QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended September 30, 2003

Commission
File Number

Name of Registrant, State of Incorporation, Address of Principal Executive Offices,
    and Telephone Number    

I.R.S. Employer Identification Number

001-31403

PEPCO HOLDINGS, INC.
("Pepco Holdings," a Delaware
  corporation)
701 Ninth Street, N.W.
Washington, D.C. 20068
Telephone: (202)872-2000

52-2297449

001-01072

POTOMAC ELECTRIC POWER COMPANY
("Pepco," a District of
  Columbia and Virginia
  corporation)
701 Ninth Street, N.W.
Washington, D.C. 20068
Telephone: (202)872-2000

53-0127880

001-13895

CONECTIV
("Conectiv," a Delaware
  corporation)
800 King Street, P.O. Box 231
Wilmington, Delaware 19899
Telephone: (202)872-2000

51-0377417

001-01405

DELMARVA POWER & LIGHT COMPANY
("DPL," a Delaware and
  Virginia corporation)
800 King Street, P.O. Box 231
Wilmington, Delaware 19899
Telephone: (202)872-2000

51-0084283

001-03559

ATLANTIC CITY ELECTRIC COMPANY
("ACE," a New Jersey
  corporation)
800 King Street, P.O. Box 231
Wilmington, Delaware 19899
Telephone: (202)872-2000

21-0398280

333-59558

ATLANTIC CITY ELECTRIC
  TRANSITION FUNDING LLC
("ACE Funding," a New Jersey
  limited liability company)
P.O. Box 15597
Wilmington, Delaware 19850
Telephone: (202)872-2000

51-0408521

Continued

Securities registered pursuant to Section 12(b) of the Act:

Registrant

Title of Each Class

Name of Each Exchange on Which Registered  

Pepco Holdings

Common Stock, $.01 par value

   New York Stock
   Exchange

Pepco

Guarantee by Pepco of the 7-3/8% Trust Originated Preferred Securities issued by Potomac Electric Power Company Trust I

   New York Stock    Exchange

DPL

Guarantee by DPL of the 8.125% Cumulative Trust Preferred Capital Securities of Delaware Power Financing I

   New York Stock
   Exchange

ACE

Guarantee by ACE of the 7-3/8% Cumulative Quarterly Income Preferred Securities, issued by Atlantic Capital II

   New York Stock    Exchange

Securities registered pursuant to Section 12(g) of the Act:

Pepco

Serial Preferred Stock, $50 par value

     Indicate by check mark whether each of the registrants (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X . No    .

     Indicate by check mark whether Pepco Holdings is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes   X  .    No      .

     Pepco, Conectiv, DPL, ACE, and ACE Funding are not accelerated filers.

     Conectiv, DPL, ACE and ACE Funding meet the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and are therefore filing this Form 10-Q with reduced disclosure format specified in General Instruction H(2) of Form 10-Q.

Registrant

Number of Shares of Common Stock of the Registrant Outstanding at September 30, 2003

Pepco Holdings

171,383,998 ($.01 par value)

Pepco

100 ($.01 par value) (a)

Conectiv

100 ($.01 par value) (a)

DPL

1,000 ($2.25 par value) (b)

ACE

18,320,937 ($3 par value)(b)

ACE Funding

None (c)

(a)

As of August 1, 2002, all voting and non-voting common equity is owned
  by Pepco Holdings.

(b)

All voting and non-voting common equity is owned by Conectiv.

(c)

All voting and non-voting common equity is owned by ACE.

     THIS COMBINED FORM 10-Q IS SEPARATELY FILED BY PEPCO HOLDINGS, PEPCO, CONECTIV, DPL, ACE, AND ACE FUNDING. INFORMATION CONTAINED HEREIN RELATING TO ANY INDIVIDUAL REGISTRANT IS FILED BY SUCH REGISTRANT ON ITS OWN BEHALF. EACH REGISTRANT MAKES NO REPRESENTATION AS TO INFORMATION RELATING TO THE OTHER REGISTRANTS.

TABLE OF CONTENTS

Page

PART I

FINANCIAL INFORMATION

  Item 1.

-

Financial Statements

1

  Item 2.

-

Management's Discussion and Analysis of
   Financial Condition and Results of
   Operations

97

  Item 3.

-

Quantitative and Qualitative Disclosures
   About Market Risk

170

  Item 4.

