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PHI utility subsidiaries Pepco, Delmarva Power and Atlantic City Electric have a long history of environmental stewardship. Our unregulated businesses, Conectiv Energy and Pepco Energy Services, continue to provide clean energy choices and services to our wholesale and retail customers.

In 2004, as part of our efforts to preserve natural resources and help educate youth, we expanded our outreach to government and non-government organizations in the areas we serve. We provided financial and in-kind services support to more than 45 agencies throughout our five-state region, including the District of Columbia. We partnered with the states of Maryland and Delaware to promote the development of renewable resources and provide for job growth through investments in related emerging businesses. Our affiliate Pepco Energy Services has partnered with the Chesapeake Bay Foundation to promote the purchase of electric energy supplied by renewable resources. And our wholesale energy business, Conectiv Energy, has assumed a leadership role in the Corporate Wetlands Restoration Partnership, which promotes alliances between government organizations and businesses to restore wetlands in Delaware, New Jersey and other states.

Our Environmental Management System continues to be our cornerstone for ensuring that all the elements of our Environmental Policy are implemented effectively, including compliance with applicable laws and regulations. To ensure accountability, we have designated specific individuals responsible for compliance at each PHI facility. During 2004, seven environmental audits were conducted at various company locations.

Major expansion of PHI’s transmission system in Maryland and New Jersey was initiated during 2004. In view of the rich environmental resources of the region, a Geospatial Information System (GIS) was used to locate local waterways, wetlands, endangered species and other ecologically sensitive areas. As a result of this approach, the locations of approximately 80 poles were changed to protect the environment. Also, due to reduced construction constraints, significant savings were realized. The GIS work also resulted in a shorter, more timely permitting process. During the year, PHI maintained various habitat programs along existing rights-of-way as well as our wetlands enhancement programs.