Exhibit 4f(9)










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                            GUARANTEE AGREEMENT


                                  Between


                      Atlantic City Electric Company
                              (as Guarantor)
                                     


                                    and



                           The Bank of New York
                               (as Trustee)



                                dated as of



                              October 1, 1996


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<PAGE>

                             TABLE OF CONTENTS

                                                                       Page

                                 ARTICLE I
                               DEFINITIONS . . . . . . . . . . . . . . .  1

       SECTION 1.1. Definitions. . . . . . . . . . . . . . . . . . . . .  1

                                ARTICLE II
                            TRUST INDENTURE ACT. . . . . . . . . . . . .  5

       SECTION 2.1. Trust Indenture Act; Application.  . . . . . . . . .  5
       SECTION 2.2. List of Holders. . . . . . . . . . . . . . . . . . .  5
       SECTION 2.3. Reports by the Guarantee Trustee.. . . . . . . . . .  5
       SECTION 2.4. Periodic Reports to Guarantee Trustee. . . . . . . .  5
       SECTION 2.5. Evidence of Compliance with Conditions
Precedent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6
       SECTION 2.6. Events of Default; Waiver. . . . . . . . . . . . . .  6
       SECTION 2.7. Event of Default; Notice.. . . . . . . . . . . . . .  6
       SECTION 2.8. Conflicting Interests. . . . . . . . . . . . . . . .  6

                                ARTICLE III
            POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE . . . . .  7

       SECTION 3.1. Powers and Duties of the Guarantee Trustee.. . . . .  7
       SECTION 3.2. Certain Rights of Guarantee Trustee. . . . . . . . .  9

                                ARTICLE IV
                             GUARANTEE TRUSTEE . . . . . . . . . . . . . 11

       SECTION 4.1. Guarantee Trustee; Eligibility.  . . . . . . . . . . 11
       SECTION 4.2. Compensation and Reimbursement.. . . . . . . . . . . 11
       SECTION 4.3. Appointment, Removal and Resignation of the 
                    Guarantee Trustee. . . . . . . . . . . . . . . . . . 12

                                 ARTICLE V
                                GUARANTEE  . . . . . . . . . . . . . . . 13

       SECTION 5.1. Guarantee. . . . . . . . . . . . . . . . . . . . . . 13
       SECTION 5.2. Waiver of Notice and Demand. . . . . . . . . . . . . 13
       SECTION 5.3. Obligations Not Affected.  . . . . . . . . . . . . . 13
       SECTION 5.4. Rights of Holders. . . . . . . . . . . . . . . . . . 14
       SECTION 5.5. Guarantee of Payment.  . . . . . . . . . . . . . . . 15
       SECTION 5.6. Subrogation. . . . . . . . . . . . . . . . . . . . . 15
       SECTION 5.7. Independent Obligations. . . . . . . . . . . . . . . 15

                                ARTICLE VI
                        COVENANTS AND SUBORDINATION. . . . . . . . . . . 15

       SECTION 6.1. Subordination. . . . . . . . . . . . . . . . . . . . 15

                                ARTICLE VII
                                TERMINATION. . . . . . . . . . . . . . . 16

       SECTION 7.1. Termination. . . . . . . . . . . . . . . . . . . . . 16

                               ARTICLE VIII
                              MISCELLANEOUS  . . . . . . . . . . . . . . 16

       SECTION 8.1. Successors and Assigns.  . . . . . . . . . . . . . . 16
       SECTION 8.2. Amendments.  . . . . . . . . . . . . . . . . . . . . 16
       SECTION 8.3. Notices. . . . . . . . . . . . . . . . . . . . . . . 17
       SECTION 8.4. Benefit. . . . . . . . . . . . . . . . . . . . . . . 18
       SECTION 8.5. Interpretation.  . . . . . . . . . . . . . . . . . . 18
       SECTION 8.6. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . 18



<PAGE>
                            GUARANTEE AGREEMENT
                                                 
 
 
               This GUARANTEE AGREEMENT ("Guarantee Agreement"),
dated as of October 1, 1996, is executed and delivered by
Atlantic City Electric Company, a New Jersey corporation (the
"Guarantor"), and The Bank of New York, a New York banking
corporation organized under the laws of the State of New York, as
trustee (the "Guarantee Trustee"), for the benefit of the Holders
(as defined herein) from time to time of the Preferred Securities
(as defined herein) of Atlantic Capital I, a Delaware statutory
business trust (the "Issuer"). 
 
               WHEREAS, pursuant to an Amended and Restated Trust
Agreement (the "Trust Agreement"), dated as of October 1, 1996
among the Issuer Trustees named therein, the Guarantor, as
Depositor, and the Holders (as therein defined) from time to time
of undivided beneficial interests in the assets of the Issuer,
the Issuer is issuing 2,800,000 of its 8.25% Cumulative Quarterly
Income Preferred Securities (liquidation preference $25 per
preferred security) (the "Preferred Securities") representing
preferred undivided beneficial interests in the assets of the
Issuer and having the terms set forth in the Trust Agreement; 
 
               WHEREAS, the Preferred Securities will be issued
by the Issuer and the proceeds thereof, together with the
proceeds from the issuance of the Issuer's Common Securities (as
defined below), will be used to purchase the Debentures (as
defined in the Trust Agreement) of the Guarantor which will be
deposited with The Bank of New York, as Property Trustee under
the Trust Agreement, as trust assets; and 
 
               WHEREAS, as incentive for the Holders to purchase
Preferred Securities the Guarantor desires irrevocably and
unconditionally to agree, to the extent set forth herein, to pay
to the Holders (as defined herein) of the Preferred Securities
the Guarantee 
Payments (as defined herein) and to make certain other payments
on the terms and conditions set forth herein. 
 
