A spark for Pepco

October 6, 2012

TO UNDERSTAND the scale of the reliability problems Pepco has had, it helps to look at a map Gov. Martin O’Malley’s office released last week. Montgomery and Prince George’s counties are painted in red, indicating areas in which distribution line outages knocked out power in all three major storms in the past three years. There is even more orange on the map, indicating areas that lost power in two of those storms. In December, state regulators blamed Pepco for a sorry record, concluding it hadn’t invested in proper maintenance for years, and they fined the utility $1 million.

The task, however, is not simply to punish Pepco but to make Maryland’s power grid more reliable and resilient. There has been some progress. Pepco has promised to spend half a billion dollars over five years performing the sort of upkeep that should have happened before. The state Public Service Commission (PSC) has written new, higher reliability standards that will require fewer service interruptions and fewer hours in the dark when they do happen, as well as more tree trimming, which is perhaps the most important factor in preventing outages. Finally, Mr. O’Malley released a plan last week that would go beyond the PSC’s new requirements. It is controversial, but it has some promising ideas.

The governor would require that the state measure utilities’ performance by how they do during major outage events, not just on calm days; he would expand power-line upgrades and target the lines most vulnerable during big storms; and he would accelerate these investments. Though his plan, assembled by a gubernatorial task force, does not propose instructing utilities precisely which upgrades to make and where, it anticipates that Pepco and others will respond by spending heavily on more tree trimming, selectively putting critical wires underground and installing technology that can quickly and automatically adapt to certain disruptions.

That all sounds great, provided the tree trimming is no more aggressive than truly needed. The controversy comes in how to pay for it. Mr. O’Malley proposes allowing Pepco to collect a surcharge on Maryland ratepayers’ electricity bills while it completes its upgrades, on the order of “a dollar or two” per month, he told a group of Post editors and writers last week. Typically, utilities can recover costs only after they have incurred them, and, following Pepco’s years of neglect, Marylanders might bristle at having to pay any more than they already are. But, the governor’s report argues, the surcharge should not finance investments required of the company under new and higher service standards; the extra cash should pay only for accelerating the process of meeting those standards.

Mr. O’Malley’s recommendations now go to the PSC, which should aim to ensure ratepayers that any surcharge will be fair to them. First, the state’s regulators should collect more information from utilities to establish the price of the governor’s plan and compare it with the potential costs of enduring more big storms without the quick upgrades it envisions. Then the commission should design a way to accelerate the imposition of performance standards along with the upgrade work. If the PSC implements the governor’s plan fairly, it should prevent more of those maddening red and orange splotches.

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