Less than a month after its $6.8 billion merger with Exelon went through, Pepco is asking the Maryland Public Service Commission for a 10 percent across-the-board rate increase for most of its 560,000 customers in Montgomery and Prince George’s counties.
Under the 200-page proposal, which was filed Tuesday, the typical Pepco residential customer in Maryland would see their power bill increase by $15.80 a month, according to Pepco.
The average monthly bill is now $152. If the request is granted as proposed, it would bring an additional $127 million to Pepco. The rate request covers commercial and residential customers.
“This has absolutely nothing to do with the merger,” said Donna Cooper, president of Pepco, which is the electricity utility for the District and much of the Maryland suburbs. “This has to do with prior investments in our system.”
Those investments include $327 million spent in the past two years to improve the reliability of Pepco’s electric distribution system.
In addition, during the past two years, Pepco implemented a successful $24 million program to reinforce 24 major distribution lines in Maryland. The company said it has also made technology investments for smart meters that help save power.
Maryland Attorney General Brian E. Frosh, who opposed the merger, zeroed in on the smart meters.
“This is a rate increase premised upon their installation of smart meters,” Frosh said. “They are saying, ‘Pay us back for putting in the smart meters.’ The point . . . was they would lead to cost efficiencies. The Public Service Commission has got to take a very hard look to match up the claims of efficiency against the new request for a rate hike.”
The company has begun sending out $50 rate credits to its customers, one now and one next year, to help defray increases. The rate credits were part of the utility’s deal to win approval from regulators.
The filing is the first Pepco request for a rate increase since Dec. 4, 2013, which resulted in a total rate increase of $8.8 million. The average residential customer’s bill rose less than 1 percent that year.
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.
The merger affected about 2 million Mid-Atlantic electric customers who are served by Pepco Holdings, including more than 815,000 ratepayers in the District and in Prince George’s and Montgomery counties.
Rate increases have been common following other mergers. Increases happened in Baltimore and other cities after Exelon acquired energy distributors.
“Today’s announcement confirms what we had feared and why we’re still fighting,” Anya Schoolman, executive director of the Community Power Network, a regional group opposing the merger, said in an email. “Area ratepayers are going to the ones who pay the price for Exelon’s takeover of Pepco.”
Utilities typically file rate increases every 12 to 18 months to recoup investments and other costs.
Pepco said it was going to have to file for a rate increase whether the merger was approved or not to recoup its investments and rising costs over the past several years.
“We thought it was prudent to hold off on filing [for a rate increase] . . . while the merger proceeding was ongoing to allow all parties to focus their resources on the merger applications,” said Kevin McGowan, Pepco’s vice president for regulatory policy.