1.0.0.3 true SIGNIFICANT ACCOUNTING POLICIES false 1 $ true false false false PEPCO HOLDINGS INC dei_LegalEntityAxis xbrldi http://xbrl.org/2006/xbrldi us-gaap_ParentCompanyMember dei_LegalEntityAxis explicitMember Shares Standard http://www.xbrl.org/2003/instance shares 0 USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 USDperShareItemType Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares 0 1 PEPCO HOLDINGS INC 0 na true na na na No definition available. false true false false false false false false false 1 false false 0 0 false false No definition available. No authoritative reference available. false 2 Notes to Financial Statements [Abstract] 2 pom false na duration string Notes to Financial Statements [Abstract] false false false false false true false false false 1 false false 0 0 false false Notes to Financial Statements [Abstract] false 3 SIGNIFICANT ACCOUNTING POLICIES 2 us-gaap_SignificantAccountingPoliciesTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <div> (2) SIGNIFICANT ACCOUNTING POLICIES Financial Statement Presentation Pepco Holdings’ unaudited consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). PHI adopted the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC), which is the single source reference system for all authorative U.S. GAAP, as discussed in Note (3), “Newly Adopted Accounting Standards.” Pursuant to the rules and regulations of the Securities and Exchange Commission, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted. Therefore, these financial statements should be read along with the annual financial statements included in PHI’s Annual Report on Form 10-K for the year ended December 31, 2008. In the opinion of PHI’s management, the consolidated financial statements contain all adjustments (which all are of a normal recurring nature) necessary to present fairly Pepco Holdings’ financial condition as of September 30, 2009, in accordance with GAAP. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. Interim results for the three and nine months ended September 30, 2009 may not be indicative of PHI’s results that will be realized for the full year ending December 31, 2009, since its Power Delivery and Competitive Energy business are seasonal. PHI has evaluated all subsequent events through October 29, 2009, the date of issuance of the consolidated financial statements to which these Notes relate. Change in Accounting Principle After the completion of the July 1, 2009 goodwill impairment test, PHI adopted a new accounting policy whereby PHI’s annual impairment review of goodwill will be performed as of November 1 each year. Management believes that the change in PHI’s annual impairment testing date is preferable because it better aligns the timing of the test with management’s annual update of its long-term financial forecast. The change in accounting principle had no effect on PHI’s consolidated financial statements.   Change in Accounting Estimate In the second quarter of 2008, PHI reassessed the sustainability of its tax position and revised its assumptions regarding the estimated timing of the tax benefits generated from its cross-border energy lease investments. Based on the reassessment, PHI for the quarter ended June 30, 2008, recorded an after-tax charge to net income of $93 million. For additional discussion on this matter, see Notes (7), “Leasing Activities,” and (14), “Commitments and Contingencies.” Consolidation of Variable Interest Entities In accordance with the provisions of FASB guidance on the consolidation of variable interest entities (ASC 810), Pepco Holdings consolidates those variable interest entities where Pepco Holdings or a subsidiary has been determined to be the primary beneficiary. The guidance addresses conditions under which an entity should be consolidated based upon variable interests rather than voting interests. Subsidiaries of Pepco Holdings have power purchase agreements (PPAs) with a number of entities to which the guidance applies. ACE and Pepco PPAs Pepco Holdings, through its ACE subsidiary, is a party to three PPAs with unaffiliated, non-utility generators (NUGs). Due to a variable element in the pricing structure of the PPAs, Pepco Holdings potentially assumes the variability in the operations of the plants operated by the NUGs and, therefore, has a variable interest in the counterparties. Despite continued efforts to obtain information from these three entities during the three months ended September 30, 2009, PHI was unable to obtain sufficient information to conduct the analysis required under FASB guidance on the consolidation of variable interest entities to determine whether these three entities were variable interest entities or if ACE was the primary beneficiary. As a result, Pepco Holdings has applied the scope exemption from the guidance for enterprises that have conducted exhaustive efforts to obtain the necessary information, but have not been able to obtain such information. Net purchase activities under the PPAs for the three months ended September 30, 2009 and 2008, were approximately $70 million and $93 million, respectively, of which approximately $66 million and $82 million, respectively, consisted of power purchases under the PPAs. Net purchase activities under the PPAs for the nine months ended September 30, 2009 and 2008, were approximately $214 million and $265 million, respectively, of which approximately $197 million and $233 million, respectively, consisted of power purchases under the PPAs. Pepco Holdings does not have direct loss exposure under the PPAs because ACE is able to recover its costs from its customers through regulated