     | (Unaudited, In Millions of Dollars)
|March 31, 2001                                                                                                                                                                                                                                                                                          |                                    
|Operating Revenue                                                                                                                                                                                                                                                                                       | $ 446.9(A)                         
|Operating Expenses                                                                                                                                                                                                                                                                                      |                                    
|Fuel and Purchased Energy                                                                                                                                                                                                                                                                               | 188.8                              
|Other Operation and
        Maintenance                                                                                                                                                                                                                                                                 | 50.8                               
|Depreciation and Amortization                                                                                                                                                                                                                                                                           | 34.4                               
|Other Taxes                                                                                                                                                                                                                                                                                             | 53.2                               
|Total Operating Expenses                                                                                                                                                                                                                                                                                | 327.2                              
|Operating Income                                                                                                                                                                                                                                                                                        | 119.7                              
|Other Income (Expenses)                                                                                                                                                                                                                                                                                 |                                    
|Interest and Dividend Income                                                                                                                                                                                                                                                                            | 23.4                               
|Interest Expense                                                                                                                                                                                                                                                                                        | (34.7)                             
|(Loss) Income from Equity
      Investments, Principally a
      Telecommunication Entity                                                                                                                                                                                                               | -                                  
|Other Income                                                                                                                                                                                                                                                                                            | 5.2                                
|Total Other Expenses                                                                                                                                                                                                                                                                                    | (6.1)                              
|Distributions on Preferred    Securities of Subsidiary Trust                                                                                                                                                                                                                                            | 2.3                                
|Income Tax Expense (Benefit)                                                                                                                                                                                                                                                                            | 47.5                               
|Net Income (Loss)                                                                                                                                                                                                                                                                                       | $   63.8(B)                        
|                                                                                                                                                                                                                                                                                                        |                                    
|(A)Includes a pre-tax gain of $50.2 million from the sale of the Conemaugh Generating 
         Station.(B)Includes an after-tax gain of $22.4 million from the sale of the Conemaugh Generating 
         Station.(C)Includes dividend income from PCI's ongoing preferred stock investment portfolio.



|                                                                                          | Competitive Segment                
|----------------------------------------------------------------------------------------- | -----------------------------------
|                                                                                          |                                    
|                                                                                          |                                    
|                                                                                          | Utility                            
|Three Months Ended:                                                                       | (Unaudited, In Millions of Dollars)
|                                                                                          |                                    
|March 31, 2000                                                                            |                                    
|Operating Revenue                                                                         | $440.1                             
|Operating Expenses                                                                        |                                    
|Fuel and Purchased Energy                                                                 | 212.0                              
|Other Operation and
        Maintenance                                                   | 77.3                               
|Depreciation and Amortization                                                             | 61.8                               
|Other Taxes                                                                               | 45.7                               
|Total Operating Expenses                                                                  | 396.8                              
|Operating Income (Loss)                                                                   | 43.3                               
|Other Income (Expenses)                                                                   |                                    
|Interest and Dividend Income                                                              | -                                  
|Interest Expense                                                                          | (36.8)                             
|(Loss) Income from Equity
      Investments, Principally a       Telecommunication Entity | -                                  
|Other Income                                                                              | 1.0                                
|Total Other Expenses                                                                      | (35.8)                             
|Distributions on Preferred Securities
  of Subsidiary Trust                               | 2.3                                
|Income Tax Expense (Benefit)                                                              | 1.9                                
|Net Income (Loss)                                                                         | $   3.3                            
|                                                                                          |                                    

(A)

