Pepco Electric bills, especially the "fuel adjustment" section, rose over the summer at a rate matched only by recipients' blood pressure, to judge by the volume of complaints reaching the Potomac Electric Power Co.
The "fuel adjustment" section doubled or tripled previous rates on many bills during July and August, prompting so many cries of anguish that Pepco printed a special folder explaining it for anybody who wants one.
In essence, according to Pepco, the rise is a combination of three factors: higher international coal and oil prices, higher summer temperatures and a change in Pepco billing practices.
Under the "fuel adjustment clause" in legislation affecting billing, month-by-month costs of whatever fuel Pepco burns to produce its power are passed along directly to the consumer. Coal is cheaper than oil, so if a coal burning power plant shuts down for some reason and its power has to be replaced by an oil-burning one, the "fuel adjustment" section of the bill rises.
"There is no markup, no profit, not one cent in it for Pepco," said consumer services director Jim Culp.
Fuel prices are up. The average cost of Pepco coal in 1976 was $27.34 per ton. The average 1977 cost through August has been $23.86 per ton. Similarly, oil has risen from an average of $10.87 per barrel in 1976 to $13.49 per barrel through March, 1977, a Pepco spokesman said. He added that 70 per cent of Pepco's fuel is coal, 30 per cent oil.
Summer temperatures were up. This year's "cooling degree hours" - the number of degrees each hour over 71 degrees Fahrenheit - were up 200 per cent this July and 250 per cent in August over last year's levels.
"People are shocked at their electric bills but it's partly because of air conditioning," the spokesman said.
Pepco changed its billing procedure. Until January, part of the fuel cost was included in the other part of the bill, the basic rate charged per kilowatt hour. For example, if the basic rate was 3 1/2 cents per kilowatt hour to cover capital investment, salaries depreciation and all the other costs of running a utility, then another half a cent, say, was added on to over part of the fuel cost. The base rate would then be 4 cents, and the "fuel adjustment" section would cover all fuel costs over one-half cent per kilowatt hour.
Starting in January, however, the bills were changed to show ALL fuel costs under the "fuel adjustment" section, instead of having part of the fuel bill hidden in the basic rate charge all of it has been showing up on the "fuel adjustment" portion. In February it cost Pepco 1.2 cents per kilowatt hour for the fuel; in May it was 1.5 cents and now it is 2 cents, according to the spokesman.
The fuel adjustment portion of the bill not only looks higher because of this new procedure, but has risen in fact because of the higher fuel costs and increased electricity use over the summer by individuals, the spokesman concluded.
Consumer advocates have criticized the fuel adjustment procedure on grounds that it eliminates any incentive for power companies to conserve fuel or increase efficiency since all fuel costs are passed on to the consumer.
Pepco's Jim Culp denied that. "It doesn't make sense to have your investment (in machinery) sitting idle if a plant is down," he said. Besides, he added, high power bills result in consumer reduction of electricity use, which would mean that equipment yet to be paid for would have to be idled. "There's nobody to pay for the investment except the consumers," he said.
D. C. Public Service Commission utility analyst Earl Martyn said the fuel adjustment procedure allowed Pepco to pay its fuel bills without having to ask the commission for a rate change every month as fuel prices oscillate. Rate change cases take 18 months to two years to decide, he said.
Still, he noted that both the Virginia Electric and Power Co. and Maryland Gas and Electric Co. were planning to return to including part of the fuel cost in the base rate. Pepco may decide to do the same thing "because of the political and economic pressure," he said.
"If I've explained this fuel adjustment clause once I've explained it 250 times," he said. "I wish I could use a tape recording."