Form U-13-60
Mutual and Subsidiary Service Companies

Beginning January 1, 2002 and Ending December 31, 2002

A Subsidiary Service Company

Date of Incorporation: January 16, 1998

State or Sovereign Power under which Incorporated or Organized: Delaware

800 King Street
Wilmington, DE 19899

James P. Lavin, Controller
Accounting and Finance
701 Ninth Street, N.W.
Washington, D.C. 20068

Pepco Holdings, Inc./Conectiv

INSTRUCTIONS FOR USE OF FORM U-13-60

1.

TIME OF FILING. Rule 94 provides that on or before the first day of May in each calendar year, each mutual service company and each subsidiary service company as to which the Commission shall have made a favorable finding pursuant to Rule 88, and every service company whose application for approval or declaration pursuant to Rule 88 is pending shall file with the Commission an annual report on Form U-13-60 and in accordance with the Instructions for that form.

2.

NUMBER OF COPIES. Each annual report shall be filed in duplicate. The company should prepare and retain at least one extra copy for itself in case correspondence with reference to the report becomes necessary.

3.

PERIOD COVERED BY REPORT. The first report filed by any company shall cover the period from the date the Uniform System of Accounts was required to be made effective as to that company under Rules 82 and 93 to the end of that calendar year. Subsequent reports should cover a calendar year.

4.

REPORT FORMAT. Reports shall be submitted on the forms prepared by the Commission. If the space provided on any sheet of such form is inadequate, additional sheets may be inserted of the same size as a sheet of the form or folded to such size.

5.

MONEY AMOUNTS DISPLAYED. All money amounts required to be shown in financial statements may be expressed in whole dollars, in thousands of dollars or in hundred thousands of dollars, as appropriate and subject to provisions of Regulation S-X (Section 210.3-01(c)).

6.

DEFICITS DISPLAYED. Deficits and other like entries shall be indicated by the use of either brackets or a parenthesis with corresponding reference in footnotes. (Regulation S-X, Section 210.3-01 (c)).

7.

MAJOR AMENDMENTS OR CORRECTIONS. Any company desiring to amend or correct a major omission or error in a report after it has been filed with the Commission shall submit an amended report including only those pages, schedules, and entries that are to be amended or corrected. A cover letter shall be submitted requesting the Commission to incorporate the amended report changes and shall be signed by a duly authorized officer of the company.

8.

DEFINITIONS. Definitions contained in Instruction 01-8 to the Uniform System of Accounts for Mutual Service Companies and Subsidiary Service Companies, Public Utility Holding Company Act of 1935, as amended February 2, 1979 shall be applicable to words or terms used specifically within this Form U-13-60.

9.

ORGANIZATION CHART. The service company shall submit with each annual report a copy of its current organization chart.

10.

METHODS OF ALLOCATION. The service company shall submit with each annual report a listing of the currently effective methods of allocation being used by the service company and on file with the Securities and Exchange Commission pursuant to the Public Utility Holding Company Act of 1935.

11.

ANNUAL STATEMENT OF COMPENSATION FOR USE OF CAPITAL BILLED. The service company shall submit with each annual report a copy of the annual statement supplied to each associate company in support of the amount of compensation for use of capital billed during the calendar year.

12.

ELECTRONIC FILERS. Electronic filers are subject to Regulation S-T and the EDGAR Filer Manual. Any rule or instruction therein shall be controlling unless otherwise specifically provided in rules or instructions pertaining to the submission format documents.

Data that appears in tabular or columnar format shall be marked as prescribed in the EDGAR Filer Manual.

Signatures shall be in typed form rather than manual format. See rule 13 of Regulation S-T.

LISTING OF SCHEDULES AND ANALYSIS OF ACCOUNT

Description of Schedules and Accounts

Schedule or Account Number

Page Number

COMPARATIVE BALANCE SHEET

Schedule

I

4-5

Service Company Property

Schedule

II

6-7

Accumulated Provision for Depreciation and   Amortization of Service Company Property