-

Controls and Procedures

170

PART II

OTHER INFORMATION

  Item 1.

-

Legal Proceedings

173

  Item 2.

-

Changes in Securities and Use of Proceeds

176

  Item 3.

-

Defaults Upon Senior Securities

176

  Item 4.

-

Submission of Matters to a Vote of Security Holders

176

  Item 5.

-

Other Information

176

  Item 6.

-

Exhibits and Reports on Form 8-K

177

  Signatures

204

  Principal Executive Officer and Principal Financial Officer Certifications
     (Exhibit 31)

185

TABLE OF CONTENTS - EXHIBITS

Exh. No.

Registrant(s)

Description of Exhibit

Page

12.1

PHI

Statements Re: Computation of Ratios

179

12.2

Pepco

Statements Re: Computation of Ratios

180

12.3

Conectiv

Statements Re: Computation of Ratios

181

12.4

DPL

Statements Re: Computation of Ratios

182

12.5

ACE

Statements Re: Computation of Ratios

183

15

PHI

Independent Accountants' Awareness Letter

184

31.1

PHI

Rule 13a-14(a)/15d-14(a) Certificate of Chief Executive Officer

185

31.2

PHI

Rule 13a-14(a)/15d-14(a) Certificate of Chief Financial Officer

186

31.3

Pepco

Rule 13a-14(a)/15d-14(a) Certificate of Chief Executive Officer

187

31.4

Pepco

Rule 13a-14(a)/15d-14(a) Certificate of Chief Financial Officer

188

31.5

Conectiv

Rule 13a-14(a)/15d-14(a) Certificate of Chief Executive Officer

189

31.6

Conectiv

Rule 13a-14(a)/15d-14(a) Certificate of Chief Financial Officer

190

31.7

DPL

Rule 13a-14(a)/15d-14(a) Certificate of Chief Executive Officer

191

31.8

DPL

Rule 13a-14(a)/15d-14(a) Certificate of Chief Financial Officer

192

31.9

ACE

Rule 13a-14(a)/15d-14(a) Certificate of Chief Executive Officer

193

31.10

ACE

Rule 13a-14(a)/15d-14(a) Certificate of Chief Financial Officer

194

31.11

ACEF

Rule 13a-14(a)/15d-14(a) Certificate of Chief Executive Officer

195

31.12

ACEF

Rule 13a-14(a)/15d-14(a) Certificate of Chief Financial Officer

196

32.1

PHI

Certificate of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350

197

32.2

Pepco

Certificate of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350

198

32.3

Conectiv

Certificate of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350

199

32.4

DPL

Certificate of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350

200

32.5

ACE

Certificate of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350

201

32.6

ACEF

Certificate of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350

202

PART I    FINANCIAL INFORMATION

Item 1.   FINANCIAL STATEMENTS

     Listed below is a table that sets forth, for each registrant, the page number where the information is contained herein.

                      Registrants                  

Item

Pepco
Holdings

Pepco

Conectiv

DPL

ACE

ACE
Funding

Report of Independent
  Accountants

3

N/A

N/A

N/A

N/A

N/A

Consolidated Statements
  of Earnings

4

34

54

72

82

93

Consolidated Statements
  of Comprehensive
  Earnings

5

35

55

N/A

N/A

N/A

Consolidated Balance
  Sheets

6

36

56

73

83

94

Consolidated Statements
  of Cash Flows

8

38

58

75

85

N/A

Notes to Consolidated
  Financial Statements

9

39

59

76

86

95

THIS PAGE INTENTIONALLY LEFT BLANK.

Report of Independent Accountants

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

We have reviewed the accompanying consolidated balance sheet of Pepco Holdings, Inc. and its subsidiaries (the Company) as of September 30, 2003, and the related consolidated statements of earnings and consolidated statements of comprehensive earnings for each of the three-month and nine-month periods ended September 30, 2003 and 2002 and the consolidated statement of cash flows for the nine-month periods ended September 30, 2003 and 2002. These interim 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 and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, 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, 2002, and the related consolidated statements of earnings, and the consolidated statements of comprehensive earnings, and consolidated statements of cash flows for the year then ended (not presented herein), and in our report dated February 10, 2003, except as to the twelfth and thirteenth paragraphs of Note 14 for which the date is March 4, 2003, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of September 30, 2003, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

