The commission also denied a plan that would have allowed Pepco to create new “pre-payment” surchages for future system upgrades.
“Overall, the commission found that Pepco’s application lacked the evidence required to substantiate its request,” the PSC said in a statement. “The Commission considered instead its longer history of substandard performance.”
Because the storm hit after the commission had gone into deliberations on the rate hike, Pepco’s performance was prohibited by law from being factored into the decision.
The PSC said it was required to approve some form of rate hike to cover appropriate levels of infrastructure investment and to pay for the company to comply with new regulations designed to prevent accidental electrocutions.
The decision aligned more closely with consumer advocates’ groups than industry. The Office of People Counsel, for example, recommended that Pepco had a justified claim to an increase of just $13.6 million.
This was not the first time recently that the commission denied most of Pepco’s rate request. In 2006 and 2009, regulators rejected more than 70 percent of what Pepco wanted.
The commission also said Pepco officials were tone deaf when they failed to explain how much of the increase they were seeking was an attempt to make up for historic neglect — an accounting the commission wanted. Ignoring that request “makes us wonder if the Company heard us.”
Reactions across the Maryland suburbs, which have been hit hard by a series of protracted Pepco outages since the 2010 “Snowmageddon,” ran the spectrum Friday.
Opponents who pushed for the full rate-hike denial were tepid in their support.
“While we would have preferred no increase at all, we’re happy that the PSC at least did not give them the full amount,” said Tammy Bresnahan, a lobbyist for AARP Maryland.
Del. Tom Hucker (D-Montgomery) was less impressed. He, too, said the PSC should have denied the entire increase.
“They should have denied it out of hand. . . . It absolutely sends the wrong message to the public [that] they are proud they denied most of it.”
Montgomery County Council President Roger Berliner (D-Potomac-Bethesda), however, one of Pepco’s most outspoken local critics, said the commission made an important call: “I think the commission recognized it was in peril of losing public confidence. It was going to draw the line, here, now.”
A Pepco spokesman declined to comment. Anthony J. Kamerick, Pepco Holdings’ executive vice president and chief regulatory officer, said in an interview last month that the company might file another rate increase later this year if it did not like the ruling.
Mary Pat Flaherty and Jennifer Jenkins contributed to this report.