Schedule

III

8

Investments

Schedule

IV

9

Accounts Receivable from Associate Companies

Schedule

V

10-10a

Fuel Stock Expenses Undistributed

Schedule

VI

11

Stores Expense Undistributed

Schedule

VII

12

Miscellaneous Current and Accrued Assets

Schedule

VIII

13

Miscellaneous Deferred Debits

Schedule

IX

14

Research, Development, or Demonstration Expenditures

Schedule

X

15

Proprietary Capital

Schedule

XI

16

Long-Term Debt

Schedule

XII

17

Current and Accrued Liabilities

Schedule

XIII

18

Notes to Financial Statements

Schedule

XIV

19-20

COMPARATIVE STATEMENT OF INCOME

Schedule

XV

21

Analysis of Billing - Associate Companies

Account

457

22

Analysis of Billing - Non associate Companies

Account

458

23

Analysis of Charges for Service - Associate and   Non associate Companies

Schedule

XVI

24

Schedule of Expense by Department or Service Function

Schedule

XVII

25-27

Departmental Analysis of Salaries

Account

920

28-29

Outside Services Employed

Account

923

30-32

Employee Pensions and Benefits

Account

926

33

General Advertising Expenses

Account

930.1

34

Miscellaneous General Expenses

Account

930.2

35

Rents

Account

931

36

Taxes Other Than Income Taxes

Account

408

37

Donations

Account

426.1

38

Other Deductions

Account

426.5

39

Notes to Statement of Income

Schedule

XVIII

40

LISTING OF INSTRUCTIONAL FILING REQUIREMENTS

Description of Reports or Statements

ORGANIZATION CHART

41

METHODS OF ALLOCATION

42-47

ANNUAL STATEMENT OF COMPENSATION FOR USE OF CAPITAL BILLED

48

SIGNATURE

49

Give balance sheet of the Company as of December 31
of the current and prior year

Account

Assets and Other Debits

As of
December 31

Current
2002

Prior
2001

(In Thousands)

SERVICE COMPANY PROPERTY

101

Service Company Property (Schedule II)

$           84,759  

$           84,571  

107

Construction work in progress (Schedule II)

-  

-  

     Total Property

$           84,759  

$           84,759  

108

Less accumulated provision for depreciation and amortization of service company property (Schedule III)

$           41,144  

$           28,507  

     Net Service Company Property

$           43,615  

$           56,064  

INVESTMENTS

121

Nonutility Property

$                890  

$             2,232  

123

Investments in associate companies (Schedule IV)

-  

-  

124

Other investments (Schedule IV)

-  

-  

128

Special Funds

23,684  

4,238  

     Total Investments

$          24,574  

$            6,470  

CURRENT AND ACCRUED ASSETS

131

Cash

$                 (54)

$                 25  

134

Special deposits

-  

-  

135

Working funds

83  

115  

136

Temporary cash investments (Schedule IV)

-  

-  

141

Notes receivable

-  

-  

143

Accounts receivable

1,535  

1,900  

144

Accumulated provision for uncollectible accounts

-  

-  

146

Accounts receivable from associate companies (Schedule V and XIV)

30,396  

18,299  

152

Fuel stock expenses undistributed (Schedule VIII)

-  

-  

154

Materials and supplies

-  

-  

163

Stores expense undistributed (Schedule VII)

-  

-  

165

Prepayments

6,501  

1,015  

171

Interest and Dividends Receivable

-  

-  

174

Miscellaneous current and accrued assets (Schedule VIII)

-  

-  

     Total Current and Accrued Assets

$           38,461  

$           21,354  

DEFERRED DEBITS

181

Unamortized debt expense

$                    -  

$                    -  

183

Preliminary Survey and Investigation

-  

-  

184

Clearing accounts

2  

10  

186

Miscellaneous deferred debits (Schedule IX)

3,524  

4,053  

188

Research, development, or demonstration expenditures (Schedule X)

-  

-  

190

Accumulated deferred income taxes

1,036  

565  

     Total Deferred Debits

$             4,562  

$             4,628  

     TOTAL ASSETS AND OTHER DEBITS

$         111,212  

$           88,516  

SCHEDULE I - COMPARATIVE BALANCE SHEET

Account

Assets and Other Debits

As of
December 31

Current
2002

Prior
2001

(In Thousands)

PROPRIETARY CAPITAL

201

Common stock issued (Schedule XI)

$                    1  

$                    1  

211

Miscellaneous paid-in-capital (Schedule XI)

-  

-  

215

Appropriated retained earnings (Schedule XI)

-  

-  

216

Unappropriated retained earnings (Schedule XI)

(492)

37  

     Total Proprietary Capital

$               (491)

$                 38  

LONG - TERM DEBT

223

Advances from associate companies (Schedule XII)

$                    -  

$                    -  

224

Other long-term debt (Schedule XII)