               NOW, THEREFORE, in consideration of the purchase
by each Holder of Preferred Securities, which purchase the
Guarantor hereby agrees shall benefit the Guarantor, the
Guarantor executes and delivers this Guarantee Agreement for the
benefit of the Holders from time to time of the Preferred
Securities. 


                                 ARTICLE I

                               DEFINITIONS 


SECTION 1.1.   Definitions. 

               As used in this Guarantee Agreement, the terms set
forth below shall, unless the context otherwise requires, have
the following meanings.  Capitalized or otherwise defined terms
used but not otherwise defined herein shall have the meanings
assigned to such terms in the Trust Agreement as in effect on the
date hereof. 
 
               "Affiliate" of any specified Person means any
other Person directly or indirectly controlling or controlled by
or under direct or indirect common control with such specified
Person, provided, however, that an Affiliate of the Guarantor
shall not be deemed to include the Issuer. For the purposes of
this definition, "control" when used with respect to any
specified Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings
correlative to the foregoing. 
 
               "Common Securities" means the securities
representing common undivided beneficial interests in the assets
of the Issuer. 
 
               "Debt" means, with respect to any Person, whether
recourse is to all or a portion of the assets of such Person and
whether or not contingent, (i) every obligation of such Person
for money borrowed; (ii) every obligation of such Person
evidenced by bonds, debentures, notes or other similar
instruments, including obligations incurred in connection with
the acquisition of property, assets or businesses; (iii) every
reimbursement obligation of such Person with respect to letters
of credit, bankers' acceptances or similar facilities issued for
the account of such Person; (iv) every obligation of such Person
issued or assumed as the deferred purchase price of property or
services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business); (v)
every capital lease obligation of such Person; and (vi) every
obligation of the type referred to in clauses (i) through (v) of
another Person and all dividends of another Person the payment of
which, in either case, such Person has guaranteed or is
responsible or liable for, directly or indirectly, as obligor 
or otherwise. 
 
               "Event of Default" means a default by the
Guarantor on any of its payment or other obligations under this
Guarantee Agreement; provided, however, that, except with respect
to a default in payment of any Guarantee Payments, the Guarantor
shall have received notice of default and shall not have cured
such default within 60 days after receipt of such notice.        

               "Guarantee Payments" means the following payments
or distributions, without duplication, with respect to the
Preferred Securities, to the extent not paid or made by or on
behalf of the Issuer: (i) any accumulated and unpaid
Distributions (as defined in the Trust Agreement) required to be
paid on the Preferred Securities, to the extent the Issuer shall
have funds on hand available therefor at such time, (ii) the
redemption price, including all accrued and unpaid Distributions
to the date of redemption (the "Redemption Price"), with respect
to the Preferred Securities called for redemption by the Issuer
to the extent the Issuer shall have funds on hand available
therefor at such time, and (iii) upon a voluntary or involuntary
dissolution, winding-up or liquidation of the Issuer, unless
Debentures are distributed to the Holders in exchange for all of
the Preferred Securities, the lesser of (a) the aggregate of the
liquidation preference of $25 per Preferred Security plus
accumulated and unpaid Distributions on the Preferred Securities
to the date of payment to the extent the Issuer shall have funds
on hand available to make such payment at such time and (b) the
amount of assets of the Issuer remaining available for
distribution to Holders in liquidation of the Issuer (in either
case, the "Liquidation Distribution").

               "Guarantee Trustee" means The Bank of New York,
until a Successor Guarantee Trustee has been appointed and has
accepted such appointment pursuant to the terms of this Guarantee
Agreement and thereafter means each such Successor Guarantee
Trustee.

               "Holder" means any holder, as registered on the
books and records of the Issuer, of any Preferred Securities;
provided, however, that in determining whether the holders of the
requisite percentage of Preferred Securities have given any
request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor, the Guarantee Trustee or any Affiliate of
the Guarantor or the Guarantee Trustee.  

               "Indenture" means the Junior Subordinated
Indenture dated as of October 1, 1996, as supplemented and
amended between the Guarantor and the Bank of New York, as
trustee.

               "List of Holders" has the meaning specified in
Section 2.2(a).    

               "Majority in liquidation preference of the
Securities" means, except as provided by the Trust Indenture Act,
a vote by the Holder(s), voting separately as a class, of more
than 50% of the liquidation preference of all then outstanding
Preferred Securities issued by the Issuer.

               "Officers' Certificate" means, with respect to any
Person, a certificate signed by the Chairman and Chief Executive
Officer, President or a Vice President, and by the Treasurer, an
Assistant Treasurer, the Controller, the Secretary or an
Assistant Secretary of such Person, and delivered to the
Guarantee Trustee.  Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for
in this Guarantee Agreement shall include:  

               (a) a statement that each officer signing the 
       Officers' Certificate has read the covenant or condition
       and the definitions relating thereto;  

               (b) a brief statement of the nature and scope of
       the examination or investigation undertaken by each 
       officer in rendering the Officers' Certificate;  

               (c) a statement that each such officer has made
       such examination or investigation as, in such officer's
       opinion, is necessary to enable such officer to express an
       informed opinion as to whether or not such covenant or
       condition has been complied with; and 

               (d) a statement as to whether, in the opinion of
       each such officer, such condition or covenant has been
       complied with.  