(2)     Summary of Significant Accounting PoliciesBasis of Presentation
          The information furnished in the accompanying consolidated financial statements 
reflects all adjustments (which consist only of normal recurring accruals) which are, in 
the opinion of management, necessary for a fair presentation of the Company's results of 
operations for the interim periods presented. The accompanying consolidated financial 
statements and notes thereto should be read in conjunction with the Company's 2000 
Form 10-K. Certain prior period amounts have been reclassified in order to conform to 
the current period presentation.Derivative Instruments and Hedging Activities
          On January 1, 2001, the Company adopted the provisions of Statement of Financial 
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging 
Activities" (SFAS 133).  Although the Utility is not directly impacted by SFAS 133, the 
competitive subsidiaries have entered into several agreements that are subject to the 
provisions of SFAS 133.  Specifically, PCI has entered into two interest rate swap 
agreements for the purposes of hedging certain variable interest rate debt obligations for 
fixed interest rate debt that were issued under its Medium Term Note (MTN) program; 
and, Pepco Energy Services has entered into two fuel oil price swap agreements for the 
purpose of hedging the variability of fuel oil costs for electric power generation.  In 
accordance with the terms of the swap agreements, both PCI and Pepco Energy Services 
receive or pay the net difference between variable interest payments/market prices and 
the fixed rates/prices due from its swap counterparties, thereby fixing its interest expense 
and fuel cost, respectively.
          On the date of adoption, PCI formally designated its swap agreements as cash flow 
hedge instruments which, for accounting purposes, are measured at fair market value and 
recorded as liabilities in the Company's consolidated balance sheet.  As cash flow hedges, 
the effective portion of the change in the fair value of the interest rate and oil price swaps 
are reported as a component of Accumulated Other Comprehensive Income (AOCI). As a 
yield adjustment is realized, the related amount reflected in AOCI is subsequently 
reclassified into interest expense or fuel and purchased energy.
          The Company's management assesses interest rate and fuel oil price risks by 
continually identifying and monitoring changes in the marketplace that may adversely 
impact expected future cash flows and by evaluating hedging opportunities.
          On January 1, 2001, PCI recorded an after-tax adjustment of $33 thousand to 
AOCI for the purposes of recognizing the fair value of interest rate swaps designated as 
cash flow hedges.A similar adjustment was not required for the oil price swaps as they 
did not exist at that date.  AOCI is adjusted monthly for changes in the fair value of the 
interest rate and fuel oil swaps.  During the three months ended March 31, 2001, PCI 
recorded $53 thousand in income as a result of the change in the fair value of the swap 
agreements.  As of March 31, 2001, PCI recorded $668 thousand as an interest rate swap 
liability classified in other liabilities and Pepco Energy Services recorded $511 thousand 
as purchase commitments included in accounts payable and other liabilities, respectively.
          PCI's interest rate swaps expire on March 24, 2004 and August 22, 2005, 
respectively, which coincides with the maturity date of these MTNs, to which the swaps 
relate for hedging purposes.  Pepco Energy Services' fuel oil swaps expire in August 
2001, which coincides with the planned fuel requirements for electric power generation.
          Through the year ended December 31, 2002, approximately $519 thousand of 
losses in AOCI related to the oil price and interest rate swaps are expected to be 
reclassified into income as a yield adjustment of the hedged items.Comprehensive Income
          The Company's components of comprehensive income are net income, unrealized 
losses on marketable securities, and unrealized losses on derivative instruments.  
Comprehensive income was $63.7 million and $5 million for the three months ended 
March 31, 2001 and 2000, respectively.(3)     Treasury Stock Transactions
          On February 12, 2001, the Company announced its plan to repurchase up to $450 
million of its common stock in the open market or in privately negotiated transactions 
over the next twelve months.  The actual amount of stock to be repurchased will be 
determined by management depending on market conditions.  As of March 31, 2001, the 
Company has acquired 1,852,800 shares in connection with this repurchase plan at a cost 
of approximately $41.5 million, which is reflected as a reduction to shareholders' equity 
on the accompanying consolidated balance sheets.  At December 31, 2000, Pepco had 
7,792,907 shares held in treasury at a cost of approximately $200 million in connection 
with a previous stock repurchase plan.(4)     Commitments and ContingenciesInvestments
          As of March 31, 2001, the carrying value of PCI's marketable securities, which 
consisted primarily of preferred stocks with mandatory redemption features, was $217.7 
million. This total included preferred stock from Southern California Edison and Pacific 
Gas & Electric (PG&E) with carrying values at March 31, 2001, of $6.3 million and $9.5 
million (including net unrealized losses of $4.3 million and $8.3 million).  On April 6, 
2001, PG&E filed for Chapter 11 bankruptcy protection. Due to the numerous political 
and economic factors influencing the California utility market, the full extent of PG&E's 
filing and subsequent potential impact on PCI's investment, if any, is uncertain.Regulatory Contingencies          On April 26, 2001, the Company filed an application with the Maryland Public 
Service Commission to approve the Company's plan to distribute $188.6 million to 
Maryland customers as their portion of divestiture gain sharing.  The Company has 
requested expedited consideration of its application and a final determination is expected 
by June 30, 2001.NPDES Permits
          Subsequent to the sale of its generation assets on December 19, 2000, the Company 
has one remaining facility, the Benning Station, operating under a National Pollutant 
Discharge Elimination System (NPDES) permit.  The Benning Station consists of a 
generating facility and a service center.  An NPDES permit renewal application for the 
facility was submitted in July 1993.  The Environmental Protection Agency issued a final 
permit in November 2000.  The Company has appealed certain provisions of the new 
permit.  During the interim, the previously existing permit remains in effect.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 
          This Quarterly Report on Form 10-Q, including the report of 
PricewaterhouseCoopers LLP on review of unaudited interim financial information dated 
May 2, 2001 will automatically be incorporated by reference in the Prospectuses 
constituting parts of the Company's Registration Statements on Form S-3 (Number 33-
58810) and Forms S-8 (Numbers 33-36798, 33-53685, 33-54197, 333-56683 and 333-
57221), and under New RC, Inc.'s Registration Statement on Form S-4 (Number 333-
57042), filed under the Securities Act of 1933.  Such report of PricewaterhouseCoopers 
LLP, however, is not a "report" or "part of the Registration Statement" within the 
meaning of Sections 7 and 11 of the Securities Act of 1933 and the liability provisions of 
Section 11(a) of such Act do not apply.Report of Independent Accountants
To the Board of Directors
and Shareholders of
Potomac Electric Power Company
We have reviewed the accompanying consolidated balance sheets of Potomac Electric 
Power Company and its consolidated subsidiaries (the Company) as of March 31, 2001 
and 2000, and the related consolidated statements of earnings and retained income and 
the consolidated statements of cash flows for the three month period then ended.  These 
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American 
Institute of Certified Public Accountants.  A review of interim financial information 
consists principally of applying analytical procedures to financial data and making 
inquiries of persons responsible for financial and accounting matters. It is substantially 
less in scope than an audit conducted in accordance with generally accepted auditing 
standards, the objective of which is the expression of an opinion regarding the financial 
statements taken as a whole.  Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made 
to the accompanying consolidated interim financial information for it to be in conformity 
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing standards, 
the consolidated balance sheet as of December 31, 2000, and the related consolidated 
statements of earnings and retained income and the consolidated statement of cash flows 
for the year then ended (not presented herein); and in our report dated January 19, 2001, 
we expressed an unqualified opinion on those consolidated financial statements.  In our 
opinion, the information set forth in the accompanying consolidated balance sheet as of 
December 31, 2000, is fairly stated, in all material respects, in relation to the consolidated 
balance sheet from which it has been derived.
/S/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP 
Washington, D.C.
May 2, 2001Item 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED 
                     RESULTS OF OPERATIONS AND FINANCIAL CONDITION
          For additional information, other than the information disclosed in the 
Management's Discussion and Analysis of Consolidated Results of Operations and 
Financial Condition section herein, refer to Item 7. Management's Discussion and 
Analysis of Financial Condition and Results of Operations of the Company's 2000 Form 
10-K.Safe Harbor Statements
          In connection with the safe harbor provisions of the Private Securities Litigation 
Reform Act of 1995 (Reform Act), the Company is hereby filing cautionary statements 
identifying important factors that could cause actual results to differ materially from 
those projected in forward-looking statements (as such term is defined in the Reform Act) 
made in this report on Form 10-Q.  Any statements that express, or involve discussions as 
to expectations, beliefs, plans, objectives, assumptions or future events or performance 
are not statements of historical facts and may be forward-looking.
          Forward-looking statements involve estimates, assumptions and uncertainties and 
are qualified in their entirety by reference to, and are accompanied by, the following 
important factors, which are difficult to predict, contain uncertainties, are beyond the 
control of the Company and may cause actual results to differ materially from those 
contained in forward-looking statements:

