The people's counsel for the District of Columbia has asked the city's public service commission to roll back a $35.4 million rate increase granted Potomac Electric Power Co. just days before a decision to cancel construction of a coal-fired power plant.
In a petition to the Public Service Commission filed yesterday, Brian Lderer asked the agency to institute "an immediate investigation" of Pepco's construction decision and to rule that the rate increase granted June 1 was unreasonable.
At issue is Pepco's decision to drop construction of a coal-powered generating plant at the Dickerson Power Station while continuing construction of an oil-fired unit at Chalk Point. When Pepco announced it was dropping plans for the Dickerson unit, the utility said increased conservation and decreased consumption by customers had rendered it unnecessary.
"In the latest rate increase of $35.4 million, not one penny of that increase was due to any investment in the Dickerson 4 unit," said David Boyce, a spokesman for Pepco. Boyce called Lederer's petition a rehash of old issues that the people's counsel had previously raised before the public service commission.
But Lederer maintained that the utility purposely delayed an announcement on the Dickerson plant until after the rate increase decision to sidestep any public review of whether the decision to stop one unit and go with another was in the public interest.
"It's not a private decision whether to build coal instead of oil, to delay for months in making a decision that was obvious," said Lederer. In the long run, the company's choice of the oil-burning plant over the coal-burning unit when it became apparent that both were not needed will cost consumers money.
"The company has not played it straight with the commission or with the city," he said. "The problems with the construction program have been around for a long time, but they have not been laying out what their long-term program is. Everytime they announce a key decision after a key regulatory date has passed, it just shows contempt," he said.
While the cost of the now-defunct construction program for Dickerson was not included in the rate-making base for the most recent increase, the cost of the alternate facility was, he said.
Pepco defended its choice of construction of the Chalk Point facility, saying that work was nearly complete there and that the unit would provide additional capacity when it would be badly needed.
"The reason to proceed with one and not the other is because, while we had bought equipment for Dickerson, physical construction had not begun," said Boyce. "Even with an accelerated construction program, it could not have been put into service before 1987," he said.
In contrast, the Chalk Point unit is already more than 80 percent complete and can be ready by 1982, said Boyce. "We need additional capacity in 1982 because we have to take one of our other major generating units out of service in that year to do mandatory environmental work on it and because we also need to retire very old, very ineeficient and very costly oil units in the District," he said. "The decision there is a very clear one."
Lederer disagreed, however. "They don't retire Benning and Buzzards Point (units) and they don't have any problems," he said. "They are making these decisions unilaterally to the detriment of the ratepayer and the benefit of the investor."