               "Person" means a legal person, including any
individual, corporation, estate, partnership, joint venture,
association, joint stock company, limited liability company,
trust, unincorporated association, or government or any agency or
political subdivision thereof, or any other entity of whatever
nature.

               "Responsible Officer" means, with respect to the
Guarantee Trustee, any Senior Vice President, any Vice President,
any Assistant Vice President, the Secretary, any Assistant
Secretary, the Treasurer, any Assistant Treasurer, any Trust
Officer or Assistant Trust Officer or any other officer of the
Corporate Trust Department of the Guarantee Trustee customarily
performing functions similar to those performed by any of the
above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and
familiarity with the particular subject.                                   

               "Senior Debt" means the principal of (and premium,
if any) and interest, if any (including interest accruing on or
after the filing of any petition in bankruptcy or for
reorganization relating to the Guarantor whether or not such
claim for post-petition interest is allowed in such proceeding),
on Debt, whether incurred on or prior to the date of this
Guarantee or thereafter incurred, unless, in the instrument
creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such obligations are not
superior in right of payment to the Guarantee or to other Debt
which is pari passu with, or subordinated to, the Guarantee;
provided, however, that Senior Debt shall not be deemed to
include (a) any Debt of the Guarantor which when incurred and
without respect to any election under Section 1111(b) of the
Bankruptcy Reform Act of 1978, was without recourse to the
Guarantor, (b) any Debt of the Guarantor to any of its
Subsidiaries, (c) Debt to any employee of the Guarantor, (d) any
liability for taxes, (e) Debt or other  monetary obligations to
trade creditors created or assumed by the Guarantor or any of its
Subsidiaries in the ordinary course of business in connection
with the obtaining of goods, materials or services and (f) Debt
issued under the Indenture and (g) the Guarantee.                     

               "Successor Guarantee Trustee" means a successor
Guarantee Trustee possessing the qualifications to act as
Guarantee Trustee under Section 4.1.

               "Trust Indenture Act" means the Trust Indenture
Act of 1939, as amended.                                                   
      
                   


                                ARTICLE II

                           TRUST INDENTURE ACT  


SECTION 2.1.   Trust Indenture Act; Application. 

               (a) This Guarantee Agreement is subject to the
       provisions of the Trust Indenture Act that are required or
       deemed to be part of this Guarantee Agreement and shall,
       to the extent applicable, be governed by such provisions. 
       

               (b) If and to the extent that any provision of
       this Guarantee Agreement limits, qualifies or conflicts
       with the duties imposed by Sections 310 to 317, inclusive,
       of the Trust Indenture Act, such imposed duties shall
       control.  

SECTION 2.2.   List of Holders.

               (a) The Guarantor shall furnish or cause to be
       furnished to the Guarantee Trustee (i) semiannually, on or
       before January 15 and July 15 of each year, a list, in
       such form as the Guarantee Trustee may reasonably require,
       of the names and addresses of the Holders ("List of
       Holders") as of a date not more than 15 days prior to the
       delivery thereof, and (ii) at such other times as the
       Guarantee Trustee may request in writing, within 30 days
       after the receipt by the Guarantor of any such request, a
       List of Holders as of a date not more than 15 days prior
       to the time such list is furnished; provided that, the
       Guarantor shall not be obligated to provide such List of
       Holders at any time the List of Holders does not differ
       from the most recent List of Holders given to the
       Guarantee Trustee by the Guarantor.  The Guarantee Trustee
       may destroy any List of Holders previously given to it on
       receipt of a new List of Holders.

               (b) The Guarantee Trustee shall comply with its
       obligations under Section 311(a) of the Trust Indenture
       Act (subject to the provisions of Section 311(b) of the
       Trust Indenture Act) and Section 312(b) of the Trust
       Indenture Act.  

SECTION 2.3.   Reports by the Guarantee Trustee.

               Not later than July 15 of each year, commencing
July 15, 1997, the Guarantee Trustee shall provide to the Holders
such reports as are required by Section 313(a) of the Trust
Indenture Act, if any, in the form and in the manner provided by
Section 313(a) of the Trust Indenture Act.  The Guarantee Trustee
shall also comply with the requirements of Section 313(d) of the
Trust Indenture Act.   

SECTION 2.4.   Periodic Reports to Guarantee Trustee.

               The Guarantor shall provide to the Guarantee
Trustee, the Securities and Exchange Commission and the Holders
such documents, reports and information, if any, as required by
Section 314 of the Trust Indenture Act and the compliance
certificate required by Section 314 of the Trust Indenture Act in
the form, in the manner and at the times required by Section 314
of the Trust Indenture Act.  

SECTION 2.5.   Evidence of Compliance with Conditions Precedent.

               The Guarantor shall provide to the Guarantee
Trustee such evidence of compliance with such conditions
precedent, if any, provided for in this Guarantee Agreement that
relate to any of the matters set forth in Section 314(c) of the
Trust Indenture Act.  Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in
the form of an Officers' Certificate.  

SECTION 2.6.   Events of Default; Waiver.

               The Holders of a Majority in liquidation
preference of the Preferred Securities may, by vote on behalf of
all of the Holders, waive any past Event of Default and its
consequences.  Upon such waiver, any such Event of Default shall
cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured, for every purpose of this Guarantee
Agreement, but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent
therefrom.  

SECTION 2.7.   Event of Default; Notice.

