The District of Columbia Public Service Commision yesterday rejected a bid by the D.C. people's counsel to delay for a year hearings on a $45.5 million rate increase for Potomac Electric Power Co.
The delay would have allowed the people's counsel to complete a federally financed study questioning the basis for Pepco's rates and suggesting alternatives to the company's plans for providing electrical service.
Instead, the commission gave recently appointed People's Counsel Brian Lederer a delay of about three months to prepare his case against the rate raise. Hearings that were to have begun Nov. 28 now are scheduled to start Feb. 21.
The PSC decision means electric rates in Washington probably will not increase before next summer.
Pepco vigorously fought the requested delay, saying it could not afford to wait a year or more for a rate increase without falling far below the profit margin the PSC says Pepco should earn.
Even the three-month delay that was granted will cause a fiscal pinch for the utility company, H.L. Davis, Pepco's senior vice president for finace, said after the hearing.
LEderer said failure to win the one-year postponement he had sought will "prejudice our case" and limit the arguments his office can raise against Pepco's increase request.
The people's counsel recently got a $126.000 federal grant to increase local citizen involvement in utility rate making.
Part of that money would pay for a lenghty study that would question the very basis of Pepco's electric rates, including the company's projections of electrical demand, management of the system, and plans for a new power plants.
During the three-hour-long hearings yesterday, Lederer contended such a comprehensive study is the only way to escape what he called "the rate increase treadmill."
The pending rate increase request is Pepco's third in two years and the sixth in eight years, he said. Since 1970, the average monthly electric bill of Washington residential customers has climbed from $12.27 to $27.33. That is still lower than those sent by comparable utilities in the midatlantic and northeastern states. Pepco officials noted.
Lederer contended a major reason for the steadily increasing rates was that Pepco had overestimated the demand for electricity here and then had built generating plants to meet that demand. In 1968 and again in 1972, Pepco forecast it would need the capacity to generate 6,000 megawatts of power by 1977. But last summer's peak power demand was only 3, 850 megawatts, he said.
That excess capacity means Pepco is operating inefficiently and it is the cause of Pepco's "erosion of earnings and unstable rates," Lederer argued
Instead of giving Pepco the higher rates the utility says are needed to improve its earning and pay for new plants, the PSC should wait for the federal study to suggest alternatives, he said.
The people's counsel said energy conservation measures and changes in electric rates to discourage use of power could eliminate the need for more generators.
He had also urged a one-year delay in an experimental plan to charge large electricity users higher rates during peak demand hours, thus encouraging them to curtail their electricity use. The commission suspended the plan until January and said it will decide then what to do.
Pepco officials yesterday did not debate Lederer's charges against the utility, arguing instead that PSC should not delay the rate increase for a year while awaiting the uncertain results of the study.
The utility company said the PSC had argued it to build greater reserves into generating system to guard against blackouts and brownouts, creating the excess capacity.