|- | prevailing governmental policies and regulatory actions, including those of the 
Federal Energy Regulatory Commission (FERC) and the Maryland and D.C. 
Commissions, with respect to allowed rates of return, industry and rate structure, 
acquisition and disposal of assets and facilities, operation and construction of plant 
facilities, recovery of purchased power expenses, and present or prospective 
wholesale and retail competition (including but not limited to retail wheeling and 
transmission costs);
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|- | changes in and compliance with environmental and safety laws and policies;                                                                                                                                                                                                                                                                                                                                                                                                                                                
|- | weather conditions;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|- | population growth rates and demographic patterns;                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|- | competition for retail and wholesale customers;                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|- | growth in demand, sales and capacity to fulfill demand;                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|- | changes in tax rates or policies or in rates of inflation;                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|- | changes in projects costs;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|- | unanticipated changes in operating expenses and capital expenditures;                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|- | capital market conditions;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|- | competition for new energy development opportunities and other opportunities;                                                                                                                                                                                                                                                                                                                                                                                                                                             
|- | Legal and administrative proceedings (whether civil or criminal) and settlements 
that influence the business and profitability of the Company;                                                                                                                                                                                                                                                                                                                                                                           
|- | pace of entry into new markets;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|- | Time and expense required for building out the planned Starpower network;                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|- | Success in marketing services;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|- | possible development of alternative technologies;                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|- | The ability to secure electric and gas supply to fulfil sales commitments at favorable prices, and                                                                                                                                                                                                                                                                                                                                                                                                                        
|- | The cost of fuel.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

