The D.C. Public Service Commission yesterday proposed charging the city's 200 largest commercial electric customers more for using electricity during peak hours of the day.
The Commission's proposed opinion and order, which would not be implemented for about a year, puts the Washington business community on notice that they must either pay the higher rates for using electricity during peak hours - usual business hours - or shift some work schedules to the early mornings or late nights.
In addition, the order would aid Pepco, whose profits dropped sharply in the first two months this year, help the utility's stockholders gain a better rate of return and eventually could lead to lower rates for residential customers, according to a city official.
The proposed opinion will become final within 10 days of issuance if no objections are raised, according to Melvin Washington, assistant corporation counsel.
The actual rate structure will be made part of the commission's final order at the conclusion of Pepco's current rate case, Washington said. The lowest rates would be in effect weekdays from midnight to 8 a.m. and on weekends and holidays. The highest rates would be during summer weekday afternoons, from noon to 8 p.m.
Pepco customers for some time have paid higher rates in summer than in winter. Regulations on usage during the day were effective during the 1920s and 1930s but later abandoned when energy became more plentiful, the commission wrote.
"Those customers which take most of their electricity during peak hours pay no more than customers which take realtively large amounts during off-peak hours," the opinion said. "Today's decision signals the end of this practice for Pepco's large commercial customers."
"The harsh truth is that the non-peak customers have been subsidizing the on-peak customers," the opinion continued. "This is a form of cross-subsidization which the commission wishes to end."
The matter was initiated by the commission two years ago, Washington said. Although the action was not started by Pepco, "Pepco states on brief that it supports adoption of time-of-day rates for its largest commercial customers," the commissioners said in their opinion.
A Pepco spokesman said last night that its lawyers had not yet analyzed the opinion or determined its effects.
Although the main purpose of the opinion is to shift usage by large electricity consumers to off-peak periods, the rates "will also tend to assist Pepco in avoiding revenue erosion," the commissioners said.
Washington also said that one result of the procedure could be a reduction in rates for residential customers.
"As we see it, time-of-day-rates which follow the principles announced today will best aid both Pepco and its customers and a whole," the opinion said.
The commissioners said that Pepco's large users could save money by shifting their usage to off-peak times. But they added that they are "not unmindful that the record contains little evidence that Pepco's large customers will or even can reduce their energy needs or shift their requirements from on-peak to off-peak periods."
During testimony before the commission this spring, a Metropolitan Board of Trade representative argued that many District businesses must operate at specific hours "in direct response to the demands of the customers."