/s/ PricewaterhouseCoopers LLP
Washington, DC
November 13, 2003

PEPCO HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(Unaudited)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2003

2002

2003

2002

(Millions of Dollars)

Net income

$157.3 

$115.2 

$175.5 

$184.1 

Other comprehensive earnings (loss), net of taxes

  Unrealized (losses) gains on derivative
    instruments:

    Unrealized holding (losses) gains
      arising during period

(33.9)

2.3 

(43.3)

4.5 

    Less: reclassification adjustment for
           (losses) gains included in net earnings

(4.3)

0.1 

(7.2)

(0.1)

    Net unrealized (losses) gains on
      derivative instruments

(29.6)

2.2 

(36.1)

4.6 

  Realized gain (loss) on Treasury lock

2.9 

(94.9)

8.8 

(105.3)

  Unrealized gain (loss) on interest rate swap
    agreements designated as cash flow hedges:

    Unrealized holding gains (losses) arising
      during period

1.5 

(12.0)

(4.4)

(11.1)

    Less: reclassification adjustment for loss
           included in net earnings

(2.0)

(0.7)

(3.3)

(1.0)

    Net unrealized gain (loss) on interest rate swaps

3.5 

(11.3)

(1.1)

(10.1)

  Unrealized gains on marketable securities:

    Unrealized holding gains arising during period

4.0 

0.4 

5.7 

4.3 

    Less: reclassification adjustment for gains
           included in net earnings

0.6 

0.2 

0.4 

- 

    Net unrealized gains on marketable securities

3.4 

0.2 

5.3 

4.3 

  Other comprehensive losses, before tax

(19.8)

(103.8)

(23.1)

(106.5)

  Income tax benefit

(8.1)

(41.4)

(7.4)

(43.1)

    Other comprehensive losses, net of tax

(11.7)

(62.4)

(15.7)

(63.4)

Comprehensive earnings

$145.6 

$ 52.8 

$159.8 

$120.7 

The accompanying Notes are an integral part of these Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PEPCO HOLDINGS, INC.

     For additional information, other than the information disclosed in the Notes to Consolidated Financial Statements section herein, refer to Item 8. Financial Statements and Supplementary Data of the Company's 2002 Form 10-K.

(1)  ORGANIZATION

     Pepco Holdings, Inc. (Pepco Holdings or the Company), a registered holding company under the Public Utility Holding Company Act of 1935 (PUHCA), was incorporated under the laws of Delaware on February 9, 2001 for the purpose of effecting Potomac Electric Power Company's (Pepco) acquisition of Conectiv. In accordance with the terms of the merger agreement, upon the consummation of the merger on August 1, 2002, Pepco and Conectiv became wholly owned subsidiaries of Pepco Holdings. Additionally, Pepco, through a series of transactions, transferred its ownership interests in its pre-merger subsidiaries Potomac Capital Investment Corporation (PCI) and Pepco Energy Services, Inc. (Pepco Energy Services) to Pepco Holdings and PCI transferred its ownership interest in its pre-merger subsidiary Pepco Communications, Inc. (Pepcom) to Pepco Holdings. These transactions resulted in PCI, Pepco Energy Services, and Pepcom becoming wholly owned subsidia ries of Pepco Holdings. Additionally, PUHCA imposes certain restrictions on the operations of registered holding companies and their subsidiaries; therefore, Pepco Holdings has a subsidiary service company, named PHI Service Company, that provides a variety of support services to Pepco Holdings and its subsidiaries. The costs of the service company are directly assigned or allocated to Pepco Holdings and its subsidiaries based on prescribed allocation factors listed in the service agreement filed with, and approved by, the Securities and Exchange Commission (SEC). Pepco Holdings manages its operations as described below.

Power Delivery

     The largest component of Pepco Holdings' business is power delivery, which is conducted through its subsidiaries Pepco, Delmarva Power & Light Company (DPL), and Atlantic City Electric Company (ACE). Pepco, DPL and ACE are all regulated public utilities in the jurisdictions in which they serve customers. The operations of DPL and ACE are collectively referred to herein as "Conectiv Power Delivery."