Any forward-looking statements speak only as of May 2, 2001, and the Company 
undertakes no obligation to update any forward-looking statement to reflect events or 
circumstances after the date on which such statement is made or to reflect the occurrence 
of unanticipated events.  New factors emerge from time to time and it is not possible for 
management to predict all of such factors, nor can it assess the impact of any such factor 
on the business or the extent to which any factor, or combination of factors, may cause 
results to differ materially from those contained in any forward-looking statement.CONSOLIDATED RESULTS OF OPERATIONS
OPERATING REVENUEUtility          	The decrease in Utility operating revenue during the 2001 quarter, compared to 
the corresponding quarter in the prior year, primarily resulted from the termination of the 
previously existing contract to provide full-requirements energy to SMECO on December 
31, 2000 (a new full-requirements agreement commenced between Pepco Energy 
Services and SMECO on January 1, 2001).Competitive Operations          Competitive operating revenue is derived from the operations of PCI and Pepco 
Energy Services.  PCI classifies its revenue as "financial investments" and "utility 
industry services" and Pepco Energy Services classifies its revenue as "energy services."
          	Competitive operating revenue increased during the quarter ended March 31, 
2001 due to an increase in energy services revenue over the period which primarily 
resulted from the continued growth of Pepco Energy Services' businesses. This increased 
growth includes the commencement in January 2001 of the four-year contract to provide 
full-requirements energy to SMECO.  The increase in operating revenue was partially 
offset by a decrease in utility industry services revenue over the prior quarter due to the 
fact that 2000 revenue included a one-time pre-tax gain of approximately $20 million 
from the sale of PCI's 50% interest in the Cove Point liquefied natural gas storage facility 
and pipeline.Gain on Divestiture of Generation Assets
          This amount represents the pre-tax gain that was recorded as a result of the sale of 
the Company's interest in Conemaugh.  For additional information, refer to Note (1) 
Organization and Segment Information, herein.
OPERATING EXPENSES          	Consolidated operating expenses increased during the first quarter of 2001 
primarily due to an increase in Pepco Energy Services' fuel and purchased energy as a 
result of the growth in its gas and electric businesses.  This increase was partially offset 
by a reduction in Utility depreciation expense which resulted from the divestiture of its 
generation assets in December 2000.OTHER INCOME (EXPENSES)Interest and Dividend Income

