TABLE OF CONTENTS

(1)  Organization

     Pepco Holdings, Inc. (Pepco Holdings or the Company), formerly New RC,
Inc., was incorporated under the laws of Delaware on February 9, 2001, as a
wholly owned subsidiary of Potomac Electric Power Company (Pepco). At
June 30, 2002, Pepco Holdings had 100 shares of common stock issued and
outstanding (with a par value of $.01) for proceeds of $200, or $2.00 per
share. Other than the treasury lock transactions that Pepco Holdings has
entered into, which are discussed in Note (2) Hedge Transactions, herein,
Pepco Holdings had not commenced operations as of June 30, 2002 and therefore
it had no operating results.

     On February 12, 2001, Pepco and Conectiv announced that each company's
board of directors approved an agreement for a strategic transaction whereby
Pepco would acquire Conectiv for a combination of cash and stock valued at
approximately $2.2 billion. After the closing of the acquisition of Conectiv
on August 1, 2002, Pepco and Conectiv became subsidiaries of Pepco Holdings.
The combination will be accounted for as a purchase of Conectiv by Pepco in
the third quarter of 2002. As of August 1, 2002, Pepco Holdings is a holding
company registered under the Public Utility Holding Company Act of 1935, as
amended.

(2)  Hedge Transactions and New Accounting Standards

     In June 2002, Pepco Holdings entered into several treasury lock
transactions with a cumulative notional amount of $1.25 billion, in
anticipation of the issuance of several series of fixed rate debt commencing
in July 2002. These treasury lock transactions, which have been designated
as qualified cash flow hedges in accordance with the provisions of Statement
of Financial Accounting Standards No. 133 entitled "Accounting for Derivative
Instruments and Hedging Activities," are intended to offset the changes in
future cash flows attributable to fluctuations in interest rates.

     The fair value of the treasury locks resulted in a pre-tax loss of $10.4
million at June 30, 2002 ($6.2 million after-tax). The after-tax amount is
reported as a component of accumulated other comprehensive loss in the
shareholders' equity section of Pepco Holdings' consolidated balance sheets
and the pre-tax amount is recorded as a liability. Upon issuance of the debt
the net gain or loss on the settlement of the treasury lock transactions will
be removed from accumulated other comprehensive loss and amortized on Pepco
Holdings' consolidated statements of earnings and retained income over the
life of the related debt. As discussed in Note (4) Subsequent Event, herein,
the debt was not issued in July 2002. Management anticipates it will be
issued at a later date.

     In 2002, a pronouncement was issued by the Emerging Issues Task Force
entitled EITF Issue No. 02-3 (EITF 02-3) "Accounting for Contracts Involved
in Energy Trading and Risk Management Activities." EITF 02-3 addresses the
presentation of revenue and expense associated with "energy trading book"
contracts on a gross vs. net basis. Previously the EITF concluded that gross
presentation was acceptable, but with the issuance of EITF 02-3 and the
subsequent guidance provided by the EITF in June 2002, net presentation is
required. Two of Pepco Holdings' subsidiaries (after the consummation of the
merger transaction on August 1, 2002), Pepco Energy Services, Inc. and
Conectiv Energy Holding Company, enter into trading activities that are
subject to the provisions of this pronouncement and both historically have
classified these contracts on a gross basis. EITF 02-3 is required to be
implemented effective for the third quarter 2002 reporting cycle. Pepco
Holdings is in the process of completing its evaluation of the extent of its
subsidiaries revenue and expense reclassifications that will be required and
expects that the implementation of EITF 02-3, including the associated
reclassification of certain revenues and expenses, will not have an impact on
its overall financial position or net results of operations.

     On July 30, 2002, the Financial Accounting Standard Board issued SFAS
146, "Accounting for Costs Associated with Exit or Disposal Activities." The
standard requires companies to recognize costs associated with exit or
disposal costs when they are incurred rather than at the date of a commitment
to an exit or disposal plan. The primary effect of applying SFAS 146 will be
on the timing of recognition of costs associated with exit or disposal
activities. In many cases, those costs will be recognized as liabilities in
periods following a commitment to a plan, not at the date of the commitment.
SFAS 146 is to be applied prospectively to exit or disposal activities
initiated after December 31, 2002. Pepco Holdings is in the process of
assessing the provisions of SFAS 146 in order to determine its impact on its
financial position and results of operations.

(3)  Commitments and Contingencies

     Pepco Holdings' Board of Directors has declared a dividend on common
stock of $.16576079 per share payable September 30, 2002, to shareholders of
record on September 10, 2002.

(4)  Subsequent Event

     Due to unfavorable market conditions that existed at July 31, 2002,
Pepco Holdings did not proceed with the issuance of its series of fixed rate
debt that were hedged by the treasury lock transactions. However, Pepco
Holdings will continue to monitor market conditions and will complete the
issuance at a later date. If the offering is not completed in a reasonable
period, generally within 60 days, the treasury locks would be declassified as
a hedge and therefore the accumulated other comprehensive loss or gain would
be recognized immediately on the Company's statements of earnings and
retained income. The fair value of the treasury locks was a $54.3 million
loss position at July 31, 2002 ($32.4 million after-tax).

             * * * * * * * * * * * * * * * * * * * * * * * * *

     This Quarterly Report on Form 10-Q will automatically be incorporated by
reference in the Prospectus constituting part of Pepco Holdings, Inc.'s
Registration Statements on Form S-3 (Number 333-89938) and on Form S-8
(Numbers 333-96673, 333-96675, and 333-96687), filed under the Securities Act
of 1933.

                       Report of Independent Accountants

To the Board of Directors
and Shareholders of
Pepco Holdings, Inc.

We have reviewed the accompanying consolidated balance sheet of Pepco
Holdings, Inc. (the Company) as of June 30, 2002, and the related
consolidated statements of earnings and retained income for the three and six
month periods ended June 30, 2002 and the three month period ended June 30,
2001 and the period February 9, 2001 (inception) through June 30, 2001 and
the consolidated statement of cash flows for the six month period ended
June 30, 2002 and the period February 9, 2001 (inception) through June 30,
2001. These financial statements are the responsibility of the Company's
management.

We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with auditing standards generally accepted in the
United States of America, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole. Accordingly, we
do not express such an opinion.

Based on our review, we are not aware of any material modifications that
should be made to the accompanying consolidated interim financial statements
for them to be in conformity with accounting principles generally accepted in
the United States of America.

We previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet as
of December 31, 2001, and the related consolidated statements of earnings and
retained income, and consolidated statement of cash flows for the period
February 9, 2001 (inception) through December 31, 2001 (not presented
herein), and in our report dated January 18, 2002, we expressed an
unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying consolidated balance
sheet at June 30, 2002, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.

PricewaterhouseCoopers LLP
August 9, 2002

                                                                      Exhibit 15

August 9, 2002

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC  20549

Commissioners:

We are aware that our report dated August 9, 2002 on our review of interim
financial information of Pepco Holdings, Inc. (the "Company") as of and for
the period ended June 30, 2002 and included in the Company's quarterly report
on Form 10-Q for the quarter then ended is incorporated by reference in the
Prospectuses constituting parts of the Registration Statements on Form S-8
(Numbers 333-96673, 333-96675, and 333-96687) respectively, and on Form S-3
(Numbers 333-89938).

Very truly yours,

PricewaterhouseCoopers LLP
Washington, DC