rates. During the third quarter of 2008, Pepco transferred to Sempra Energy Trading LLP (Sempra) an agreement with Panda-Brandywine, L.P. (Panda) under which Pepco was obligated to purchase from Panda 230 megawatts of capacity and energy annually through 2021 (Panda PPA). Net purchase activities under the Panda PPA for the three and nine months ended September 30, 2008, were approximately $17 million and $59 million, respectively. DPL Wind Transactions PHI, through its DPL subsidiary, has entered into four wind PPAs in amounts up to a total of 350 megawatts. Three of the PPAs are with land-based facilities and one of the PPAs is with an offshore facility. When completed and operational, DPL would purchase energy and renewable energy credits (RECs) from the four wind facilities and capacity from one of the wind facilities. The RECs help DPL fulfill a portion of its requirements under the State of Delaware’s Renewable Energy Portfolio Standards Act, which requires that 20 percent of total load needed in Delaware be produced from renewable sources by 2019. The Delaware Public Service Commission (DPSC) has approved the four agreements, each of which sets forth the prices to be paid by DPL over the life of the respective contracts. Payments under the agreements are currently expected to start in late 2009 for one of the land-based contracts, 2010 for the other two land-based contracts, and 2014 for the offshore contract, if the projects are ultimately completed and operational. The lengths of the contracts range between 15 and 25 years. DPL is obligated to purchase energy and RECs in amounts generated and delivered by the sellers at rates that are primarily fixed under these agreements. Recent disruptions in the capital and credit markets, as well as permitting delays, could result in setbacks in the construction schedules and the operational start dates of the wind facility currently expected to start in late 2009, one of the wind facilities expected to start in 2010, and the wind facility currently expected to start in 2014. If the wind facilities are not operational by specified dates, DPL has the right to terminate the PPAs. DPL concluded that consolidation is not required for any of these PPAs under FASB guidance on the consolidation of variable interest entities (ASC 810). DPL would need to reassess its accounting conclusions if there were material changes to the contractual arrangements or wind facilities. Goodwill Goodwill represents the excess of the purchase price of an acquisition over the fair value of the net assets acquired at the acquisition date. Substantially all of Pepco Holdings’ goodwill was generated by Pepco’s acquisition of Conectiv in 2002 and was allocated to Pepco Holdings’ Power Delivery reporting unit based on the aggregation of its components. Pepco Holdings tests its goodwill for impairment annually and whenever an event occurs or circumstances change in the interim that would more likely than not reduce the fair value of a reporting unit below its carrying amount. After the completion of its July 1, 2009 annual impairment test, PHI changed the date of its annual impairment test to November 1. Factors that may result in an interim impairment test include, but are not limited to: a change in the identified reporting units; an adverse change in business conditions; a protracted decline in stock price causing market capitalization to fall below book value; an adverse regulatory action; or an impairment of long-lived assets in the reporting unit. As described in Note (6), “Goodwill,” no impairment charge has been recorded for the three and nine months ended September 30, 2009. Taxes Assessed by a Governmental Authority on Revenue-Producing Transactions Taxes included in Pepco Holdings’ gross revenues were $88 million for each of the three months ended September 30, 2009 and 2008, and $245 million and $238 million for the nine months ended September 30, 2009 and 2008, respectively. Reclassifications and Adjustments Certain prior period amounts have been reclassified in order to conform to current period presentation. The following adjustments have been recorded which are not considered material either individually or in the aggregate: Pepco Holdings In the third quarter of 2008, PHI identified an error in the accounting for certain of its restricted stock awards granted under the Long-Term Incentive Plan that resulted in an understatement of stock-based compensation expense in 2006 and 2007. This error was corrected in the third quarter of 2008, resulting in an increase in Other Operation and Maintenance expenses for the three and nine months ended September 30, 2008 of $9 million. Pepco In the second quarter of 2008, Pepco recorded an adjustment to correct errors in Other Operation and Maintenance expenses for prior periods dating back to February 2005 for which late payment fees were incorrectly recognized. This adjustment resulted in an increase in Other Operation and Maintenance expenses for the nine months ended September 30, 2008 of $3 million. DPL In the third quarter of 2008, DPL recorded an adjustment to correct errors in Other Operation and Maintenance expenses for prior periods dating back to May 2006 for which late payment fees were incorrectly recognized. This adjustment resulted in an increase in Other Operation and Maintenance expenses for the three and nine months ended September 30, 2008 of $4 million and $3 million, respectively. </div> false false No definition available. No authoritative reference available. false 4 POTOMAC ELECTRIC POWER CO 0 na true na na na No definition available. false true false false false false false