D.C. People's Counsel Brian Lederer charged yesterday that Potomac Electric Power Co.'s request for an emergency 6.7 percent rate increase is "misleading and disingenuous" because the company is really in good financial shape and not suffering the "financial disaster" it claims.
"They don't have a financial problem now, they're only projecting that they might have one in the future," said Lederer, who officially represents consumers in utility rate cases. "They're saying they're losing money every day. This is untrue and they know it."
Last month Pepco asked the D.C. Public Service Commission for a 6.7 percent emergency rate increase, saying that the commission's failure so far to make a decision on Pepco's earlier 16 percent rate increase request, filed 17 months ago, had led the company into a "serious and worsening financial condition" in the District of Columbia.
Lederer filed a motion Tuesday asking the commission to dismiss Pepco's new request, on which the commission has yet to act. Yesterday, Lederer released to the public a detailed analysis of the company's arguments.
Lederer's argument is that the company is over-building power plants and that it will have excess generating capacity in the years ahead unless this program is curbed. High utility rates are causing people to conserve, he argues, so annual increases in electricity use are declining.
"They want to gild the financial lily," said Lederer. "They want to be able to finance a construction program whether it's needed or not and whether or not the capital markets are in disarray."
Lederer's written analysis says that the financial crisis the company complains of is based on statistics used in the complex ratemaking process -- statistics that "do not always reflect the overall financial health of a company."
Lederer said the past two years were among the best in Pepco's financial history. He argued in hearings in the pending 16 percent rate case that no increase should be granted and that rates instead should be rolled back.
A Pepco spokesman said yesterday the company is "in dire financial straits -- in the District at least" -- because it is not earning its authorized rate of return of 9.06 percent. This rate, approved earlier by the commission, is return paid to holders of the company's stocks and bonds as dividends and interest.