The increase in interest and dividend income during the first quarter of 2001 
resulted primarily from the interest earned on the proceeds received from the divestiture 
of the Company's generation assets in December 2000. (Loss) Income from Equity Investments, Principally a Telecommunication Entity
          These amounts represent the Company's share of the pre-tax income or loss from 
entities in which it has a 20% to 50% equity investment.  The Company's most significant 
equity investment is the joint venture known as Starpower Communications, LLC 
(Starpower) that was formed in 1997 between wholly owned subsidiaries of PCI and 
RCN Corporation.  Additionally, this line item includes income from Pepco Energy 
Services' 50% share of the operations from Viron/Pepco Services, Inc., which was 
created in 1999 to provide energy-savings performance contracting services to the 
Military District of Washington.
          Starpower, which is discussed in detail in Item 8. Financial Statements and 
Supplementary Data in the Company's 2000 Form 10-K, is the only regional company 
providing a competitively priced bundled package for residential customers, over an 
advanced fiber-optic network for cable television, local and long distance telephone, and 
dial-up and high-speed Internet services. The customer subscriber services base is 
composed of customers served on Starpower's advanced fiber-optic network (On-
network) and off of other networks ahead of Starpower's build-out (Off-network).  The 
On-network customer subscriber services are principally composed of cable, local and 
long distance telephone and high-speed Internet customer services and totaled in excess 
of 43,000 as of March 31, 2001, compared to approximately 25,000 at March 31, 2000. 
The Off-network customer subscriber services are principally composed of dial-up 
Internet and resale local and long distance telephone customers and totaled in excess of 
224,000 as of March 31, 2001, compared to approximately 260,000 at March 31, 2000. 
Total customer subscriber services including cable, telephone and Internet subscribers 
were in excess of 267,000 as of March 31, 2001, compared to approximately 285,000 as 
of March 31, 2000. The decline in total customer subscriber services over the past year is 
principally due to the loss of dial-up Internet customers due to competition from free dial-
up Internet service providers.
          Through March 31, 2001, Starpower has built sufficient advanced fiber-optic 
network to cumulatively reach approximately 180,000 On-network households as 
compared to approximately 90,000 such households at March 31, 2000. As of March 31, 
2001, PCI has cumulatively invested $184 million in Starpower.
          The Loss from Equity Investments, Principally a Telecommunication Entity, 
increased for the three months ended March 31, 2001, compared to the corresponding 
period in 2000, primarily due to expenses incurred in connection with the expansion of 
the Starpower network.  PCI anticipates that Starpower will continue to incur losses in 
2001 as it further develops and expands its network and customer base.
INCOME TAX EXPENSE
          The increase in income tax expense during the first quarter of 2001 primarily 
results from taxes incurred in connection with the sale of Conemaugh.  Taxes also 
increased over this period as a result of interest income earned on the proceeds from the 
divestiture in December 2000.CAPITAL RESOURCES AND LIQUIDITYDividends on Common Stock
          The Company's annual dividend rate on its common stock is determined by its 
Board of Directors on a quarterly basis and takes into consideration, among other factors, 
current and possible future developments which may affect the Company's income and 
cash flows.  On February 12, 2001, the Company announced that it will reduce the annual 
dividend on its common stock to $1.00 per share from $1.66 per share, effective with the 
June 2001 dividend.Construction and Generating Capacity
          Construction expenditures, excluding the Allowance for Funds Used During 
Construction and Capital Cost Recovery Factor, totaled $45.6 million for the three 
months ended March 31, 2001 and are projected to total $190.5 million for the year 2001.  
For the five-year period 2001-2005, construction expenditures are projected to total $761 
million.Preferred Stock Repurchases
          During February 2001, the Company repurchased the following Preferred Stock: 
35,400 shares of $2.44 series of 1957 at $43.50 per share; 40,030 shares of $2.46 series 
of 1958 at $43.60 per share; 35,801 shares of $2.28 series of 1965 at $40.50 per share.  
The repurchases totaled approximately $5.5 million.Mortgage Bond Repurchases
          On April 30, 2001, the Company announced that on June 1, 2001, it will redeem at 
103.61% of principal amount, plus accrued interest to the redemption date, the entire 
$100 million outstanding principal amount of its 9 % First Mortgage Bonds due June 1, 
2021.  These bonds were issued in 1991.Item 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT                     MARKET RISK
          Refer to Item 7A. Quantitative and Qualitative Disclosures About Market Risk of 
the Company's 2000 Form 10-K.PART II   OTHER INFORMATIONItem 1.      LEGAL PROCEEDINGS
          Refer to Item 3. Legal Proceedings of the Company's 2000 Form 10-K.Item 5.      OTHER INFORMATION
Annual Meeting of Common Shareholders and Special Meeting of Preferred 
Shareholders          The Company's joint Annual Meeting of Common Shareholders and Special 
Meeting of Preferred Shareholders will be held at 10:00 a.m., local time, on July 18, 
2001, at The Inn and Conference Center, University of Maryland University College, 
3501 University Boulevard East, Adelphi, Maryland.  The record date has been set for 
Tuesday, May 29, 2001.