false false 1 false false 0 0 false false No definition available. No authoritative reference available. false 5 Notes to Financial Statements [Abstract] 2 pom false na duration string Notes to Financial Statements [Abstract] false false false false false true false false false 1 false false 0 0 false false Notes to Financial Statements [Abstract] false 6 SIGNIFICANT ACCOUNTING POLICIES 2 us-gaap_SignificantAccountingPoliciesTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <div> (2) SIGNIFICANT ACCOUNTING POLICIES Financial Statement Presentation Pepco’s unaudited financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). Pepco adopted the Financial Standards Accounting Board (FASB) Accounting Standards Codification (ASC), which is the single source reference system for all authorative U.S. GAAP, as discussed in Note 3, “Newly Adopted Accounted Standards.” Pursuant to the rules and regulations of the Securities and Exchange Commission, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted. Therefore, these financial statements should be read along with the annual financial statements included in Pepco’s Annual Report on Form 10-K for the year ended December 31, 2008. In the opinion of Pepco’s management, the financial statements contain all adjustments (which all are of a normal recurring nature) necessary to present fairly Pepco’s financial condition as of September 30, 2009, in accordance with GAAP. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. Interim results for the three and nine months ended September 30, 2009 may not be indicative of results that will be realized for the full year ending December 31, 2009 since the sales of electric energy are seasonal. Pepco has evaluated all subsequent events through October 29, 2009, the date of issuance of the financial statements to which these Notes relate. Consolidation of Variable Interest Entities Due to a variable element in the pricing structure of Pepco’s purchase power agreement with Panda-Brandywine, L.P. (Panda) entered into in 1991, pursuant to which Pepco was obligated to purchase from Panda 230 megawatts of capacity and energy annually through 2021 (Panda PPA), Pepco potentially assumed the variability in the operations of the plants related to the Panda PPA and therefore had a variable interest in the entity. During the third quarter of 2008, Pepco transferred the Panda PPA to Sempra Energy Trading LLP (Sempra). Net purchase activities with the counterparty to the Panda PPA for the three and nine months ended September 30, 2008 were approximately $17 million and $59 million, respectively. Taxes Assessed by a Governmental Authority on Revenue-Producing Transactions Taxes included in Pepco’s gross revenues were $71 million and $67 million for the three months ended September 30, 2009 and 2008, respectively, and $194 million and $183 million for the nine months ended September 30, 2009 and 2008, respectively. Reclassifications and Adjustments Certain prior period amounts have been reclassified in order to conform to current period presentation. The following adjustments have been recorded which are not considered material either individually or in the aggregate: During the third quarter of 2009, Pepco recorded an adjustment to correct amounts incorrectly recorded as an expense related to a new PJM Interconnection, LLC (PJM) program, which should have been deferred as a regulatory asset. The adjustment resulted in a decrease to Fuel and Purchased Energy expenses for the three months ended September 30, 2009 of $1 million.   In the third quarter of 2008, PHI identified an error in the accounting for certain of its restricted stock awards under the Long-Term Incentive Plan which resulted in an understatement of Pepco’s stock-based compensation expense in 2006 and 2007. This error was corrected in the third quarter of 2008, resulting in an increase in Pepco’s Other Operation and Maintenance expenses for the three and nine months ended September 30, 2008 of $3 million. In the second quarter of 2008, Pepco recorded an adjustment to correct errors in Other Operation and Maintenance expenses for prior periods dating back to February 2005 for which late payment fees were incorrectly recognized. This adjustment resulted in an increase in Other Operation and Maintenance expenses for the nine months ended September 30, 2008 of $3 million. </div> false false No definition available. No authoritative reference available. false 7 DELMARVA POWER & LIGHT CO /DE/ 0 na true na na na No definition available. false true false false false false false false false 1 false false 0 0 false false No definition available. No authoritative reference available. false 8 Notes to Financial Statements [Abstract] 2 pom false na duration string Notes to Financial Statements [Abstract] false false false false false true false false false 1 false false 0 0 false false Notes to Financial Statements [Abstract] false 9 SIGNIFICANT ACCOUNTING POLICIES 2 us-gaap_SignificantAccountingPoliciesTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <div> (2) SIGNIFICANT ACCOUNTING POLICIES Financial Statement Presentation DPL’s unaudited financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). DPL adopted the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC), which is the single source reference system for all authorative U.S. GAAP, as discussed in Note 3, “Newly Adopted Accounting Standards.” Pursuant to the rules and regulations of the Securities and Exchange Commission, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted. Therefore, these financial statements should be read along with the annual financial statements included in DPL’s Annual Report on Form 10-K for the year ended December 31, 2008. In the opinion of DPL’s management, the financial statements contain all adjustments (which all are of a normal recurring nature) necessary to present fairly DPL’s financial condition as of September 30, 2009, in accordance with GAAP. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. Interim results for the three and nine months ended September 30, 2009 may not be indicative of results that will be realized for the full year ending December 31, 2009 since the sales of electric energy are seasonal. DPL has evaluated all subsequent events through October 29, 2009, the date of issuance of the financial statements to which these Notes relate. Change in Accounting Principle After the completion of the July 1, 2009 goodwill impairment test, DPL adopted a new accounting policy whereby DPL’s annual impairment review of goodwill will be performed as of November 1 each year. Management believes that the change in DPL’s annual impairment testing date is preferable because it better aligns the timing of the test with management’s annual update of its long-term financial forecast. The change in accounting principle has had no effect on DPL’s financial statements. DPL Wind Transactions PHI, through its DPL subsidiary, has entered into four wind power purchase agreements (PPAs) in amounts up to a total of 350 megawatts. Three of the PPAs are with land-based facilities and one of the PPAs is with an offshore facility. When completed and operational, DPL would purchase energy and renewable energy credits (RECs) from the four wind facilities and capacity from one of the wind facilities. The RECs help DPL fulfill a portion of its requirements under the State of Delaware’s Renewable Energy Portfolio Standards Act, which requires that 20 percent of total load needed in Delaware be produced from renewable sources by 2019. The Delaware Public Service Commission (DPSC) has approved the four agreements, each of which sets forth the prices to be paid by DPL over the life of the respective contracts. Payments under the agreements are currently expected to start in late 2009 for one of the land-based contracts, 2010 for the other two land-based contracts, and 2014 for the offshore contract, if the projects are ultimately completed and operational. The lengths of the contracts range between 15 and 25 years. DPL is obligated to purchase energy and RECs in amounts generated and delivered by the sellers at rates that are primarily fixed under these agreements. Recent disruptions in the capital and credit markets, as well as permitting delays, could result in setbacks in the construction schedules and the operational start dates of the wind facility currently expected to start in late 2009, one of the wind facilities expected to start in 2010, and the wind facility currently expected to start in 2014. If the wind facilities are not operational by specified dates, DPL has the right to terminate the PPAs. DPL concluded that consolidation is not required for any of these PPAs under FASB guidance on the consolidation of variable interest entities (ASC 810). DPL would need to reassess its accounting conclusions if there were material changes to the contractual arrangements or wind facilities. Goodwill Goodwill represents the excess of the purchase price of an acquisition over the fair value of the net assets acquired at the acquisition date. All of DPL’s goodwill was generated by DPL’s acquisition of Conowingo Power Company in 1995. DPL tests its goodwill for impairment annually and whenever an event occurs or circumstances change in the interim that would more likely than not reduce the fair value of DPL below its carrying amount. After the completion of its July 1, 2009 annual impairment test, DPL changed the date of its annual impairment test to November 1. Factors that may result in an interim impairment test include, but are not limited to: a change in the identified reporting units; an adverse change in business conditions; an adverse regulatory action; or an impairment of DPL’s long-lived assets. As described in Note (6), “Goodwill,” no impairment charge has been recorded for the three and nine months ended September 30, 2009. Taxes Assessed by a Governmental Authority on Revenue-Producing Transactions Taxes included in DPL’s gross revenues were $4 million for each of the three months ended September 30, 2009 and 2008, and $13 million for each of the nine months ended September 30, 2009 and 2008. Reclassifications and Adjustments Certain prior period amounts have been reclassified in order to conform to current period presentation. The following adjustments have been recorded which are not considered material either individually or in the aggregate: During the second and third quarters of 2009, DPL recorded adjustments to correct certain income tax errors. The adjustments resulted in an increase in income tax expense of $1 million for the three months ended September 30, 2009. During the third quarter of 2009, DPL recorded an adjustment to correct certain errors in the Bill Stabilization Adjustment (BSA) calculation. The adjustment resulted in a decrease in revenue of $1 million for the three and nine months ended September 30, 2009. In the third quarter of 2008, DPL recorded an adjustment to correct errors in Other Operation and Maintenance expenses for prior periods dating back to May 2006 for which late payment fees were incorrectly recognized. This adjustment resulted in an increase in Other Operation and Maintenance expenses for the three and nine months ended September 30, 2008 of $4 million and $3 