               (a) The Guarantee Trustee shall, within 90 days
       after the occurrence of an Event of Default, transmit by
       mail, first class postage prepaid, to the Holders, notices
       of all Events of Default known to the Guarantee Trustee,
       unless such defaults have been cured before the giving of
       such notice, provided, that, except in the case of a
       default in the payment of a Guarantee Payment, the
       Guarantee Trustee shall be protected in withholding such
       notice if and so long as the Board of Directors, the
       executive committee or a trust committee of directors
       and/or Responsible Officers of the Guarantee Trustee in
       good faith determines that the withholding of such notice
       is in the interests of the Holders.

               (b) The Guarantee Trustee shall not be deemed to
       have knowledge of any Event of Default unless the
       Guarantee Trustee shall have received written notice, or a
       Responsible Officer charged with the administration of the
       Trust Agreement shall have obtained written notice, of
       such Event of Default.  

SECTION 2.8.   Conflicting Interests.

               The Trust Agreement shall be deemed to be
specifically described in this Guarantee Agreement for the
purposes of clause (i) of the first proviso contained in Section
310(b) of the Trust Indenture Act.



                                ARTICLE III

           POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE  


SECTION 3.1.   Powers and Duties of the Guarantee Trustee.

               (a) This Guarantee Agreement shall be held by the
       Guarantee Trustee for the benefit of the Holders, and the
       Guarantee Trustee shall not transfer this Guarantee
       Agreement to any Person except a Holder exercising his or
       her rights pursuant to Section 5.4(iv) or to a Successor
       Guarantee Trustee on acceptance by such Successor
       Guarantee Trustee of its appointment to act as Successor
       Guarantee Trustee.  The right, title and interest of the
       Guarantee Trustee shall automatically vest in any
       Successor Guarantee Trustee, upon acceptance by such
       Successor Guarantee Trustee of its appointment hereunder,
       and such vesting (and, as to the Guarantee Trustee
       cessation of holding) of title shall be effective whether
       or not conveyancing documents have been executed and
       delivered pursuant to the appointment of such Successor
       Guarantee Trustee.                                        

               (b) If an Event of Default has occurred and is
       continuing, the Guarantee Trustee may in its discretion
       proceed to protect and enforce its rights and other rights
       of the Holders by such appropriate judicial proceedings as
       it shall deem most effectual to protect and enforce any
       such rights, whether for the specific enforcement of any
       covenant or agreement in this Guaranty Agreement or in aid
       of the exercise of any power granted herein, or to enforce
       any other proper remedy.                                  

               (c) The Guarantee Trustee, before the occurrence
       of any Event of Default and after the curing of all Events
       of Default that may have occurred, shall undertake to
       perform such duties and only such duties as are
       specifically set forth in this Guarantee Agreement, and no
       implied covenants shall be read into this Guarantee
       Agreement against the Guarantee Trustee.  In case an Event
       of Default has occurred (that has not been cured or waived
       pursuant to Section 2.6), the Guarantee Trustee shall
       exercise such of the rights and powers vested in it by
       this Guarantee Agreement, and use the same degree of care
       and skill in its exercise thereof, as a prudent person
       would exercise or use under the circumstances in the
       conduct of his or her own affairs.

               (d) No provision of this Guarantee Agreement
       shall be construed to relieve the Guarantee Trustee from
       liability for its own negligent action, its own negligent
       failure to act or its own willful misconduct, except that: 
       

                           (i   prior to the occurrence of any Event of
               Default and after the curing or waiving of all
               such Events of Default that may have occurred:

                    (A)         the duties and obligations of the
                   Guarantee Trustee shall be determined solely
                   by the express provisions of this Guarantee
                   Agreement, and the Guarantee Trustee shall
                   not be liable except for the performance of
                   such duties and obligations as are
                   specifically set forth in this Guarantee
                   Agreement; and

                    (B)      in the absence of bad faith on the part
                   of the Guarantee Trustee, the Guarantee
                   Trustee may conclusively rely, as to the
                   truth of the statements and the correctness
                   of the opinions expressed therein, upon any
                   certificates or opinions furnished to the
                   Guarantee Trustee and conforming to the
                   requirements of this Guarantee Agreement; but
                   in the case of any such certificates or
                   opinions that by any provision hereof or of
                   the Trust Indenture Act are specifically
                   required to be furnished to the Guarantee
                   Trustee, the Guarantee Trustee shall be under
                   a duty to examine the same to determine
                   whether or not they conform to the
                   requirements of this Guarantee Agreement;   


                (ii   the Guarantee Trustee shall not be liable
               for any error of judgment made in good faith by a
               Responsible Officer of the Guarantee Trustee,
               unless it shall be proved that the Guarantee
               Trustee was negligent in ascertaining the
               pertinent facts upon which such judgment was made;
               

                 (iii   the Guarantee Trustee shall not be liable
               with respect to any action taken or omitted to be
               taken by it in good faith in accordance with the
               direction of the Holders of not less than a
               Majority in liquidation preference of the
               Preferred Securities relating to the time, method
               and place of conducting any proceeding for any
               remedy available to the Guarantee Trustee, or
               exercising any trust or power conferred upon the
               Guarantee Trustee under this Guarantee Agreement; 

                  (iv   no provision of this Guarantee Agreement
               shall require the Guarantee Trustee to expend or
               risk its own funds or otherwise incur personal
               financial liability in the performance of any of
               its duties hereunder or in the exercise of any of
               its rights or powers, if the Guarantee Trustee
               shall have reasonable grounds for believing that
               the repayment of such funds or liability is not
               reasonably assured to it under the terms of this
               Guarantee Agreement or adequate indemnity against
               such risk or liability is not reasonably assured
               to it; and
                      (v)  whether or not therein
               expressly so provided, every
               provision of this Guarantee
               Agreement relating to the conduct
               or affecting the liability of or
               affording protection to the
               Guarantee Trustee shall be subject
               to the provisions of this Section.
                     