Pepco

     Pepco is engaged in the transmission and distribution of electricity in Washington, D.C. and major portions of Prince George's and Montgomery Counties in suburban Maryland. Under settlements approved by the Maryland Public Service Commission and the District of Columbia Public Service Commission in connection with the divestiture of its generation assets in 2000, Pepco is required to provide default electricity supply to customers who do not choose another supplier (referred to as "standard offer service" or "SOS") at specified rates to customers in Maryland until July 2004 and to customers in Washington, D.C. until February 2005. This supply is purchased from an affiliate of Mirant Corporation ("Mirant"). On July 14, 2003, Mirant and most of its subsidiaries filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. For a discussion of Pepco's relationship with Mirant, see Note (4) "Commitments and Continge ncies" herein. For the twelve months ended September 30, 2003, Pepco delivered 5.7 million megawatt hours to SOS customers in the District of Columbia and 10.3 million megawatt hours to SOS customers in Maryland. For this period total deliveries were 11.0 million megawatt hours in the District of Columbia and 15.0 million megawatt hours in Maryland.

Conectiv Power Delivery

     DPL is engaged in the transmission and distribution of electricity in Delaware and portions of Maryland and Virginia and provides gas distribution service in northern Delaware. Under settlements approved by the Maryland Public Service Commission and the Delaware Public Service Commission, DPL is required to provide standard offer electricity service at specified rates to residential customers in Maryland until July 2004 and to non-residential customers in Maryland until May 2004 and to provide default electricity service at specified rates to customers in Delaware until May 2006. It is currently expected that DPL will also provide default electric service at specified rates to customers in Virginia until July 2007. However, the Virginia State Corporation Commission could terminate the obligation for some or all classes of customers sooner if it finds that an effectively competitive market exists. Conectiv Energy (described in the "Competitiv e Energy" section) supplies all of DPL's standard offer and default service load requirements under a supply agreement that ends May 31, 2006. The terms of the supply agreement are structured to coincide with DPL's load requirements under each of its regulatory settlements. Conectiv Energy's resources for supplying DPL's standard offer and default service load include electricity generated by Conectiv Energy's plants and electricity purchased under long-term agreements or in the current market. DPL purchases gas supplies for its customers from marketers and producers in the current market and under short-term and long-term agreements.

     ACE is engaged in the generation, transmission and distribution of electricity in southern New Jersey. Default service obligations, known as Basic Generation Service (BGS) were supplied for the period August 1, 2002 through July 31, 2003 by the following sources. Approximately 80% of the ACE's BGS load was supplied by the winning bidders of the BGS auction. The remaining 20% of ACE's BGS load was supplied utilizing ACE's to be divested fossil fired units (prior to divestiture of the units) and ACE's NUG contracts, to the extent such electric generating plants were not sufficient to satisfy such load. Any excess energy available from these sources was sold to the market to offset the BGS supply costs. Effective August 1, 2003, 100% of the BGS load is supplied by the winning bidders of the 2003 BGS auction with 100% of the capacity and energy available from the NUG contracts sold to the market to offset the NUG contract costs. ACE is providing 500 MW of capacity credits to the winning bidders of the 2003 BGS auction. The energy associated with these capacity credits is sold to the market with the revenues used to offset the operating costs of the fossil units. In January 2003, ACE terminated its competitive bidding process to sell these generation units.

     ACE formed Atlantic City Electric Transition Funding LLC (ACE Funding) during 2001. ACE Transition Funding is a wholly owned subsidiary of ACE. ACE Funding was organized for the sole purpose of purchasing and owning Bondable Transition Property (BTP), issuing transition bonds (Bonds) to fund the purchasing of BTP, pledging its interest in BTP and other collateral to the Trustee to collateralize the Bonds, and to perform activities that are necessary, suitable or convenient to accomplish these purposes.

Competitive Energy

     The competitive energy component of the Company's business is conducted through subsidiaries of Conectiv Energy Holding Company (collectively referred to herein as "Conectiv Energy") and Pepco Energy Services.

Conectiv Energy

     Conectiv Energy supplies power to DPL and ACE and provides wholesale power, capacity, and ancillary services (generally reserves and reliability services) to the Pennsylvania/New Jersey/Maryland (PJM) power pool. Conectiv Energy's generation asset strategy focuses on mid-merit plants with operating flexibility and multi-fuel capability that can quickly change their output level on an economic basis. Mid-merit plants generally are operated during times when demand for electricity rises and prices are higher.