|Statistical Data                                                                                                                                                                        
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                        
|                                                                                                                                                                                        
|                                                                                                                                                                                        
|Operating Revenue                                                                                                                                                                       
|                                                                                                                                                                                        
|Electric Revenue                                                                                                                                                                        
|Other                                                                                                                                                                                   
|Total Utility Operating Revenue                                                                                                                                                         
|Competitive Operating Revenue                                                                                                                                                           
|Gain on Divestiture of Generating Assets                                                                                                                                                
|Total Operating Revenue                                                                                                                                                                 
|                                                                                                                                                                                        
|Distribution and Transmission by Class of Service                                                                                                                                       
|                                                                                                                                                                                        
|Residential                                                                                                                                                                             
|General Service                                                                                                                                                                         
|Large Power Service *                                                                                                                                                                   
|Street Lighting                                                                                                                                                                         
|Metro                                                                                                                                                                                   
|Network Transmission Services                                                                                                                                                           
|Wholesale                                                                                                                                                                               
|Total Revenue                                                                                                                                                                           
|Network Transmission Expenses                                                                                                                                                           
|System                                                                                                                                                                                  
|                                                                                                                                                                                        
|Generation Services (SOS) by Class of Service                                                                                                                                           
|                                                                                                                                                                                        
|Residential                                                                                                                                                                             
|General Service                                                                                                                                                                         
|Large Power Service *                                                                                                                                                                   
|Street Lighting                                                                                                                                                                         
|Metro                                                                                                                                                                                   
|Wholesale                                                                                                                                                                               
|Subtotal                                                                                                                                                                                
|EUM Capacity/Energy                                                                                                                                                                     
|System                                                                                                                                                                                  
|                                                                                                                                                                                        
|Distribution and Transmission Sales(Millions of KWH)                                                                                                                                    
|                                                                                                                                                                                        
|Residential                                                                                                                                                                             
|General Service                                                                                                                                                                         
|Large Power Service *                                                                                                                                                                   
|Street Lighting                                                                                                                                                                         
|Metro                                                                                                                                                                                   
|Wholesale                                                                                                                                                                               
|System                                                                                                                                                                                  
|                                                                                                                                                                                        
|Generation Services (SOS) Sales(Millions of KWH)                                                                                                                                        
|                                                                                                                                                                                        
|Residential                                                                                                                                                                             
|General Service                                                                                                                                                                         
|Large Power Service *                                                                                                                                                                   
|Street Lighting                                                                                                                                                                         
|Metro                                                                                                                                                                                   
|Wholesale                                                                                                                                                                               
|System                                                                                                                                                                                  
|                                                                                                                                                                                        
|Average System Revenue  per KWH(Cts./KWH)                                                                                                                                               
|Delivered                                                                                                                                                                               
|Generation Services (SOS)                                                                                                                                                               
|                                                                                                                                                                                        
|Weather Data                                                                                                                                                                            
|Heating Degree Days                                                                                                                                                                     
|20 Year Average                                                                                                                                                                         
|Cooling Degree Hours                                                                                                                                                                    
|20 Year Average                                                                                                                                                                         
|                                                                                                                                                                                        
|Heating Degree Days - The daily difference in degrees by which the mean temperature is below 65 degrees Fahrenheit (dry bulb).                                                          
|Cooling Degree Hours - The daily sum of the differences, by hours, by which the temperature (effective temperature) for each hour exceeds 71 degrees Fahrenheit (effective temperature).
|* Large Power Service customers are served at high voltage of 66KV or higher.                                                                                                           

Item 6.      EXHIBITS AND REPORTS ON FORM 8-K

|(a) | Exhibits                                                                                                                                                                                                                                                                                                                                                               |   |                                                                     
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | --------------------------------------------------------------------
|    | Exhibit 12                                                                                                                                                                                                                                                                                                                                                             | - | Computation of ratios - filed herewith.                             
|    | Exhibit 15                                                                                                                                                                                                                                                                                                                                                             | - | Letter re: unaudited interim financial information - filed herewith.
|(b) | Reports on Form 8-K                                                                                                                                                                                                                                                                                                                                                    |   |                                                                     
|    | A Current Report on Form 8-K was filed by the Company on January 8, 
2001, announcing the completion of the sale of its generating assets through 
the sale of its 9.72% interest in the Conemaugh Generating Station.  The item 
reported on such Form 8-K was Item 2. (Acquisition and Disposition of 
Assets).                                                     
|    | A Current Report on Form 8-K was filed by the Company on January 25, 
2001, providing detailed financial information and audited consolidated 
financial statements of the Company.  The item reported on such Form 8-K 
was Item 7. (Financial Statements and Exhibits).                                                                                             
|    | A Current Report on Form 8-K was filed by the Company on February 12, 
2001, summarizing the Company's Agreement and Plan of Merger with 
Conectiv.  The press release by Pepco and Conectiv dated February 12, 2001 
was included in the Form 8-K.  The items reported on such Form 8-K were 
Item 5. (Other Events) and Item 7. (Financial Statements and Exhibits).
|    | A Current Report on Form 8-K was filed by the Company on February 13, 
2001, which included the Agreement and Plan of Merger dated as of 
February 9, 2001 among Potomac Electric Power Company, New RC, Inc. 
and Conectiv.  The items reported on such Form 8-K were Item 5. (Other 
Events) and Item 7. (Financial Statements and Exhibits).                       
|    | A Current Report on Form 8-K was filed by the Company on March 27, 
2001, indicating that the Company's online business-to-business marketplace 
(PepMarket.com) will be integrated into the Company's corporate services.  
The items reported on such Form 8-K were Item 5. (Other Events) and Item 
7. (Financial Statements and Exhibits).                        