SECTION 3.2.   Certain Rights of Guarantee Trustee.

               (a) Subject to the provisions of Section 3.1: 

                    (i   The Guarantee Trustee may rely and shall
               be fully protected in acting or refraining from
               acting upon any resolution, certificate,
               statement, instrument, opinion, report, notice,
               request, direction, consent, order, bond,
               debenture, note, other evidence of indebtedness or
               other paper or document reasonably believed by it
               to be genuine and to have been signed, sent or
               presented by the proper party or parties.

                     (ii   Any direction or act of the Guarantor
               contemplated by this Guarantee Agreement shall be
               sufficiently evidenced by an Officers' Certificate
               of the Guarantor unless otherwise prescribed
               herein.

                 (iii   Whenever, in the administration of this
               Guarantee Agreement, the Guarantee Trustee shall
               deem it desirable that a matter be proved or
               established before taking, suffering or omitting
               to take any action hereunder, the Guarantee
               Trustee (unless other evidence is herein
               specifically prescribed) may, in the absence of
               bad faith on its part, request and rely upon an
               Officers' Certificate of the Guarantor which, upon
               receipt of such request from the Guarantee
               Trustee, shall be promptly delivered by the
               Guarantor.

                        (iv   The Guarantee Trustee shall have no duty
               to see to any recording, filing or registration of
               any instrument (or any re-recording, re-filing or
               registration thereof).

                   (v   The Guarantee Trustee may consult with
               legal counsel, and the written advice or opinion
               of such legal counsel with respect to legal
               matters shall be full and complete authorization
               and protection in respect of any action taken,
               suffered or omitted to be taken by it hereunder in
               good faith and in accordance with such advice or
               opinion. Such legal counsel may be legal counsel
               to the Guarantor or any of its Affiliates and may
               be one of its employees.  The Guarantee Trustee
               shall have the right at any time to seek
               instructions concerning the administration of this
               Guarantee Agreement from any court of competent
               jurisdiction.

                    (vi   The Guarantee Trustee shall be under no
               obligation to exercise any of the rights or powers
               vested in it by this Guarantee Agreement at the
               request or direction of any Holder, unless such
               Holder shall have provided to the Guarantee
               Trustee such adequate security and indemnity as
               would satisfy a reasonable person in the position
               of the Guarantee Trustee, against the costs,
               expenses (including attorneys' fees and expenses)
               and liabilities that might be incurred by it in
               complying with such request or direction,
               including such reasonable advances as may be
               requested by the Guarantee Trustee; provided that,
               nothing contained in this Section 3.2(a)(vi) shall
               be taken to relieve the Guarantee Trustee, upon
               the occurrence of an Event of Default, of its
               obligation to exercise the rights and powers
               vested in it by this Guarantee Agreement.   

             (vii   The Guarantee Trustee shall not be bound
               to make any investigation into the facts or
               matters stated in any resolution, certificate,
               statement, instrument, opinion, report, notice,
               request, direction, consent, order, bond,
               debenture, note, other evidence of indebtedness or
               other paper or document, but the Guarantee
               Trustee, in its discretion, may make such further
               inquiry or investigation into such facts or
               matters as it may see fit.  

                     (viii   The Guarantee Trustee may execute any of
               the trusts or powers hereunder or perform any
               duties hereunder either directly or by or through
               its agents or attorneys, and the Guarantee Trustee
               shall not be responsible for any misconduct or
               negligence on the part of any such agent or
               attorney appointed with due care by it hereunder.

                   (ix   Any action taken by the Guarantee Trustee
               or its agents hereunder shall bind the Holders,
               and the signature of the Preferred Guarantee
               Trustee or its agents alone shall be sufficient
               and effective to perform any such action.  No
               third party shall be required to inquire as to the
               authority of the Guarantee Trustee to so act or as
               to its compliance with any of the terms and
               provisions of this Guarantee Agreement, both of
               which shall be conclusively evidenced by the
               Guarantee Trustee's or its agent's taking such
               action.

                      (x   Whenever in the administration of this
               Guarantee Agreement the Guarantee Trustee shall
               deem it desirable to receive instructions with
               respect to enforcing any remedy or right or taking
               any other action hereunder, the Guarantee Trustee
               (A) may request instructions from the Holders, (B)
               may refrain from enforcing such remedy or right or
               taking such other action until such instructions
               are received, and (C) shall be protected in acting
               in accordance with such instructions.  

                       (xi)  the Guarantee Trustee shall not be
               charged with knowledge of any Event of Default
               unless either (1) a Responsible Officer of the
               Trustee shall have actual knowledge of the Event
               of Default or (2) written notice of such Event of
               Default shall have been given to the Guarantee
               Trustee by the Guarantor, any other obligor on the
               Preferred Securities or by any Holder of the
               Preferred Securities.

               (b) No provision of this Guarantee
       Agreement shall be deemed to impose any duty or
       obligation on the Guarantee Trustee to perform any
       act or acts or exercise any right, power, duty or
       obligation conferred or imposed on it in any
       jurisdiction in which it shall be illegal, or in
       which the Guarantee Trustee shall be unqualified or
       incompetent in accordance with applicable law, to
       perform any such act or acts or to exercise any
       such right, power, duty or obligation.  No
       permissive power or authority available to the
       Guarantee Trustee shall be construed to be a duty
       to act in accordance with such power and authority. 
       

