Electricity bills for Potomac Electric Power Co.'s business and residential customers in the Maryland suburbs of Washington will be increased 4.4 percent on an annual basis in the near future, under a $17.2 million rate increase approved this week by Maryland's public service commission.
For an average residential user in February, with a consumption of 936 kilowatt hours, the increase would have added about $2 to that month's $47.42 bill.
Specific increase amounts were not available last night; they will be included in a formal proposal to be subcommission as early as today, after which the higher charges will take effect.
Although the Maryland agency Monday approved an overall $20.23 million annual basic rate increase to Pepco, a reduction in fuel surcharge revenues of about $3 million also was ordered. Thus, the net increase for customers will be $17.2 million a year -- in contrast to the revised $43.1 million Pepco request filed originally late last year.
For Maryland customers of Pepco, an electric utility firm based in Washington, the regulatory decision this week represents the second boost in basic rates since 1976. These rates were increased by 3.8 percent, or $14.1 million, last year.
In addition, the Maryland agency approved an increase to 9.6 percent from 9.12 percent in Pepco's rate of return on total investments to supply power for its customers in the state. Pepco had asked for a 10 percent rate of return and actually earned at a 7.8 percent rate in the 12 months through last November.
David Boyce, a Pepco spokesman, said yesterday that the Maryland agency's decision amounted to "a much-needed increase," and he noted that the commission moved rapidly to make a decision after concluding hearings last month.
At the same time, Boyce said some elements of the agency's order -- including a requirement that the "test" year for measuring purposes end last November instead of in March -- will make it impossible for Pepco to earn to level of profitability permitted by the agency in its decision, because of the impact of soaring operating expenses in more recent months.
The agency also decided that most of Pepco's advertising does not meet "informational" requiremennts and spending for such ads was cut from the rate base, as requested by Peoples Counsel John Keane Jr.
Boyce said "it is too early to speculate" on whether the company soon will file for another rate increase in the state. With this week's decision, Pepco's basic rates will have been increased 7 percent since the end of 1976, or far below the average of overall consumer price hikes. Fuel surcharges aren't included in the base rates.