Pepco seeks 6 percent D.C. rate increase

Bill O'Leary/The Washington Post - A Pepco worker cuts a wire on a damaged utility pole after historic storm Sandy in October 2012.

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Pepco, the electricity supplier for the District and suburban Maryland, announced Friday that it is seeking a $52 million rate increase for its city customers, despite lingering questions about the utility’s performance in big storms.

The proposed 6 percent increase, which would require the approval of the D.C. Public Service Commission, would add $5.89 to the average monthly residential bill, increasing it to about $100, Pepco Region President Thomas H. Graham said.

He said the increase, which comes after a $24 million increase last year, would pay for continued efforts to boost reliability and customer service. Similar upgrades are responsible for a 17 percent reduction in outages in the past three years, he said.

“The real take-away here is our commitment to better meet expectations of our customers with regards to reliability, and we have exceeded those standards,” Graham said. “But it remains vitally important we continue to make investments in the system so our system will continue to improve.”

But the proposed increase unnerved some District leaders, who predicted a backlash from residents who still remember widespread outages in the summer during 100-degree heat.

Sandra Mattavous-Frye, the People’s Counsel who advocates for D.C. consumers, vowed she would fight the proposed hike “aggressively, zealously and with all the ardor” that she “can possibly mount.”

“The company seems to be relentless, and they just keep coming back and back,” said Mattavous-Frye, who noted that Pepco has won $72 million in rate hikes since 2006. “At some point, the commission will have to say no.”

The proposed increase would not affect Pepco customers in Maryland. In November, Pepco filed a separate $60 million rate hike request for Maryland, despite a $126 million profit in 2012.

If the request is approved by the Maryland Public Service Commission, the average residential monthly bill would go up by $7.13, or about 5 percent. The Maryland PSC rejected the bulk of a prior rate hike request in the summer, arguing that the utility offered inconsistent service.

The District’s PSC also has been trimming back Pepco’s requested increases, although Mattavous-Frye said it’s been more than 20 years since it rejected one outright.

Pepco submitted a request for a $42 million rate hike in 2011, but the commission agreed to only $24 million, adding about $2.60 to the average residential bill.

In recent years, Pepco has faced more scrutiny as it struggled with several widespread power outages, including after a February 2010 blizzard and the June derecho. A Washington Post investigation in 2010 found that Pepco ranked near the bottom nationally among electric companies in its ability to keep the power on and restore it after an outage.

At the time, Pepco officials estimated that the reliability upgrades would cost the average ratepayer about an extra $1 a month. But Pepco Vice President Bill Gausman said those estimates have increased as the utility boosted its maintenance, including trimming 846 miles of trees in the past 27 months.

Graham said Pepco also has a five-year, $1.47 billion budget for new transmission and distribution projects.

Some of the improvements appeared to pay off in October, when Pepco drew high marks for largely keeping the lights on during Hurricane Sandy. In addition to the overall 17 percent reduction in outages in 2010, Graham said there has been a 21 percent decrease in the length of District outages over that period.

But Mattavous-Frye said residents should take those statistics “with a grain of salt” because of the utility’s past record.

“To say, ‘We are better than we were at our worst,’ uhm, you should have never been that bad in the first place,” she said. “I don’t buy it. I am glad they haven’t gotten any worse, but I am not going to give them credit for not getting worse.”

The vigorous pace of tree trimming is a departure in the District, where regulators learned in 2011 that Pepco had failed to spend all of the money it had budgeted for tree trimming for most of the previous seven years, even as the utility cited trees as a main cause of its outages. At the 2011 hearing, D.C. regulators said Pepco had at times not spent several hundred thousands of dollars it allotted to trimming at the time the company presented its budget to regulators weighing rate increases.

In recent months, the utility has been under pressure from D.C. Council members and Mayor Vincent C. Gray (D) to take more dramatic steps to curb outages. Gray has convened a task force of District and Pepco officials to study the feasibility of burying more city power lines, which could cost up to $5 billion.

In November, Pepco officials said they would not seek a rate increase in the District until that task force completed its work. But Gausman said the utility is moving forward with its request because the task force is “taking longer than anticipated.”

And Graham cautioned that the proposed increase does not take into account any potential future costs associated with burying more power lines.

“This represents the investments we have made in the system so far to improve the reliability of the system,” said Graham, who is urging the PSC to rule on the request within nine months.

Mary Pat Flaherty contributed to this report.

 
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