Atlantic Energy Assigned 'BBB+' BLR by S&P.

NEW YORK--(BUSINESS WIRE)--S&P CreditWire 9/22/97--Standard & Poor's today assigned its triple-`B'-plus bank loan rating (BLR) to Atlantic Energy Inc.'s $40 million unsecured revolving credit agreement due Sep. 27, 1998. This rating reflects the risk profile that would apply to all senior unsecured creditors of the company.

The credit quality of Atlantic Energy, an electric utility holding company, is derived from its primary cash generating subsidiary, Atlantic City Electric Co. (single-`A'-minus senior secured debt), which comprises about 95% of consolidated assets. Diversified operations include thermal cooling and heating systems for business and institutional users, cogeneration projects, leveraged leases, and other passive investments. The credit quality of Atlantic Electric reflects an average business position, and financial measures that are under significant pressure from above-market power purchase obligations. This pressure should be relieved somewhat by savings generated by the pending stock-for-stock merger of Atlantic Electric with Delmarva Power & Light Co., a utility with a stronger credit profile. The two utilities, which will become operating subsidiaries of a new holding company called Conectiv, indicate that consolidated merger savings would total $500 million over 10 years.

Atlantic Electric's average business position is supported by asset diversity, a small industrial sector, a manageable construction program, and a dramatically strengthening service area economy centered around Atlantic City. These attributes are partially offset by high rates, excess generating capacity, above-market power purchase requirements, and nuclear exposure.

The New Jersey Board of Public Utilities (BPU) has approved a favorable settlement regarding recovery of costs incurred with respect to the extended outage at the two-unit Salem nuclear station. The BPU has also made supportive recommendations to the governor and the state legislature regarding electric industry restructuring in New Jersey. In addition, the company settled its suit against Public Service Electric & Gas Co., the operator of Salem, limiting operation and maintenance expense exposure during 1997 if the plants perform poorly. Unit 2 returned to service in August 1997, and Unit 1 is expected to do so in the fourth quarter. The units represent only 6% of total assets. Cash flow measures are expected to remain pressured for the ratings, with adjusted funds from operations interest coverage hovering around 3 times (x) and adjusted debt to total capitalization remaining in the upper-50% level.

OUTLOOK (Atlantic City Electric Co.): STABLE

The stable credit trend is a function of the pending merger with Delmarva Power, which could help to shore up credit protection measures. It also reflects the reasonable settlements regarding replacement power costs and operating and maintenance expenses related to the restart of the Salem plants. In addition, industry restructuring legislation that is supportive of the state's utilities is expected to be adopted in early 1998. ---CreditWire

CONTACT: Richard W. Cortright, Jr., 212/208-1657

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