“Our third quarter financial results reflect continued progress on executing our strategic plan, including our investments in Power Delivery infrastructure to improve system reliability and customer service. The gain on the early termination of certain cross-border energy leases also contributed to higher earnings,” said Joseph M. Rigby, Chairman, President and Chief Executive Officer. “Over the next five years, we expect to spend approximately $5.9 billion on investments aimed at improving system reliability, enhancing customer service, and installing advanced technologies. Investments such as these are important components of our strategy to provide value to our customers and investors.”
Rigby continued by noting that it is critically important to the Company that the regulators ensure timely cost recovery and the opportunity to earn reasonable rates of return on Pepco Holdings’ extensive investments. “As we complete our current round of distribution rate cases this year, we recognize that an additional cycle of rate cases across the jurisdictions we serve is necessary to help keep the rate of cost recovery in line with our rate of investment. Reducing regulatory lag will continue to be a significant focus going forward.”
The decrease in adjusted net income from continuing operations (Non-GAAP) for the nine months ended September 30, 2012, as compared to the same period in the prior year, was driven by lower Pepco Energy Services earnings due to the wind-down of the retail energy supply business and lower energy services project activity, partially offset by higher electric transmission and distribution revenue (primarily due to higher rates driven by increased investment).
Non-GAAP Financial InformationManagement believes the adjusted net income from continuing operations and related per share data are representative of Pepco Holdings’ ongoing business operations. Management uses this information internally to evaluate Pepco Holdings’ period-over-period financial performance and, therefore, believes that this information is useful to investors. The presentation of adjusted net income from continuing operations and related per share data is intended to complement, and should not be considered as an alternative to, reported earnings and related per share data presented in accordance with accounting principles generally accepted in the United States (GAAP).