The Potomac Electric Power Co. is trying to soften the impact of a new Maryland law that places stringent controls on the utility's ability to pass rising fuel costs on to its customers.
Stanley J. Bright, Pepco comptroller, recently argued before the Maryland Public Service Commission in a hearing in Riverdale that the company should be allowed to impose a special surcharge - computed quarterly - for fuel costs it would absorb under the new law.
The law prohibits electric utilities from passing on fuel cost increases of less than 5 percent. To pass on increases of more than that, utilities must first prove to the Public Service Commission that they are buying fuel economically and operating their plants efficiently.
Under the old law the pass-throughs were automatic, with commission review every six months.
Fuel costs for coal and oil used in utilities' generating plants have risen to nearly a third of customer's bills, and public anger over the increases led to passage to the law that goes into effect Sept. 1.
The commission is taking testimony in a series of hearings this month on how to implement the law.
At this point, it is not clear how the new law will affect the pocketbooks of Pepco's 276,000 Maryland customers. The intent of the law is to make Pepco and other electric utilities in the state more efficient - ultimately saving customers' money.
But opinions vary on how this should work.
Pepco's position is that it is already efficient and that any inconvenience or lag in collecting revenues because of the new law will cost customers more. "The money's got to come from somewhere," a company spokesman said.
Gary Alexander, a lawyer hired for this case by the state People's Counsel office that represents residential utilities customers, disagrees.
He said a surcharge would make it too easy for companies to collect fuel cost increases, thus eliminating the incentive to be more efficient.
Alexander said the utility should wait until it makes a general rate increase request to try to recover uncollected fuel costs. Such hearings are lengthy and detailed enough for a thorough examination of company efficiency, he said.
Under the new law, there also must be hearings each time the company wants to pass through an increase of more than 5 percent in its fuel costs. These hearings could be as often as monthly.
Under the new system, according to Bright's testimony, the compnay would be constantly behind in its fuel collections - thus the need for the surcharge.
Bright's testimony included in a Pepco study of a recent 12-month period showing that under the new law - even interpreted as the company wants it - a customer would have saved $7.14 in his bills as currently computed and the company would have had as much as $4.4 million in uncollected fuel costs.
But the $7.14 saving is misleading, Bright testified, because there is no way of knowing if the 12-month period is truly representative. Over a period of years, he said, fuel charges would remain generally comparable to what they ae now if the company's recommendations are followed.