PEPCO HOLDINGS, INC. COMBINED EXECUTIVE RETIREMENT PLAN

PEPCO HOLDINGS, INC.

COMBINED EXECUTIVE RETIREMENT PLAN

The Pepco Holdings, Inc. Combined Executive Retirement Plan is intended to serve as an amended and restated nonqualified executive retirement plan which represents in one plan document, a combination and merger of three previously separate nonqualified executive retirement plans, specifically, the Pepco Holdings, Inc. Supplemental Executive Retirement Plan, the Pepco Holdings, Inc. Supplemental Benefit Plan and the Pepco Holdings, Inc. Executive Performance Supplemental Retirement Plan (hereinafter sometimes collectively referred to as the “Prior Plans”).

The separate benefit structure previously created under the former Pepco Holdings, Inc. Supplemental Executive Retirement Plan is referred to herein as the “Supplemental Executive Retirement Benefit Structure.”  The separate benefit structure previously created under the former Pepco Holdings, Inc. Supplemental Benefit Plan is referred to herein as the “Supplemental Benefit Structure.”  The separate benefit structure previously created under the former Pepco Holdings, Inc. Executive Performance Supplemental Retirement Plan is referred to herein as the “Executive Performance Supplemental Retirement Benefit Structure.”

The creation of this Plan as a mechanism to merge and centralize the administration of the Prior Plans and the benefit structures thereunder is not intended to constitute a material modification (as utilized in the context of Section 409A of the Internal Revenue Code of 1984, as amended) to any of the Prior Plans and this Plan shall be interpreted and administered in a manner which is consistent with such intent.

I.            Definitions

1.1            Applicable Executive Incentive Compensation Plan ¾ The principal annual incentive compensation plan in which the Participant participates.

1.2            Applicable Form of Benefit ¾ The type of life annuity which will be provided to a Participant receiving benefits under this Plan.  In the case of a Participant who is not married on the date benefits under this Plan commence, the Plan benefit shall be paid in the form of a single life annuity in which payments will be made to the Participant throughout the Participant’s lifetime and will terminate upon the Participant’s death.  In the case of a Participant who is married on the date benefits under this Plan commence, the Plan benefit shall be paid in an actuarially equivalent amount but in the form of a joint and survivor annuity in which payments will be made to the Participant throughout the Participant’s lifetime.  Upon the Participant’s death, should the Participant be survived by the spouse to whom the Participant was married on the date benefits under this Plan commenced, such surviving spouse shall be entitled to receive a reduced benefit throughout the surviving spouse’s lifetime equivalent to 50% of the benefit amount payable to the Participant during the Participant’s lifetime.  No alternative benefit options are provided under this Plan.

1.3            Applicable Defined Benefit Pension Plan ¾ The principal defined benefit pension plan of Pepco Holdings or one of its subsidiaries in which the Participant participates.  In the case of Participants who participate in the General Retirement Plan, such term shall also include participation in the Exempt Surviving Spouse Welfare Plan.

1.4            Committee ¾ The Compensation/Human Resources Committee of the Board of Directors of the Company.

1.5            Company ¾ Pepco Holdings, Inc. or its successor.

1.6            Eligible Executive ¾ An executive who is described in Section 2.1 of this Plan.

1.7            Exempt Surviving Spouse Welfare Plan ¾ The welfare plan by the same name which was sponsored by Pepco prior to the Merger.

1.8            General Retirement Plan ¾ The defined benefit pension plan by the same name which was sponsored by Pepco prior to the Merger.

1.9            Participant ¾ In the case of the Supplemental Executive Retirement Benefit Structure and the Executive Performance Supplemental Retirement Benefit Structure, an Eligible Executive who has satisfied the conditions described in Section 2.1 and to whom the provisions of Section 2.2 are not applicable.  In the case of the Supplemental Benefit Structure, an employee who has been so designated as described in Section 2.1.

1.10            Participation Agreement ¾ The separate agreement with a designated Participant which sets forth the constructive years of Benefit Service which will be credited to the Participant for purposes of determining benefits under the Supplemental Executive Retirement Benefit Structure.

1.11            Plan ¾ The Pepco Holdings, Inc. Combined Executive Retirement Plan.

Any term which is not defined in this section or any other section of the Plan will have the same meaning as that term has under the Applicable Defined Benefit Pension Plan.

2.1           Any employee of any Pepco Holdings subsidiary as designated by the Chief Executive Officer of the Company (the Chief Executive Officer to be designated by the Board) shall be eligible to participate in this Plan; however, no employee shall be eligible to participate in the Executive Performance Supplemental Retirement Benefit Structure of this Plan if the compensation used to determine benefits for such employee under the Applicable Defined Benefit Pension Plan in which the employee participates includes remuneration in excess of such employee’s basic rate of compensation.

2.2           An employee shall cease to be a Participant in this Plan and shall not be entitled to any benefits under the Executive Performance Supplemental Retirement Benefit Structure or the Supplemental Executive Retirement Benefit Structure if the employment of such employee is terminated for any reason, other than death, before the later of (i) the date the employee attains age 59, or (ii) the date the employee first attains either his Early Retirement Date or his Normal Retirement Date under the Applicable Defined Benefit Pension Plan.

2.3           In order to receive benefits under the Executive Performance Supplemental Retirement Benefit Structure of the Plan, a Participant (i) must not have incurred a forfeiture of benefits under Section 2.2 and (ii) must have been an Eligible Executive within the twelve (12) months immediately preceding his actual retirement under the Applicable Defined Benefit Pension Plan, and either (a) have held such position for at least a five year period, or (b) have attained age 65.

