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&lt;p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;&lt;b&gt;(6)&amp;#xA0;&lt;u&gt;GOODWILL&lt;/u&gt;&lt;/b&gt;&lt;/font&gt;&lt;/p&gt;
&lt;p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;PHI&amp;#x2019;s goodwill
balance of $1.4 billion was unchanged during the three and nine
months ended September&amp;#xA0;30, 2010. Substantially all of
PHI&amp;#x2019;s $1.4 billion goodwill balance was generated by
Pepco&amp;#x2019;s acquisition of Conectiv in 2002 and is allocated
entirely to the Power Delivery reporting unit based on the
aggregation of its regulated public utility company components for
purposes of assessing impairment under FASB guidance on goodwill
and other intangibles (ASC 350).&lt;/font&gt;&lt;/p&gt;
&lt;p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;PHI&amp;#x2019;s annual
impairment tests as of July&amp;#xA0;1, 2009 and November&amp;#xA0;1, 2009
indicated that goodwill was not impaired. As of September&amp;#xA0;30,
2010, after review of its significant assumptions in the goodwill
impairment analysis, PHI concluded that there were no events
requiring it to perform an interim goodwill impairment test.
Although PHI&amp;#x2019;s market capitalization was below book value at
September&amp;#xA0;30, 2010, PHI&amp;#x2019;s market capitalization has
improved compared to earlier periods when it performed interim
impairment tests. PHI performed its previous annual goodwill
impairment tests as of November&amp;#xA0;1, 2009 and July&amp;#xA0;1, 2009,
and an interim impairment test as of March&amp;#xA0;31, 2009 when its
market capitalization was further below book value than at
September&amp;#xA0;30, 2010, and concluded that its goodwill was not
impaired at those earlier dates. PHI will continue to closely
monitor for indicators of goodwill impairment, including the
sustained period of time that PHI&amp;#x2019;s stock price has been
below its book value.&lt;/font&gt;&lt;/p&gt;
&lt;p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;A roll forward of
PHI&amp;#x2019;s goodwill balance is set forth below in millions of
dollars:&lt;/font&gt;&lt;/p&gt;
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&amp;#xA0;&lt;/p&gt;
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&lt;td valign="top"&gt;
&lt;p style="TEXT-INDENT: -1em; MARGIN-LEFT: 1em"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;Balance,&amp;#xA0;December 31,
2008&lt;/font&gt;&lt;/p&gt;
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&lt;td valign="bottom"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;$&lt;/font&gt;&lt;/td&gt;
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&lt;p style="TEXT-INDENT: -1em; MARGIN-LEFT: 1em"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;Less: Impairment charge
associated with the wind-down of Pepco Energy Services retail
energy business&lt;/font&gt;&lt;/p&gt;
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&lt;td valign="bottom" align="right"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;(4&lt;/font&gt;&lt;/td&gt;
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&lt;p style="TEXT-INDENT: -1em; MARGIN-LEFT: 1em"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;Balance, December&amp;#xA0;31,
2009&lt;/font&gt;&lt;/p&gt;
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&lt;td valign="bottom" align="right"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;1,407&lt;/font&gt;&lt;/td&gt;
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&lt;p style="TEXT-INDENT: -1em; MARGIN-LEFT: 1em"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;Less:
Adjustments&lt;/font&gt;&lt;/p&gt;
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&amp;#xA0;&lt;/td&gt;
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&lt;td valign="top"&gt;
&lt;p style="TEXT-INDENT: -1em; MARGIN-LEFT: 1em"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;Balance, September&amp;#xA0;30,
2010&lt;/font&gt;&lt;/p&gt;
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&amp;#xA0;&lt;/td&gt;
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&amp;#xA0;&lt;/td&gt;
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&lt;p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;&lt;b&gt;(6)
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&lt;p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;DPL&amp;#x2019;s goodwill
balance of $8 million was unchanged during the three and nine month
periods ending September&amp;#xA0;30, 2010. All of DPL&amp;#x2019;s goodwill
was generated by its acquisition of Conowingo Power Company in
1995.&lt;/font&gt;&lt;/p&gt;
&lt;p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"&gt;&lt;font style="FONT-FAMILY: Times New Roman" size="2"&gt;DPL&amp;#x2019;s annual
impairment tests as of July&amp;#xA0;1, 2009 and November&amp;#xA0;1, 2009
indicated that goodwill was not impaired. As of September&amp;#xA0;30,
2010, after review of its significant assumptions in the goodwill
impairment analysis, DPL concluded that there were no events
requiring it to perform an interim goodwill impairment test. DPL
will continue to closely monitor for indicators of goodwill
impairment.&lt;/font&gt;&lt;/p&gt;
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