1. PEPCO AND CONECTIV Customer Service and Reliability Guarantees Report Maryland

2. 2 Table of Contents Introduction Customer Service Guarantees Reliability Guarantees Regulatory Reporting Major Event Definition

3. 3 Introduction This report summarizes the service quality guarantees proposed by Potomac Electric Power Company (“Pepco”), Delmarva Power & Light (“Delmarva”) and Atlantic Electric (“ACE”) (collectively known as the “Companies”) as part of their May 2001 merger application. The report is structured as follows: Customer service guarantees include:  Appointments kept  New residential service connections  Residential billing accuracy  Call center service level  Call abandonment rate Reliability guarantees include:  Outage restoration  Customer Average Interruption Duration Index  System Average Interruption Frequency Index  Individual circuit performance Regulatory reporting, which summarizes the content of corrective action plans, and the proposed annual report which will summarize performance and payouts and will be submitted to the regulatory agencies. Major Event Definition, which is the definition of a Major Event as used in the limitations and exemptions.

4. 4 Customer Service Guarantees Appointments Kept Definition: Appointments Kept means honoring all mutually agreed face-to-face service- related appointments with customers. Guaranteed appointments will be scheduled as either AM (generally 8-12am) or PM (generally 12-4pm), weekdays only (excluding holidays). Appointments subject to this guarantee include:  Meter reads and tests  Upgrades to customer equipment (such as service “heavy-ups”)  Miscellaneous referred complaints  Power quality complaints

5. 5 Customer Service Guarantees Appointments Kept (continued) Limitations/exemptions: This guarantee only applies to existing customers, for work that requires a face-to-face meeting with the customer (for access to the meter, for example) The following situations are exempt from the Appointments Kept guarantee: – during major events, as defined in this report (see page 18) – if the customer misses the appointment – if the customer cancels the appointment Appointments may be rescheduled at short notice if the work to be done during the appointment is weather dependent Appointments may be rescheduled by the Companies up to the day before the appointment Action Required if guarantee not met: If the Companies fail to honor any mutually agreed face-to-face appointment, they will credit $25 to that customer’s electric service bill.

6. 6 Customer Service Guarantees New Residential Service Connections Definition: The New Residential Service Connection guarantee means all new residential electric service connections will be energized within 10 business days of the service request, if the property is in all other respects ready for service. Limitations/exemptions: The site is ready for service when: – The area has been cleared, graded and staked and is otherwise ready for work to be done – Electrical inspection approval has been received – Service connection fees have been paid by the customer – Mainline primary and transformers have been installed – Required excavation in public space has been completed Delays caused by weather and other major events are excluded from timeframe This guarantee does not apply if the customer specifically requests that service begins on a date beyond the 10 day timeframe. Action Required if guarantee not met: If the Companies fail to energize new residential services within 10 business days, they will credit $100 to the electric service bill for that address.

7. 7 Customer Service Guarantees Residential Billing Accuracy Definition: Billing Accuracy means that the regulated portion of the total utility charge of delivered residential bills will be 100% accurate. Limitations/exemptions: Guarantee does not apply: – to non-utility components of the bill, such as the name and address, usage and weather information. – to estimated bills or Budget Billing Plans and customer supplied meter readings – when the meter has been tampered with – to the third party supplier portion of the bill – to third party payments included on the bill Only one payment will be made per adjustment, even if the adjustment relates to more than one bill. Action Required if guarantee not met: Where a bill has been sent out containing an incorrect amount and has not been corrected by the Companies prior to any customer inquiry regarding the mistake, and the bill amount is subsequently adjusted, the Companies will credit any affected customer’s account $5 over and above the adjustment made.

8. 8 Customer Service Guarantees Call Center Service Level Definition: Call Center Service Level means an annual minimum call center service level of 70% of calls answered within 30 seconds, measured using the combined statistics from all of the Companies. The service level will be measured from the time the customer selects a menu option until the call is answered. Limitations/exemptions: Figures exclude calls made during periods of major telecommunication failures and periods of labor disruption. Action Required if guarantee not met: If the Companies fail to achieve this guarantee level, they will file a corrective action plan to the appropriate regulatory agencies, as described in this report (page 16).

9. 9 Customer Service Guarantees Call Abandonment Rate Definition: Call Abandonment Rate means the annual percentage of calls abandoned by the customer after the customer selects a menu option to speak to a Customer Service Representative (i.e., in-queue). The proposed guarantee level is to have an annual average call abandonment rate of less than 10%, measured using the combined statistics from all of the Companies. Limitations/exemptions: Figures to exclude: – calls abandoned within 5 seconds – calls made during major events – calls made during periods of major telecommunication failures and periods of labor disruption. Action Required if guarantee not met: If the Companies fail to achieve this guarantee level, they will file a corrective action plan to the appropriate regulatory agencies, as described in this report (page 16).

10. 10 Reliability Guarantees Outage Restoration Definition: Outage Restoration means if a customer loses electricity service, the Companies will restore service to that customer as soon as possible, and no later than 24 hours after the Companies become aware of the outage. Limitations/exemptions: Outage Management Systems must be fully implemented before this guarantee is offered Guarantee does not apply: – to unmetered electric services (such as street lighting) – during major events – during periods of labor disruption or other force majeure events beyond the Companies’ control – when the restoration cannot be completed for safety reasons – for scheduled interruptions, when the customer has agreed to remain without service or has been disconnected for payment-related reasons – if customer refuses access to their property to restore service or otherwise impedes the restoration of service. Action Required if guarantee not met: If the Companies fail to restore service within 24 hours, they will credit the affected customer’s account $50.