3.1(a)                       Supplemental Executive Retirement Benefit Structure .  This Section 3.1(a) defines the amount of retirement income which will be paid to a Participant (who terminated employment on or after attaining age 59 for any reason other than death) under the Supplemental Retirement Benefit Structure to supplement other pension benefits.  The amount of retirement benefits payable from this Plan under the Supplemental Retirement Benefit Structure in the Applicable Form of Benefit shall be the difference, if any, between (i) the amount of the benefits to which such Participant would be entitled under the provisions of the Applicable Defined Benefit Pension Plan, the provisions of the Executive Performance Supplemental Benefit Structure and the provisions of the Supplemental Benefit Structure (expressed in the Applicable Form of Benefit) had the number of such Participant’s years of service used to calculate the

benefits under such Plan and such Benefit Structures been increased by the additional years of constructive service set forth in such Participant’s Participation Agreement, and (ii) the amount of benefits, if any, to which such Participant is otherwise entitled under the Applicable Defined Benefit Pension Plan, the Executive Performance Supplemental Benefit Structure and the Supplemental Benefit Structure.  Notwithstanding the above, in no event will a Participant be granted constructive years of  service hereunder which would cause the combination of his actual years of service credited under the Applicable Defined Benefit Pension Plan and his constructive years of  service granted hereunder to exceed the lesser of (i) forty (40), or (ii) the number by which the Participant’s then current age exceeds twenty-five (25).  To the extent that a cost of living adjustment is made to the benefits payable under the Applicable Defined Benefit Pension Plan, a comparable and proportionate adjustment will be made to the benefits payable hereunder.

3.1(b)                      Executive Performance Supplemental Retirement Benefit Structure.  This Section 3.1(b) defines the amount of retirement income which will be paid to a Participant under the Executive Performance Supplemental Retirement Benefit Structure of this Plan to supplement other pension benefits.  The amount of retirement benefits payable under the Performance Supplemental Retirement Benefit Structure of this Plan in the Applicable Form of Benefit shall be the difference, if any, between (i) the aggregate amount of the benefits to which such Participant would be entitled under the provisions of the Applicable Defined Benefit Pension Plan, the provisions of the Supplemental Executive Retirement Benefit Structure and the provisions of the Supplemental Benefit Structure (expressed in the Applicable Form of Benefit) (a) had the amount of compensation used under the Applicable Defined Benefit Pension Plan to calculate benefits (expressed on an annual basis) been increased by the average of the three highest Awards made to such Participant (or such number of Awards actually made to such

Participant if less than three) under the Applicable Executive Incentive Compensation Plan (without regard to any deferral of receipt of an Award elected by such Participant) within the five consecutive years immediately preceding the Participant’s retirement under the Applicable Defined Benefit Pension Plan, and (b)(1) had the amount of the benefits under such Plan and such Benefit Structures not been otherwise reduced due to the limitations imposed by Section 415 of the Internal Revenue Code, (2) had any dollar limitation under the Internal Revenue Code on the amount of compensation that may be considered in determining benefits under such Plan and such Benefit Structures not been imposed, and (3) had the deferred compensation earned by such Participant which was excluded from the Participant’s compensation base used in determining retirement benefits under such Plan and such Benefit Structures been included in such compensation base, and (ii) the amount of benefits, if any, to which such Participant is otherwise entitled under the Applicable Defined Benefit Pension Plan, the Supplemental Executive Retirement Benefit Structure and the Supplemental Benefit Structure.  To the extent that a cost of living adjustment is made to benefits payable under the Applicable Defined Benefit Pension Plan, a comparable and proportional adjustment will be made to the benefits payable herein.

3.1(c)                       Supplemental Benefit Structure .  This Section 3.1(c) defines the amount of retirement income which will be paid to a Participant under the Supplemental Benefit Structure to supplement other pension benefits.  The amount of retirement benefits payable under the Supplemental Benefit Structure of this Plan in the Applicable Form of Benefit shall be the difference, if any, between (i) the amount of the benefits to which such Participant would be entitled under the provisions of the Applicable Defined Benefit Pension Plan and the Conectiv Supplemental Executive Retirement Plan, if applicable (expressed in the Applicable Form of

Benefit) (1) had the amount of the benefits under such plan not been otherwise reduced due to the limitations imposed by Section 415 of the Internal Revenue Code, (2) had any dollar limitation under the Internal Revenue Code on the amount of compensation that may be considered in determining benefits under such plan not been imposed, and (3) had the deferred compensation earned by such Participant which was excluded from the Participant’s compensation base used in determining retirement benefits under such plan been included in such compensation base, and (ii) the amount of benefits, if any, to which such Participant is otherwise entitled under the Applicable Defined Benefit Pension Plan.  To the extent that a cost of living adjustment is made to the benefits payable under the Applicable Defined Benefit Pension Plan, a comparable and proportionate adjustment will be made to the benefits payable hereunder.

A Participant’s rights to a benefit under the Supplemental Benefit Structure shall vest when the Participant otherwise would be vested under the terms and conditions of the Applicable Defined Benefit Pension Plan.

A Participant whose employment with the Company is terminated prior to the attainment of a vested retirement benefit under the Applicable Defined Benefit Pension Plan shall not be entitled to receive a benefit from the Supplemental Benefit Structure of this Plan.

For bookkeeping purposes only, the Company will establish and maintain a Supplemental Benefit Account for each Participant which reflects the Participant’s currently accrued benefit under the Supplemental Benefit Structure, expressed in the form of straight life annuity.

The Company shall furnish each Participant with an annual statement, as of December 31 of each year, showing the benefit under the Supplemental Benefit Struct