SECURITIES AND EXCHANGE COMMISSION

(Release No. 35-27741; 70-9947)

Conectiv Energy Holding Company and Ace Reit, Inc.

Supplemental Order Authorizing Deregistration of Holding Companies

October 22, 2003

Conectiv Energy Holding Company ("CEH") and ACE REIT, Inc. ("ACE REIT" and together, "Applicants"), both of Wilmington, Delaware and registered holding company subsidiaries of Pepco Holdings, Inc. ("PHI"), a registered public utility holding company, have filed with the Securities and Exchange Commission ("Commission") a post-effective amendment ("Amendment") under section 5(d) of the Public Utility Holding Company Act of 1935, as amended ("Act") to a previously filed application-declaration ("Application"). The Commission issued a notice of the underlying Application on April 10, 2002 (HCAR No. 27516).

By order dated July 24, 2002 (HCAR No. 27553), Potomac Electric Power Company, an electric public utility company, was authorized to execute a merger agreement ("Merger") with Conectiv, a registered public utility holding company, creating PHI. PHI then registered as a holding company under the Act. By subsequent order dated July 31, 2002 (HCAR No. 27557) ("Financing Order"), the Commission authorized PHI and certain of its subsidiaries, among other things, to perform ongoing financing activities through a period ending June 30, 2005. At the time of the Merger, CEH and ACE REIT were considered public utility holding companies under the Act because each had subsidiary companies holding public utility assets.¹ In the Financing Order, the Commission required PHI to file with the Federal Energy Regulatory Commission ("FERC") to convert CEH and ACE REIT's utility subsidiaries to exempt wholesale generators ("EWGs"), as that term is defined under section 32 of the Act. The Commission further ordered that PHI file an application to deregister CEH and ACE REIT as holding companies under the Act by August 1, 2003. Applicants state that the requisite application to the FERC has been filed and now request that CEH and ACE REIT be deregistered as public utility holding companies under the Act.

At the time of the Merger, Applicants state that CEH had three utility subsidiaries: (i) Conectiv Delmarva Generation, Inc. ("CDG"); (ii) Conectiv Pennsylvania Generation, Inc., renamed Conectiv Pennsylvania Generation LLC ("CPG"); and (iii) Conectiv Mid-Merit, Inc. renamed Conectiv Mid Merit, LLC ("CMM"). Applicants state that ACE REIT had one utility subsidiary, Conectiv Atlantic Generation, LLC ("CAG"), at the time of the Merger. Applicants state that CPG was converted to EWG status on December 23, 2002 and CMM was converted to EWG status on February 26, 2003. Applicants further state that applications to convert CDG and CAG to EWG status were filed with the FERC on July 24, 2003.

Applicants state that PHI satisfies all of the conditions of rule 53 except rule 53(a)(1). As of March 31, 2003, PHI's aggregate investment as defined in rule 53(a)(1) under the Act, in EWGs and foreign utility companies ("FUCOs") as that term is defined in rule 33 of the Act, was $1,832.8 million. Applicants state that in the Financing Order, the Commission authorized PHI to invest up to 100% of PHI's consolidated retained earnings plus $3.5 billion in EWGs and FUCOs. Applicants state that, as of March 31, 2003, PHI's consolidated retained earnings were $770.7 million, making PHI's maximum investment in EWGs and FUCOs equal to $4,270.7 million. Applicants assert that PHI currently complies with, and will comply with, the record-keeping requirements of rule 53(a)(2), the limitation under rule 53(a)(3) on the use of the PHI system's domestic public utility company personnel to render services to EWGs and FUCOs, and the requirements of rule 53(a)(4) concerning the submission of copies of certain filings under the Act to retail regulatory commissions. Applicants state that none of the circumstances described in rule 53(b) has occurred or is continuing.

Applicants state that fees and expenses in connection with the transactions in this Application will be approximately $1,500. Applicants further state no state or federal commission, other than this Commission, has jurisdiction over the activities requested in the Amendment.

Due notice of the filing of the Application has been given in the matter prescribed in rule 23 under the Act, and no hearing has been requested of, or ordered by, the Commission. Upon the basis of the facts in the record, it is hereby found that the applicable standards of the Act and rules under the Act are satisfied, and that no adverse findings are necessary:

IT IS ORDERED, under the applicable provisions of the Act and rules under the Act, that the Amendment, as amended, be, and it is hereby is, granted, effective immediately, subject to the terms and conditions prescribed in rule 24 under the Act.

For the Commission, by the Division of Investment Management, under delegated authority.

Endnotes:

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¹ Applicants state that CEH and ACE REIT were not subject to regulation by any state utility commission. CEH and ACE REIT registered as public utility holding companies under the Act on July 25, 2002.