                                ARTICLE IV

                             GUARANTEE TRUSTEE


SECTION 4.1.   Guarantee Trustee; Eligibility. 

               (a) There shall at all times be a Guarantee
       Trustee which shall:  

                        (i   not be an Affiliate of the Guarantor; and 

                   (ii   be a Person that is eligible pursuant to
               the Trust Indenture Act to act as such and has a
               combined capital and surplus of at least
               $50,000,000, and shall be a corporation meeting
               the requirements of Section 310(c) of the Trust
               Indenture Act.  If such corporation publishes
               reports of condition at least annually, pursuant
               to law or to the requirements of the supervising
               or examining authority, then, for the purposes of
               this Section and to the extent permitted by the
               Trust Indenture Act, the combined capital and
               surplus of such corporation shall be deemed to be
               its combined capital and surplus as set forth in
               its most recent report of condition so published. 
               

               (b) If at any time the Guarantee Trustee shall
       cease to be eligible to so act under Section 4.1(a), the
       Guarantee Trustee shall immediately resign in the manner
       and with the effect set out in Section 4.3.  

               (c) If the Guarantee Trustee has or shall acquire
       any "conflicting interest" within the meaning of Section
       310(b) of the Trust Indenture Act, the Guarantee Trustee
       and Guarantor shall in all respects comply with the
       provisions of Section 310(b) of the Trust Indenture Act.


SECTION 4.2.   Compensation and Reimbursement.

               The Guarantor agrees:

               (a) to pay the Guarantee Trustee from time to
       time such reasonable compensation as the Guarantor and the
       Guarantee Trustee shall from time to time agree in writing
       for all services rendered by it hereunder (which
       compensation shall not be limited by any provision of law
       in regard to the compensation of a trustee of an express
       trust);

               (b) except as otherwise expressly provided
       herein, to reimburse the Guarantee Trustee upon its
       request for all reasonable expenses, disbursements and
       advances incurred or made by the Guarantee Trustee in
       accordance with the provisions of this Guarantee
       (including the reasonable compensation and expenses of its
       agents and counsel), except any such expense, disbursement
       or advance as may be attributable to its negligence or bad
       faith; and

               (c) to indemnify each of the Guarantee Trustee
       and any predecessor Guarantee Trustee for, and to hold it
       harmless from and against, any and all loss, damage,
       claim, liability or expense, including taxes (other than
       taxes based upon the income of the Guarantee Trustee)
       incurred without negligence or bad faith on its part,
       arising out of or in connection with the acceptance of the
       trust created by, or the administration of, this Guarantee
       Agreement, including the costs and expenses of defending
       itself against any claim or liability in connection with
       the exercise or performance of any of its powers or duties
       hereunder.

               As security for the performance of the obligations
of the Guarantor under this Section, the Guarantee Trustee shall
have a lien prior to the Preferred Securities upon all the
property and funds held or collected by the Guarantee Trustee as
such, except funds held in trust for the payment of principal of,
and premium (if any) or interest on, particular obligations of
the Guarantor under this Guarantee Agreement.

               The provisions of this Section shall survive the
termination of this Guarantee Agreement.

SECTION 4.3.   Appointment, Removal and Resignation of the
               Guarantee Trustee.                         

               (a) Subject to Section 4.3(b), unless an Event of
       Default shall have occurred and be continuing, the
       Guarantee Trustee may be appointed or removed without
       cause at any time by the Guarantor.  

               (b) The Guarantee Trustee shall not be removed
       until a Successor Guarantee Trustee has been appointed and
       has accepted such appointment by written instrument
       executed by such Successor Guarantee Trustee and delivered
       to the Guarantor.  

               (c) The Guarantee Trustee appointed hereunder
       shall hold office until a Successor Guarantee Trustee
       shall have been appointed or until its removal or
       resignation.  The Guarantee Trustee may resign from office
       (without need for prior or subsequent accounting) by an
       instrument in writing executed by the Guarantee Trustee
       and delivered to the Guarantor, which resignation shall
       not take effect until a Successor Guarantee Trustee has
       been appointed and has accepted such appointment by
       instrument in writing executed by such Successor Guarantee
       Trustee and delivered to the Guarantor and the resigning
       Guarantee Trustee.  

               (d) If no Successor Guarantee Trustee shall have
       been appointed and accepted appointment as provided in
       this Section 4.3 within 60 days after delivery to the
       Guarantor of an instrument of resignation, the resigning
       Guarantee Trustee may petition, at the expense of the
       Guarantor, any court of competent jurisdiction for
       appointment of a Successor Guarantee Trustee. Such court
       may thereupon, after prescribing such notice, if any, as
       it may deem proper, appoint a Successor Guarantee Trustee. 
       

               (e) The Guarantor shall give notice of each
       resignation and each removal of the Guarantee Trustee and
       each appointment of a successor Guarantee Trustee to all
       Holders in the manner provided in Section 8.3 hereof. 
       Each notice shall include the name of the successor
       Guarantee Trustee and the address of its Corporate Trust
       Office.


                                 ARTICLE V

                                GUARANTEE  


SECTION 5.1.   Guarantee. 

               The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments
(without duplication of amounts theretofore paid by or on behalf
of the Issuer), as and when due, regardless of any defense, right
of set-off or counterclaim which the Issuer may have or assert. 
The Guarantor's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the
Guarantor to the Holders or by causing the Issuer to pay such
amounts to the Holders.  