-  

-  

225

Unamortized premium on long-term debt

-  

-  

226

Unamortized discount on long-term debt

-  

-  

     Total Long - Term Debt

$                    -  

$                    -  

CURRENT AND ACCRUED LIABILITIES

184

Clearing accounts

$                   8  

$                (12)

231

Notes payable

-  

-  

232

Accounts payable

8,323  

7,102  

233

Notes payable to associate companies (Schedule XIII and XIV)

41,617  

42,316  

234

Accounts payable to associate companies (Schedule XIII and XIV)

-  

-  

236

Taxes accrued

697  

(1,326)

237

Interest accrued

62  

60  

238

Dividends declared

-  

-  

241

Tax collections payable

14  

10  

242

Miscellaneous current and accrued liabilities (Schedule XIII)

50,715  

30,103  

     Total Current and Accrued Liabilities

$        101,436  

$          78,254  

DEFERRED CREDITS

253

Other deferred credits

$                    -  

$                    -  

254

Other regulatory liabilities

-  

-  

255

Accumulated deferred investment tax credits

-  

-  

     Total Deferred Credits

$                    -  

$                    -  

ACCUMULATED DEFERRED INCOME TAXES

282

Accumulated deferred income taxes-Other Property

$            6,336  

$            8,164  

283

Accumulated deferred income taxes-Other

3,931  

2,060  

     Total Accumulated Deferred Income Taxes

$          10,267  

$          10,224  

TOTAL LIABILITIES AND PROPRIETARY CAPITAL

$        111,212  

$          88,516  

For the Year Ended December 31, 2002
(In Thousands)

SCHEDULE II - SERVICE COMPANY PROPERTY

Description

Balance At Beginning of Year

Additions

Retirements or Sales

Other Changes (1)

Balance At Close of Year

SERVICE COMPANY PROPERTY

Account

301

Organization

$           -  

$          -  

$            -  

$            -  

$          -  

303

Miscellaneous Intangible Plant

9,460  

-  

-  

-  

9,460  

304

Land and Land Rights

-  

-  

-  

-  

-  

305

Structures and Improvements

14,481  

-  

-  

-  

14,481  

306

Leasehold Improvements

-  

-  

-  

-  

-  

307

Equipment(2)

53,772  

488  

(300)

-  

53,960  

308

Office Furniture and Equipment

6,858  

-  

-  

-  

6,858  

309

Automobiles, Other Vehicles and Related Garage Equipment

-  

-  

-  

-  

-  

310

Aircraft and Airport Equipment

-  

-  

-  

-  

-  

311

Other Service Company Property(3)

-  

-  

-  

-  

-  

SUBTOTAL

$  84,571  

$      488  

$       (300)

$            -  

$ 84,759  

107

Construction Work in Progress (4)

-  

-  

-  

-  

-  

TOTAL

$  84,571  

$      488  

$       (300)

$            -  

$ 84,759  

(1) Provide an explanation of those changes considered material:

SCHEDULE II - CONTINUED

(2) Sub accounts are required for each class of equipment owned. The service company shall provide a
     listing by sub account of equipment additions during the year and the balance at the close of the year:

Sub account Description

Additions

Balance At Close of Year

Computer Hardware

$        488

$   45,408

Computer Software

-

8,132

Cafeteria & Kitchen Equipment

-

420

TOTAL

$        488

$    53,960

(3) Describe Other Service Company Property:

Not Applicable

(4) Describe Construction Work in Progress:

Asset Under Construction

Capitalized Date

Value

Description

Not Applicable

For the Year Ended December 31, 2002
(In Thousands)

ACCUMULATED PROVISION FOR DEPRECIATION AND
AMORTIZATION OF SERVICE COMPANY PROPERTY

Description

Balance At Beginning of Year

Additions Charged to Account 403

Retirements

Other Changes Add (Deduct) (1)

Balance At Close of Year

Account

301

Organization

$            -

$            -

$            -  

$             -  

$            -

303

Miscellaneous Intangible Plant

3,632

1,892

-

5,524

304

Land and Land Rights

-

-

-

305

Structures and Improvements

1,109

477

-

1,586

306

Leasehold

Improvements

-

-

-

307

Equipment(2)

23,056

10,146

(210)

-

32,992

308

Office Furniture and Equipment

710

332

-

1,042

309

Automobiles, Other Vehicles and Related Garage Equipment

-

-

-  

-

-

310

Aircraft and Airport Equipment

-

-

-  

-

-

311

Other Service Company Property

-

-

-  

-

-

TOTAL

$   28,507

$   12,847

$       (210)

$             -  

$   41,144

(1) Provide an explanation of those changes considered material:

NOT APPLICABLE

For the Year Ended December 31, 2002
(In Thousands)

SCHEDULE IV - INVESTMENTS

INSTRUCTIONS: Complete the following schedule concerning investments.

