Pepco receives small rate hike in Maryland

Maryland regulators rejected the bulk of a rate increase sought by Pepco on Friday, three weeks after a storm knocked out power to hundreds of thousands and led to widespread outrage — again — over the length of time the power company took to restore electricity to its customers.

The state’s 530,000 Pepco residential customers will face an average increase of $2 per month. But for Pepco, the ruling marked the second time in seven months that state officials slapped the utility for chronic poor performance, saying additional revenue to pay for overdue improvements and to compensate stockholders would have to come from somewhere other than ratepayers.

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D.C. area thunderstorms knock out power across region: Homes and businesses across Washington, D.C., Maryland and Virginia lost power June 29 as one of the most powerful and punishing storms in months swept across the region.

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Pepco could soon face additional financial woes. Regulators in the District have yet to rule on a similar rate-hike request, and under recently enacted legislation, Maryland could for the first time fine the company if it finds fault with Pepco’s response to the June 29 derecho storm.

The commission made its decision based on information from before the storm. But politically, the issues had become inseparable, with lawmakers all the way up to Gov. Martin O’Malley (D) feeling political heat in recent weeks to appear tough on Pepco and other state-regulated utilities.

Raquel Guillory, a spokeswoman for O’Malley, said the ruling by Maryland’s Public Service Commission would “send a message” that the state is holding the company responsible.

“The decision seems to represent the balance of two critically important realities,” Guillory said. “Pepco, along with its shareholders, must take responsibility for the company’s prior failings . . . and at the same time, you have to make sure they are able to invest in the infrastructure needed.”

A Washington Post investigation found that in 2010 Pepco ranked near the bottom nationally among electric companies in its ability to keep the power on and restore it after outages. Last year, the state levied what it called its largest fine ever on the utility, charging it $1 million for failing to trim trees and fix other problems that led to the frequent outages.

State Sen. Brian E. Frosh, a Montgomery County Democrat who lost power in his home for five days following last month’s storm, disagreed with O’Malley’s office. He said even a $2 increase, which goes into effect immediately, amounted to an illegitimate victory for Pepco.

“It’s unfair to ratepayers and sends a terrible message,” said Frosh, who made headlines recently by saying he would like to see state regulators fine Pepco and Baltimore Gas and Electric more than $100 million each for storm-related outages from last month.

“Any more money from ratepayers tells Pepco it can continue getting away with third-class service and get first-class compensation,” he said. “You have to provide reliable service, that’s Job 1, or shareholders shouldn’t benefit.”

Under the ruling, Pepco will annually collect $18.1 million of the $68 million it sought, which would have amounted to roughly $5.50 for the typical residential customer, according to the PSC. The rate increase was the first in three years.