SECTION 5.2.   Waiver of Notice and Demand. 

               The Guarantor hereby waives notice of acceptance
of the Guarantee Agreement and of any liability to which it
applies or may apply, presentment, demand for payment, any right
to require a proceeding first against the Guarantee Trustee,
Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor,
notice of redemption and all other notices and demands.  

SECTION 5.3.   Obligations Not Affected. 

               The obligations, covenants, agreements and duties
of the Guarantor under this Guarantee Agreement shall in no way
be affected or impaired by reason of the happening from time to
time of any of the following:  

               (a) the release or waiver, by operation of law or
       otherwise, of the performance or observance by the Issuer
       of any express or implied agreement, covenant, term or
       condition relating to the Preferred Securities to be
       performed or observed by the Issuer;  

               (b) the extension of time for the payment by the
       Issuer of all or any portion of the Distributions (other
       than an extension of time for payment of Distributions
       that results from the extension of any interest payment
       period on the Debentures as so provided in the Indenture),
       Redemption Price, Liquidation Distribution or any other
       sums payable under the terms of the Preferred Securities
       or the extension of time for the performance of any other
       obligation under, arising out of, or in connection with,
       the Preferred Securities;

               (c) any failure, omission, delay or lack of
       diligence on the part of the Holders to enforce, assert or
       exercise any right, privilege, power or remedy conferred
       on the Holders pursuant to the terms of the Preferred
       Securities, or any action on the part of the Issuer
       granting indulgence or extension of any kind;  

               (d) the voluntary or involuntary liquidation,
       dissolution, sale of any collateral, receivership,
       insolvency, bankruptcy, assignment for the benefit of
       creditors, reorganization, arrangement, composition or
       readjustment of debt of, or other similar proceedings
       affecting, the Issuer or any of the assets of the Issuer; 
       

               (e) any invalidity of, or defect or deficiency
       in, the Preferred Securities;  

               (f) the settlement or compromise of any
       obligation guaranteed hereby or hereby incurred; or  

               (g) any other circumstance whatsoever that might
       otherwise constitute a legal or equitable discharge or
       defense of a guarantor, it being the intent of this
       Section 5.3 that the obligations of the Guarantor
       hereunder shall be absolute and unconditional under any
       and all circumstances.

There shall be no obligation of the Holders to give notice to, or
obtain the consent of, the Guarantor with respect to the
happening of any of the foregoing.  

SECTION 5.4.   Rights of Holders. 

               The Guarantor expressly acknowledges that: (i)
this Guarantee Agreement will be deposited with the Guarantee
Trustee to be held for the benefit of the Holders; (ii) if an
Event of Default has occurred and is continuing, the Guarantee
Trustee has the right to enforce this Guarantee Agreement on
behalf of the Holders; (iii) the Holders of a Majority in
liquidation preference of the Preferred Securities have the right
to direct the time, method and place of conducting any proceeding
for any remedy available to the Guarantee Trustee in respect of
this Guarantee Agreement or exercising any trust or power
conferred upon the Guarantee Trustee under this Guarantee
Agreement; and (iv) any Holder may institute a legal proceeding
directly against the Guarantor to enforce its rights under this
Guarantee Agreement, without first instituting a legal proceeding
against the Guarantee Trustee, the Issuer or any other Person.  

SECTION 5.5.   Guarantee of Payment. 

               This Guarantee Agreement creates a guarantee of
payment and not of collection.  This Guarantee Agreement will not
be discharged except by payment of the Guarantee Payments in full
(without duplication of amounts theretofore paid by the Issuer)
or upon distribution of Debentures to Holders as provided in the
Trust Agreement.  

SECTION 5.6.   Subrogation. 

               The Guarantor shall be subrogated to all (if any)
rights of the Holders against the Issuer in respect of any
amounts paid to the Holders by the Guarantor under this Guarantee
Agreement and shall have the right to waive payment by the Issuer
pursuant to Section 5.1; provided, however, that the Guarantor
shall not (except to the extent required by mandatory provisions
of law) be entitled to enforce or exercise any rights which it
may acquire by way of subrogation or any indemnity, reimbursement
or other agreement, in all cases as a result of payment under
this Guarantee Agreement, if, at the time of any such payment,
any amounts are due and unpaid under this Guarantee Agreement. 
If any amount shall be paid to the Guarantor in violation of the
preceding sentence, the Guarantor agrees to hold such amount in
trust for the Holders and to pay over such amount to the Holders. 


SECTION 5.7.   Independent Obligations. 

               The Guarantor acknowledges that its obligations
hereunder are independent of the obligations of the Issuer with
respect to the Preferred Securities and that the Guarantor shall
be liable as principal and as debtor hereunder to make Guarantee
Payments pursuant to the terms of this Guarantee Agreement
notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.    


                                ARTICLE VI

                       COVENANTS AND SUBORDINATION  


SECTION 6.1.   Subordination. 

               This Guarantee Agreement will constitute an
unsecured obligation of the Guarantor and will rank subordinate
and junior in right of payment to all general liabilities of the
Guarantor.  Nothing in this Section 6.1 shall apply to claims of,
or payments to, the Guarantee Trustee under or pursuant to
Section 4.2 hereof. 


                                ARTICLE VII

                               TERMINATION  


SECTION 7.1.   Termination. 