million, respectively. In the third quarter of 2008, PHI identified an error in the accounting for certain of its restricted stock awards under the Long-Term Incentive Plan which resulted in an understatement of DPL’s stock-based compensation expense in 2006 and 2007. This error was corrected in the third quarter of 2008, resulting in an increase in DPL’s Other Operation and Maintenance expenses for the three and nine months ended September 30, 2008 of $2 million. </div> false false No definition available. No authoritative reference available. false 10 ATLANTIC CITY ELECTRIC CO 0 na true na na na No definition available. false true false false false false false false false 1 false false 0 0 false false No definition available. No authoritative reference available. false 11 Notes to Financial Statements [Abstract] 2 pom false na duration string Notes to Financial Statements [Abstract] false false false false false true false false false 1 false false 0 0 false false Notes to Financial Statements [Abstract] false 12 SIGNIFICANT ACCOUNTING POLICIES 2 us-gaap_SignificantAccountingPoliciesTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <div> (2) SIGNIFICANT ACCOUNTING POLICIES Financial Statement Presentation ACE’s unaudited consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). ACE adopted the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC), which is the single source reference system for all authorative U.S. GAAP, as discussed in Note 3, “Newly Adopted Accounting Standards.” Pursuant to the rules and regulations of the Securities and Exchange Commission, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted. Therefore, these financial statements should be read along with the annual financial statements included in ACE’s Annual Report on Form 10-K for the year ended December 31, 2008. In the opinion of ACE’s management, the consolidated financial statements contain all adjustments (which all are of a normal recurring nature) necessary to present fairly ACE’s financial condition as of September 30, 2009, in accordance with GAAP. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. Interim results for the three and nine months ended September 30, 2009 may not be indicative of results that will be realized for the full year ending December 31, 2009 since the sales of electric energy are seasonal. ACE has evaluated all subsequent events through October 29, 2009, the date of issuance of the consolidated financial statements to which these Notes relate. Consolidation of Variable Interest Entities ACE has power purchase agreements (PPAs) with a number of entities, including three contracts between unaffiliated non-utility generators (NUGs) and ACE. Due to a variable element in the pricing structure of the PPAs, ACE potentially assumes the variability in the operations of the plants operated by the NUGs and, therefore, has a variable interest in the entities. In accordance with the provisions of FASB guidance on the consolidation of variable interest entities (ASC 810), ACE continued, during the third quarter of 2009, to conduct its efforts to obtain information from these entities, but was unable to obtain sufficient information to conduct the analysis required under the guidance to determine whether these three entities were variable interest entities or if ACE was the primary beneficiary. As a result, ACE has applied the scope exemption from the guidance for enterprises that have conducted exhaustive efforts to obtain the necessary information, but have not been able to obtain such information. Net purchase activities under the PPAs for the three months ended September 30, 2009 and 2008 were approximately $70 million and $93 million, respectively, of which approximately $66 million and $82 million, respectively, consisted of power purchases under the PPAs. Net power purchase activities with the counterparties under the PPAs for the nine months ended September 30, 2009 and 2008 were approximately $214 million and $265 million, respectively, of which approximately $197 million and $233 million, respectively, consisted of power purchases under the PPAs. ACE does not have direct exposure to loss under the PPAs because ACE is able to recover its costs from its customers through regulated rates.   Taxes Assessed by a Governmental Authority on Revenue-Producing Transactions Taxes included in ACE’s gross revenues were $6 million and $7 million for the three months ended September 30, 2009 and 2008, respectively, and $17 million for each of the nine months ended September 30, 2009 and 2008. Reclassifications and Adjustments Certain prior period amounts have been reclassified in order to conform to current period presentation. The following adjustments have been recorded which are not considered material either individually or in the aggregate: During the first and second quarters of 2009, ACE recorded adjustments to correct certain income tax errors related to prior periods. These adjustments resulted in a decrease in income tax expense of $1 million for the nine months ended September 30, 2009. In the third quarter of 2008, PHI identified an error in the accounting for certain of its restricted stock awards under the Long-Term Incentive Plan which resulted in an understatement of ACE’s stock-based compensation expense in 2006 and 2007. This error was corrected in the third quarter of 2008, resulting in an increase in ACE’s Other Operation and Maintenance expenses for the three and nine months ended September 30, 2008 of $1 million. </div> false false No definition available. No authoritative reference available. false false 1 12 false UnKnown UnKnown UnKnown false true