11. 11 Reliability Guarantees Customer Average Interruption Duration Index Definition: Customer Average Interruption Duration Index (CAIDI) means the average time required to restore service to those customers that experienced sustained interruptions (sustained interruptions are those lasting more than 5 minutes). CAIDI is calculated by dividing the sum of sustained customer interruption durations by the total number of sustained customer interruptions (all data excludes sustained interruptions during major events). CAIDI approximates the average length of time required to complete service restoration and is a fair representation of average outage duration. One year after full Outage Management System (“OMS”) implementation, which is due to be completed by 2002, the Companies will guarantee that the annual CAIDI in each jurisdiction does not exceed 2 standard deviations above its historical mean, calculated by using at least one full year of post-OMS data in conjunction with adjusted pre-OMS data.

12. 12 Reliability Guarantees Customer Average Interruption Duration Index (continued) Limitations/exemptions: CAIDI figures exclude sustained interruptions during major events. Utility implementation of OMS has demonstrated that a utility’s reliability statistics such as CAIDI and SAIFI will suffer when calculated using Post-OMS implementation data, with no change in the actual reliability of service provided to customers. Because reliability statistics will change substantially, it is inappropriate to set standards for a Post-OMS environment using only Pre-OMS results. The Companies must therefore gather information to determine the approximate impact of OMS on their reliability statistics before they can implement the proposed guarantee. Action Required if guarantee not met: A failure to meet this commitment for a calendar year will trigger a set of requirements to analyze, develop and submit to the appropriate regulatory agencies a corrective action plan, as described in this report (page 16).

13. 13 Reliability Guarantees System Average Interruption Frequency Index Definition: System Average Interruption Frequency Index (SAIFI) means the average number of times that a customer experiences a sustained interruption (sustained interruptions are those lasting more than 5 minutes). SAIFI is calculated by dividing the total number of sustained customer interruptions by the total number of customers served (all data excludes sustained interruptions during major events). SAIFI approximates the average number of sustained outages experienced by customers. One year after full Outage Management System (“OMS”) implementation, which is due to be completed by 2002, the Companies will guarantee that the annual SAIFI in each jurisdiction area does not exceed 2 standard deviations above its historical mean, calculated by using at least one full year of post-OMS data in conjunction with adjusted pre-OMS data.

14. 14 Reliability Guarantees System Average Interruption Frequency Index (continued) Limitations/exemptions: SAIFI figures exclude sustained interruptions during major events. Utility implementation of OMS has demonstrated that a utility’s reliability statistics such as CAIDI and SAIFI will suffer when calculated using Post-OMS implementation data, with no change in the actual reliability of service provided to customers. Because reliability statistics will change substantially, it is inappropriate to set standards for a Post-OMS environment using only Pre-OMS results. The Companies must therefore gather information to determine the approximate impact of OMS on their reliability statistics before they can implement the proposed guarantee. Action Required if guarantee not met: A failure to meet this commitment for a calendar year will trigger a set of requirements to analyze, develop and submit to the appropriate regulatory agencies a corrective action plan, as described in this report (page 16).

15. 15 Reliability Guarantees Individual Circuit Performance Definition: Individual Circuit Performance means for each jurisdiction (MD will be by Company), individual circuits will be ranked based on SAIFI and, as a minimum, the lowest ranking 2% in each jurisdiction will be addressed. No individual circuit will be in the lowest 2% for more than 2 years in a row. If any individual circuit is expected to be in the lowest 2% for multiple years because of a long-term construction project, it will be exempt and another circuit will take its place. Limitations/exemptions: Guarantee applies only to feeders with more than 100 customers Excludes customers affected by major electric utility reconstruction projects. Action Required if guarantee not met: If the Companies fail to achieve this guarantee level, they will file a corrective action plan to the regulatory agencies, as described in this report (page 16). The corrective action plan will provide explanation for why a particular circuit has remained on the list for more than two years and how the Companies plan to address the problem.

16. 16 Regulatory Reporting Corrective Action Plans Whenever the Companies fail to meet their call center service level, call abandonment rate, CAIDI, SAIFI and individual circuit performance guarantees, they will submit a corrective action plan to the relevant regulatory agency. This corrective action plan will:  describe the cause(s) of the non-compliance  describe the corrective measures to be taken to ensure that the guarantee is achieved in the future  set a target date for completion of the corrective measures. Progress on current corrective action plans will be included in the annual report submitted to the regulatory agencies.

17. 17 Regulatory Reporting Annual Reports The Companies will provide an annual report on the entire service guarantee program to each regulatory agency. This report will include, as a minimum:  a summary of performance against each guarantee  a summary of pay-outs  a summary of any corrective action plans submitted and their progress  an update on the implementation of the program and any modifications made  the name and address of contacts to whom inquiries should be addressed.

18. 18 Major Event Definition For the purposes of these guarantees a major event means:  A weather-related event resulting in a continuous 24 hour or more period where more than 10% or 100,000, whichever is less, of the Companies’ Maryland customers are experiencing a sustained interruption*.  An unscheduled interruption of electric service resulting from an action:  taken by the Companies under the direction of an ISO  taken by the Companies to prevent an uncontrolled or cascading interruption of electric service  taken by the Companies to maintain the adequacy and security of the system, such as load control, emergency switching and energy conservation.  A sustained interruption occurring during an event which is outside the control of the Companies and is of sufficient intensity to give rise to a state of emergency or disaster being declared. * From the Electric Utility Reporting Standards Working Group, Supplemental Report