Pepco seeks rate hike in Maryland


A Pepco employee works on fixing a blown fuse on a power outage call in Rockville in this file photo. The company is seeking a rate increase that would hike the monthly bill of Maryland customers. (Matt McClain/The Washington Post)
December 4, 2013

Pepco asked Maryland regulators Wednesday for a $43.3 million rate increase that would boost the average electric bill by $4.80 a month for residential customers in Montgomery and Prince George’s counties.

Company officials said the increase — the third requested in two years — is needed to cover the cost of upgrading its infrastructure and reliability.

The power company spent $238.5 million from October 2012 to September 2013 to improve its ability to distribute electricity, and it plans to spend an additional $234 million in 2014, according to an application filed Wednesday with the state Public Service Commission.

Since 2010, officials said, the company has trimmed trees along 5,600 miles of right of way, upgraded 860 miles of underground lines and strengthened 130 feeder lines in Maryland, where the utility has 534,000 customers.

Donna Cooper, Pepco region president, said that the increase is also justified by improved performance and that power outages have declined in both frequency and duration by nearly 40 percent since 2010.

“We are committed to meeting as well as exceeding our customers’ expectations,” Cooper said in an afternoon conference call with reporters.

Pepco is also asking for an increase in the allowable return on investment to shareholders, from 9.36 percent to 10.25 percent.

The company has a request for $44 million rate increase pending in the District, where it has 257,000 customers.

Pepco has a dismal reputation for service. A 2010 Washington Post analysis found that the company ranked near the bottom nationally among electrical utilities in maintaining service and restoring service after outages. In 2011, Maryland regulators fined Pepco $1 million — the largest penalty ever levied by the PSC against the utility — for failing to address problems that led to prolonged outages after storms and even on days with fair weather.

Maryland officials reacted warily to news of the latest rate request. State Sen. Brian E. Frosh (D-Montgomery), an outspoken critic of the company’s record, said that he had yet to examine the latest filing but that Pepco’s claims of improved reliability are largely untested.

“They are certainly not visible, and the weather has been cooperative. I’m not sure we can say the service is any better,” said Frosh, a candidate for state attorney general in the June 2014 Democratic primary. “I’m really skeptical that they ought to be awarded an increase.”

In the past two rate cases, Maryland regulators granted less than half of what the company sought. In July, the PSC authorized $27.9 million of a $60.8 million increase requested by Pepco, concluding that evidence of improved reliability and infrastructure did not support the full amount. But the commission also approved a monthly surcharge — averaging 6 cents a month for residential customers when it takes effect next year — to improve reliability.

In July 2012, regulators approved just $18 million of a $68 million request, denying, among other items, recovery of costs related to tree trimming and expenses incurred in defending itself in a PSC reliability investigation.

Montgomery County Council member Roger Berliner (D-Potomac-Bethesda) said in a statement Wednesday that he expects the county to participate aggressively in the rate case and to make sure that Pepco does not improperly pass costs on to ratepayers.

“In my view, its overall performance has not risen to the level that justifies an increase in its return on equity. It is still a utility that ranks in the bottom half of all utilities in terms of performance,” Berliner said. “That is not good enough for the residents of Montgomery County, and it should not be good enough for the Commission.”

Patrick Lacefield, a spokesman for County Executive Isiah Leggett (D), said the office is reviewing the company filing.

Bill Turque, who covers Montgomery County government and politics, has spent more than thirty years as a reporter and editor for The Washington Post, Newsweek, the Dallas Times Herald and The Kansas City Star.
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