               This Guarantee Agreement shall terminate  and be
of no further force and effect upon (i) full payment of the
Redemption Price of all Preferred Securities, (ii) the
distribution of Debentures to the Holders in exchange for all of
the Preferred Securities or (iii) full payment of the amounts
payable in accordance with the Trust Agreement upon liquidation
of the Issuer.  Notwithstanding the foregoing, this Guarantee
Agreement will continue to be effective or will be reinstated, as
the case may be, if at any time any Holder must restore payment
of any sums paid with respect to Preferred Securities or under
this Guarantee Agreement.


                               ARTICLE VIII

                              MISCELLANEOUS  


SECTION 8.1.   Successors and Assigns. 

               This Guarantee Agreement may be amended only by an
instrument in writing entered into by the Guarantor and the
Guarantee Trustee.  All guarantees and agreements contained in
this Guarantee Agreement shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and
shall inure to the benefit of the Holders of the Preferred
Securities then outstanding.  Except in connection with a
consolidation, merger or sale involving the Guarantor that is
permitted under Article Eight of the Indenture and pursuant to
which the assignee agrees in writing to perform the Guarantor's
obligations hereunder, the Guarantor shall not assign its
obligations hereunder.  Nothing herein contained shall be deemed
to require the Guarantee Trustee to enter into any amendment of
this Guarantee Agreement.

SECTION 8.2.   Amendments. 

               Except with respect to any changes which do not
adversely affect the rights of the Holders in any material
respect (in which case no consent of the Holders will be
required), this Guarantee Agreement may only be amended with the
prior approval of the Holders of not less than a Majority in
liquidation preference of all the outstanding Preferred
Securities. The provisions of Article VI of the Trust Agreement
concerning meetings of the Holders shall apply to the giving of
such approval.  

SECTION 8.3.   Notices. 

               Any notice, request or other communication
required or permitted to be given hereunder shall be in writing,
duly signed by the party giving such notice, and delivered,
telecopied or mailed by first class mail as follows:  

               (a) if given to the Guarantor, to the address set
       forth below or such other address, facsimile number or to
       the attention of such other Person as the Guarantor may
       give notice of to the Holders:  

          Atlantic City Electric Company
          6801 Black Horse Pike
          Egg Harbor Township, New Jersey  08234-4130
          Facsimile No.: (609) 645-4132
          Attention: Treasurer  

with a copy to:  

          Atlantic City Electric Company
          6801 Black Horse Pike
          Egg Harbor Township, New Jersey  08324-4130
          Facsimile No.: (609) 645-4132
          Attention: General Counsel  

          (b)  if given to the Issuer, in care of the Guarantee
     Trustee, at the Issuer's (and the Guarantee Trustee's)
     address set forth below or such other address, facsimile
     number or to the attention of such other Person as the
     Guarantee Trustee on behalf of the Issuer may give notice to
     the Holders:  

          Atlantic Capital I 
          c/o Atlantic City Electric Company
          6801 Black Horse Pike
          Egg Harbor Township, New Jersey  08234-4130
          Facsimile No:  (609) 645-4132
          Attention:  Treasurer   

with a copy to:  

          The Bank of New York
          101 Barclay Street
          New York, New York 10286
          Facsimile No.: (212) 815-5999
          Attention: Corporate Trust Department   

          (c)  if given to any Holder, at the address set forth
     on the books and records of the Issuer.  All notices
     hereunder shall be deemed to have been given when received
     in person, telecopied with receipt confirmed, or mailed by
     first class mail, postage prepaid, except that if a notice
     or other document is refused delivery or cannot be delivered
     because of a changed address of which no notice was given,
     such notice or other document shall be deemed to have been
     delivered on the date of such refusal or inability to
     deliver.  

SECTION 8.4.   Benefit. 

          This Guarantee Agreement is solely for the benefit of
the Holders and, subject to Section 3.1(a), is not separately
transferable from the Preferred Securities.  

SECTION 8.5.   Interpretation. 

          In this Guarantee Agreement, unless the context
otherwise requires:  

          (a)  capitalized terms used in this Guarantee Agreement
     but not defined in the preamble hereto have the respective
     meanings assigned to them in Section 1.1;  

          (b)  a term defined anywhere in this Guarantee
     Agreement has the same meaning throughout;  

          (c)  all references to "the Guarantee Agreement" or
     "this Guarantee Agreement" are to this Guarantee Agreement
     as modified, supplemented or amended from time to time;  

          (d)  all references in this Guarantee Agreement to
     Articles and Sections are to Articles and Sections of this
     Guarantee Agreement unless otherwise specified;

          (e)  a term defined in the Trust Indenture Act has the
     same meaning when used in this Guarantee Agreement unless
     otherwise defined in this Guarantee Agreement or unless the
     context otherwise requires;

          (f)  a reference to the singular includes the plural
     and vice versa; and  

          (g)  the masculine, feminine or neuter genders used
     herein shall include the masculine, feminine and neuter
     genders.  

SECTION 8.6.   GOVERNING LAW. 

          THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.

          This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but
one and the same instrument.<PAGE>
          THIS GUARANTEE AGREEMENT is executed as of the day and
year first above written.                                        

                              ATLANTIC CITY ELECTRIC COMPANY


                              By:  /s/ L.M. Walters               
                                 L.M. Walters 
                                 Vice President, Treasurer and
Assistant                        Secretary    

                              THE BANK OF NEW YORK, as
                                Guarantee Trustee   


                              By:  /s/ Lucille Firrincieli        
                                 Lucille Firrincieli
                                 Assistant Vice President
<PAGE>