Pepco is asking the D.C. Public Service Commission for a 5.25 percent across-the-board rate increase for most of its 282,000 District customers.
The request comes three months after the company completed its $6.8 billion merger with Exelon. In April, Pepco filed a request with the state of Maryland to increase rates 10 percent for Montgomery and Prince George’s counties, which would generate $127 million annually. That request is under review.
Under the proposal, filed Thursday, the typical Pepco residential customer in the District would see their power bill increase by $4.36 a month, according to Pepco’s president, Donna Cooper.
The typical monthly bill is now $83.10. If the request is granted as proposed, it would bring an additional $85.5 million to Pepco. The rate request covers commercial and residential customer
The filing is the first Pepco request for a rate increase in the District since late 2013, when the utility won approval for a total rate increase of $8.8 million. The average residential customer’s bill rose less than 1 percent that year.
Utilities typically ask for increases annually, but Pepco deferred the requests while the merger with Exelon worked its way through regulatory approval.
Cooper said raising rates in the District would help the utility recoup the hundreds of millions of dollars it spent over the past several years on tree trimming, equipment upgrades and other improvements designed to keep power outages to a minimum and their duration as brief as possible.
“The reliability and infrastructure upgrades that we have made have reduced the number and length of power outages while delivering improved service,” Cooper said in an interview, adding that the request has nothing to do with the merger. “This [request] is directly related to upgrades for our system to improve reliability and service to our customers.”
Cooper said Pepco has cut the total number of outages by 42 percent compared with 2011. She added that when there is an outage, the duration has been reduced by 33 percent compared with 2011.
Critics of the merger were quick to note that they had warned the tie-up would lead to higher bills.
“Today’s announcement goes along with what we have been saying — that this takeover by Exelon is a bad deal for D.C. residents,” Anya Schoolman, president of DC Solar United Neighborhoods, said in a statement. She said DC SUN, a community activist group that favors solar power, would continue to work to undo the merger.
D.C. People’s Counsel Sandra Mattavous-Frye, who opposed the merger, released a statement calling the rate request “the largest rate case Pepco has ever filed” during her tenure. The counsel’s office is an independent agency that serves as an advocate for consumers of natural gas, electric and telecommunications services.
The office “will be vigilant in examining this monumental filing to ensure that any rate increase is based only on the expenses necessary to keep the lights on and not those associated with Exelon’s lengthy journey to merge with Pepco,” Mattavous-Frye said.
Typical monthly bills in the District have shrunk over the past five years because of a decline in the cost of producing electricity .
The cost of distributing electricity, however, continues to rise because of upgrades, emergency repairs, new equipment and the ever-increasing costs of labor, the company said.
In April, the company sent its customers $50 rate credits that were agreed to as part of the merger process. The credits, which will essentially cover the proposed increase, are one part of a $78 million package of benefits — including new solar programs and workforce development money — intended to sweeten the deal.
During the past three years, the company made $658 million in improvements to the distribution system.
The merger between Pepco and Exelon was first announced in April 2014 and took almost two years to complete, needing approval from the Federal Energy Regulatory Commission, the Justice Department and the states of Maryland, Delaware and New Jersey and, last month, the District.
A PSC decision on Thursday’s rate request is likely to take about a year.