Under Account 124, "Other Investments", state each investment separately, with description, including the name of the issuing company, number of shares or principal amount, etc.

Under Account 136, "Temporary Cash Investments", list each investment separately.

Description

Balance At Beginning of Year

Balance At Close of Year

Account 123 - Investment in Associate Companies

$               -

$               -

Account 124 - Other Investments

-

-

Account 136 - Temporary Cash Investments

-

-

TOTAL

$               -

$               -

For the Year Ended December 31, 2002
(In Thousands)

SCHEDULE V - ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES

INSTRUCTIONS:

Complete the following schedule listing accounts receivable from each associate company. Where the service company has provided accommodation or convenience payments for associate companies, a separate listing of total payments for each associate company by subaccount should be provided.

Description

Balance At Beginning of Year

Balance At Close of Year

Account 146 - Accounts Receivable from Associate Companies

Atlantic City Electric Company

$     7,820  

$   12,965 

Delmarva Power & Light Company

7,777  

11,102 

Conectiv Operating Services Company

749  

1,658 

Conectiv Delmarva Generation, Inc.

1,651  

1,393 

Conectiv Energy Holding Company

969  

1,056 

Conectiv Energy Supply, Inc.

(3,045) 

1,028 

Conectiv Bethlehem, LLC

81  

475 

Thermal Energy Limited Partnership

539  

231 

Conectiv Mid Merit, Inc.

204  

231 

Pepco Energy Services, Inc.

-  

188 

Conectiv Properties and Investments, Inc.

(106) 

152 

Pedrick Generation, Inc.

220  

149 

Conectiv Holding Company, Inc.

(4) 

148 

Conectiv Atlantic Generation, LLC

133  

139 

Atlantic Southern Properties

193  

113 

Pepco Holdings, Inc.

-  

72 

Conectiv Thermal Systems

65  

57 

Conectiv Solutions LLC

(90) 

44 

Conectiv Pennsylvania Generation, Inc.

-  

42 

Potomac Capital Investment Corporation

-  

37 

Atlantic Generation, Inc.

28  

27 

Vital Services Home, LLC

-  

11 

King Street Assurance LTD

2  

10 

Conectiv Services II, Inc.

12  

10 

Pepco Communications, Inc.

-  

6 

Binghamton General, Inc.

-  

5 

Binghamton Limited, Inc.

-  

3 

Atlantic City Electric Transition Funding LLC

-

3 

ATE Investments, Inc.

8  

2 

Vineland General, Inc.

-  

2 

DCTC-Burney, Inc.

2  

2 

Vineland Limited, Inc.

-  

1 

DCI II, Inc.

(1) 

- 

DCI I, Inc.

4  

- 

Conectiv Communications, Inc.

1,088  

(180)

Potomac Electric Power Company

-  

(786)

     TOTAL RECEIVABLES

$   18,299  

$   30,396 

Analysis of Convenience or Accommodation Payments:

See Schedule V (a)

For the Year Ended December 31, 2002
(In Thousands)

SCHEDULE V (a) - Analysis of Convenience or Accommodation Payments

Company Name

Total
Payments

ATE Investments, Inc.

$           288

Atlantic City Electric Company

31,978

Atlantic Generation, Inc.

56

Atlantic Southern Properties

2,974

Binghamton General Inc.

3

Binghamton Limited Inc.

2

Conectiv Holding Company, Inc.

6,345

Conectiv Atlantic Generation, LLC

17,721

Conectiv Bethlehem, LLC

10,533

Conectiv Communications, Inc.

558

Conectiv Delmarva Generation, Inc.

6,530

Conectiv Energy Holding Company

85

Conectiv Energy Supply, Inc.

9,380

Conectiv Mid-Merit, Inc.

1,213

Conectiv Operating Services Company

5,228

Conectiv Pennsylvania Generation, Inc.

24

Conectiv Properties and Investments, Inc.

3,458

Conectiv Thermal Systems

3,724

Conectiv Solutions, LLC

772

Conectiv Services II, Inc.

1,908

DCI I, Inc.

