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Why Pepco can't keep the lights on


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Pepco's filings with District regulators show that in 2008 the company spent $446 per customer on transmission and distribution of electricity; $133 went toward operations and maintenance. That made Pepco the seventh-highest spender among 23 utilities that participated in a survey that year. Further comparisons are difficult because neither Pepco nor many other companies make detailed spending public.

In response to public complaints, Pepco has said it plans to increase spending on reliability improvements by $190 million in the District and Maryland over the next five years.

Rigby said Pepco has not determined the economic impact of the outages on the local economy. But Pepco and its investors have enjoyed attractive earnings and share prices that have nearly doubled since 2009. Pepco Holdings has about $8 billion in revenue, Rigby said, including what he called pass-throughs to other companies that generate and transmit the power that Pepco delivers.

Pepco executives said they have had to balance spending on reliability with expenses in recent years, even as electric rates have increased. And they make no secret of whom they expect to shoulder the cost of enhancements.

"We're going to be spending more money," said William M. Gausman, senior vice president for strategic initiatives for Pepco Holdings. "Ultimately, people will have to pay for these improvements."

Pepco's chief executive told stock analysts in an October call that Pepco's rate increases this past year in the District and Maryland were too small and that the company would seek more money by next summer.

Pepco customers, Gausman said, "can't afford us to be the best in everything. But we will have to be better than we were; there's no question about that."

Norma Jackson agrees. For the retired public school librarian, a pattern of brief outages culminated in March, when the power in her retirement community blinked out. It stayed off, hour after hour and into the next day, then the next and then the next, she said.

"We were without heat for about 31/2 days and I couldn't conjure any heat on my own," she said. "I realized I was practically blue. My fingers were stiff. I couldn't feel my arms or down my legs."

Despite the cold, she opened her door so emergency workers could get in if she needed help.

"I realized I was really in trouble and I pulled the emergency cord. I thought to myself, 'You may not make it, kiddo.' "

A rescue squad rushed her to an emergency room, and she remained hospitalized for a month, she recalled. Doctors put her on dialysis.


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