SIGNATURES
          Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant 
has duly caused this report to be signed on its behalf by the undersigned thereunto duly 
authorized.

| | Potomac Electric Power Company
                     Registrant
/S/             A. W. WILLIAMS
By  ________________________
                 A. W. Williams
          Senior Vice President and
             Chief Financial Officer
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

May 2, 2001

Date

|Exhibit 12    Statements Re. Computation of Ratios                                                                                                                                                                                                                                     
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                       
|The computations of the coverage of fixed charges before income taxes, and the coverage of combined fixed charges and preferred dividends for the twelve months ended March 31, 2001, and each of the years 2000 through 1996, on the basis of
Utility operations only, are as follows:
|                                                                                                                                                                                                                                                                                       
|Twelve        
 Months Ended 
 March 31, 2001                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                       
|Net income                                                                                                                                                                                                                                                                             
|Taxes based on income                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                       
|Income before taxes                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                       
|Fixed charges:                                                                                                                                                                                                                                                                         
|Interest charges                                                                                                                                                                                                                                                                       
|Interest factor in rentals                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                       
|Total fixed charges                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                       
|Income before income taxes and fixed charges                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                       
|Coverage of fixed charges                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                       
|Preferred dividend requirements                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                       
|Ratio of pre-tax income to net income                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                       
|Preferred dividend factor                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                       
|Total fixed charges and preferred dividends                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                       
|Coverage of combined fixed charges and preferred dividends                                                                                                                                                                                                                             



|Exhibit 12    Statements Re. Computation of Ratios                                                                                                                                                                                                                         
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                           
|The computations of the coverage of fixed charges before income taxes, and the coverage of combined fixed charges and preferred dividends for the twelve months ended March 31, 2001, and for each of the years 2000 through 1996, on a
consolidated basis, are as follows.
|                                                                                                                                                                                                                                                                           
|Twelve    
Months Ended March 31, 2001                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                           
|Net income                                                                                                                                                                                                                                                                 
|Taxes based on income                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                           
|Income before taxes                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                           
|Fixed charges:                                                                                                                                                                                                                                                             
|Interest charges                                                                                                                                                                                                                                                           
|Interest factor in rentals                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                           
|Total fixed charges                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                           
|Competitive subsidiary capitalized interest                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                           
|Income before income taxes and fixed charges                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                           
|Coverage of fixed charges                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                           
|Preferred dividend requirements                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                           
|Ratio of pre-tax income to net income                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                           
|Preferred dividend factor                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                           
|Total fixed charges and preferred dividends                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                           
|Coverage of combined fixed charges and preferred dividends                                                                                                                                                                                                                 



Exhibit 15Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C.   20549
Ladies and Gentlemen:
We are aware that our report dated May 2, 2001 on our review of interim financial 
information of Potomac Electric Power Company for the period ended March 31, 2001 
and included in the Company's quarterly report on Form 10-Q for the quarter then ended 
is incorporated by reference in the Prospectuses constituting parts of the Registration 
Statements on Forms S-8 (Numbers 33-36798, 33-53685, 33-54197, 333-56683 and 333-
57221) filed on September 12, 1990, May 18, 1994, June 17, 1994, June 12, 1998 and 
June 19, 1998, respectively, on Form S-3 (Number 33-58810) filed on February 26, 1993 
of Potomac Electric Power Company and on Form S-4 (Number 333-57042) of New RC, 
Inc. filed on March 14, 2001. 
Very truly yours,
/S/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Washington, D.C.
May 2, 2001