Pepco requests $60.8 million rate hike in Md.

Pepco, the regional utility company that has come under fire in recent years for reliability problems, on Friday filed a $60.8 million rate request in Maryland that, if approved, would raise the average monthly bill of residential customers by $7.13, or about 5 percent.

In addition to the rate request, the utility is asking the Maryland Public Service Commission to allow it to impose what it calls a “grid resiliency charge” in future years. In 2014, that surcharge would cost the typical residential customer in Maryland about $1 a month. It would grow to $1.70 a month in 2015 and almost $2 by 2016.

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After a public relations nightmare over their handling of “derecho” this summer, Pepco and its customers held their breath for what Sandy would bring. But the region may have to wait for a better test to see if Pepco has upped up their game — Sandy’s wrath devastated cities to the north but left Washington out of the fray.

After a public relations nightmare over their handling of “derecho” this summer, Pepco and its customers held their breath for what Sandy would bring. But the region may have to wait for a better test to see if Pepco has upped up their game — Sandy’s wrath devastated cities to the north but left Washington out of the fray.

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The request comes four months after the commission rejected the bulk of a Pepco proposal to raise customer rates. Pepco had sought a $68 million increase for its 531,000 Maryland customers, but in July the agency granted the utility only $18 million, or about $2 a month.

Pepco’s surcharge is modeled after a plan recommended in October by a state task force, and endorsed by Maryland Gov. Martin O’Malley (D), that would allow electric companies to charge ratepayers in advance of serious maintenance upgrades.

Company officials said that the company would not file a rate request in the District until a city task force on burying power lines completes its report next year. The task force is considering recommending a grid resiliency charge for District residents as well.

In Maryland, consumer advocates have criticized the resiliency charge, saying it would essentially reward the utility for bad behavior.

Terri Czarski, the deputy people’s counsel for Maryland, said that the office will “give particular scrutiny” to the surcharge. “It actually looks like a reformulated bid to get what was rejected in their last” rate request, she said.

“What they keep seeking are surcharges . . . to collect more money from customers on stuff they should be doing already without the benefit of a surcharge,” she said.

But the utility said that it has made infrastructure investments of about $1 billion in Maryland over the next five years. The company is “not realizing growth in the number of customers to offset this pace of investment,” which is why it needs the rate increase, it said.

“Customers and government officials say they want us to do more, and this is in response to those expectations,” Pepco spokeswoman Myra Oppel said.

Pepco is also proposing stricter reliability standards that, if met, would allow them to receive up to a $1 million bonus. If the company failed to meet the minimum standards, it would have to credit customers up to $1 million.

In addition, Pepco wants to raise its rate of equity, to 10.25 from 9.31 percent. Pepco officials said they need the increase to woo stakeholders to invest into the company.

The Maryland Public Service Commission is expected to rule on the requests in June.

Pepco officials have said that they would file another rate increase if they weren’t satisfied with the ruling. But local officials have complained that it should not receive another one so soon because of its historically poor performance.

In a conference call with reporters, Pepco President Thomas H. Graham stressed that the request “is not an appeal to the prior decision.”

“This represents the investments we made to improve service to our customers,” Graham said.

Pepco’s announcement caps a year of ups and downs for the utility.

During the summer, Pepco was criticized for its performance after a powerful storm hit the Washington region and left hundreds of thousands of customers without power.

But customers largely praised the utility for its performance during Hurricane Sandy, with government officials throughout the region, even longtime critics, congratulating the utility.

“You did an extraordinary job,” Rep. Steny H. Hoyer (D-Md.) told the utility during a conference call at the time. “You don’t hear that enough.”

 
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