140

DCI II, Inc.

362

DCTC-Burney, Inc.

71

Delmarva Power & Light Company

34,052

King Street Assurance Ltd

2,945

Potomac Capital Investment Corporation

35

Potomac Electric Power Company

86

Potomac Energy Services, Inc.

1

Pepco Holdings, Inc.

11,483

Thermal Energy Limited Partnership

770

Vital Services Home LLC

11

Total Payments

$    152,736

The majority of convenience payments relate to benefits and outside legal, consulting and purchased power expenses paid to vendors who bill more than one system affiliate on one invoice, and expenses incurred by system affiliates who do not have a checking account.

For the Year Ended December 31, 2002
(In Thousands)

SCHEDULE VI - FUEL STOCK EXPENSE UNDISTRIBUTED

INSTRUCTIONS:

Report the amount of labor and expenses incurred with respect to fuel stock expenses during the year and indicate amount attributable to each associate company. Under the section headed "summary" listed below give an overall report of the fuel functions performed by the service company.

Description

Labor

Expenses

Total

Account 152 - Fuel Stock Expenses Undistributed

$               -

$               -

$               -

TOTAL

$               -

$               -

$               -

Summary:

Not Applicable

For the Year Ended December 31, 2002
(In Thousands)

SCHEDULE VII - STORES EXPENSE UNDISTRIBUTED

INSTRUCTIONS:

Report the amount of labor and expenses incurred with respect to stores expense during the year and indicate amount attributable to each associate company.

Description

Labor

Expenses

Total

Account 163 - Stores Expense Undistributed

$               -

$               -

$               -

TOTAL

$               -

$               -

$               -

For the Year Ended December 31, 2002
(In Thousands)

SCHEDULE VIII - MISCELLANEOUS CURRENT AND ACCRUED ASSETS

INSTRUCTIONS:

Provide detail of items in this account. Items less than $10,000 may be grouped, showing the number of items in each group.

Balance At Beginning of Year

Balance At Close of Year

Description

Account 174 - Miscellaneous Current and
                       Accrued Assets

$               -

$               -

TOTAL

$               -

$               -

For the Year Ended December 31, 2002
(In Thousands)

SCHEDULE IX - MISCELLANEOUS DEFERRED DEBITS

INSTRUCTIONS:

Provide detail of items in this account. Items less than $10,000 may be grouped by class, showing the number of items in each class.

Description

Balance At Beginning of Year

Balance At Close of Year

Account 186 - Miscellaneous Deferred Debits

Intangible Asset-Supplemental Executive Retirement Plan

$        1,483

$        1,483 

SAP Costs-Deferred

2,570

2,000 

Property Sales - Deferred selling expenses

-

42 

Other

-

(1)

TOTAL

$        4,053

$        3,524 

For the Year Ended December 31, 2002
(In Thousands)

SCHEDULE X
RESEARCH, DEVELOPMENT OR DEMONSTRATION EXPENDITURES

INSTRUCTIONS:

Provide a description of each material research, development, or demonstration project which incurred costs by the service corporation during the year.

Description

Amount

Account 188 -

RESEARCH, DEVELOPMENT, OR DEMONSTRATION EXPENDITURES

$         -

TOTAL

$         -

SCHEDULE XI - PROPRIETARY CAPITAL

Outstanding
Close of Period

Account Number

Class of Stock

Number of Shares Authorized

Par or Stated Value Per Share

No. of Shares

Total Amount

201

Common Stock Issued

1,000

$          1.00 

1,000

$  1,000 

INSTRUCTIONS:

Classify amounts in each account with brief explanation, disclosing the general nature of transactions which gave rise to the reported amounts.

Description

Amount

Account 211 - Miscellaneous Paid-In Capital

$          - 

Account 215 - Appropriated Retained Earnings

- 

TOTAL

$          - 

INSTRUCTIONS:

Give particulars concerning net income or (loss) during the year, distinguishing between compensation for the use of capital owed or net loss remaining from servicing nonassociates per the General Instructions of the Uniform System of Accounts. For dividends paid during the year in cash or otherwise, provide rate percentage, amount of dividend, date declared and date paid.

Description

Balance At Beginning of Year

Net Income or (Loss)

Dividends Paid

Balance At Close of Year

Account 216 - Unappropriated
                       Retained Earnings

$                   37

$               (529)

$        -

$   (492)

TOTAL

$                   37

$               (529)

$        -

$   (492)