On the heels of a small rate increase by Maryland regulators, Pepco announced Tuesday that it plans to file another rate request in the fall.
In a conference call to investors Tuesday, Joseph M. Rigby, chief executive of parent company Pepco Holdings, bemoaned a decision by state regulators last month to deny most of a rate increase sought by Pepco and sister company Delmarva Power. Rigby said the Maryland Public Service Commission’s ruling prompted the company to seek another rate increase and extend a hiring freeze.
“We expect to file our next round of rate cases in Maryland in the fourth quarter of this year,” he said. “A fair and reasonable outcome in the next round of cases will be crucial to continue the pace of investment in Maryland.”
Pepco sought a $68 million rate increasefor its 531,000 Maryland customers, but last month the PSC granted it only $18 million. Regulators calculated that the increase would add $2.02 to the average residential bill, but that was revised downward to $1.89, a Pepco spokeswoman said. They also reduced the company’s allowable return to shareholders to 9.31 percent, down from 9.83 percent.
“Our Plan B is to keep rate cases every nine months if that’s necessary, and that’s what we plan to do,” Anthony J. Kamerick, Pepco Holdings’ chief regulatory officer, told investors. “I think we keep pounding the rate-cases drum.”
Pepco Holdings executives did not discuss the size of the rate increase during the call.
Pepco has requested a $42 million rate increase for its 257,000 District customers, which would mean a $5 increase to the average residential bill. District regulators are expected to issue a ruling by mid-September.
Pepco’s push for another rate increase comes at a time when customers in Maryland and the District have railed against the utility for its slow restoration of power outages, which in some areas lasted a week. In the District, a majority of residents say Pepco did an unsatisfactory job restoring power, according to a Washington Post survey.
Pepco’s announcement that it would soon seek another rate increase was immediately denounced by critics Tuesday, including Del. Tom Hucker (D-Montgomery). “They should be so embarrassed by their performance, but I believe they just have no shame,” he said in a telephone interview. “They’re incredibly out of touch with their customers.”
Pepco Holdings also released its second-quarter earnings report Tuesday, reporting a 34 percent drop in profits. It announced a net income of $62 million for the quarter, down from $94 million a year ago. Operating revenue totaled $1.18 billion, down 17 percent from the previous year.
Pepco itself reported a 16 percent decrease in its second-quarter profits. The utility had net income of $27 million, down from $32 million a year earlier. Its revenue totaled $456 million, down 10 percent from the previous year.
On Tuesday night, Maryland regulators hosted the first of two public hearings this month to determine whether Pepco’s storm work in June complied with state regulations. The second hearing will be held at 7 p.m. Wednesday at the Prince George’s Community College in Largo.
About 200 residents and local officials flocked to the hearing Tuesday night, with about 80 customers complaining publicly about repeated power outages and weak Maryland regulators.
Catharine Pickar, a Somerset council member, urged the commission to deny further rate increases. “I’m asking you to do the right thing,” she said. “Tell them that they have three strikes and they’re out.”
Maryland regulators will hold additional hearings in Baltimore on Sept. 13 and 14, when Pepco and other utilities are expected to defend their work. The D.C. Public Service Commission will host its public hearing Oct. 11 at its headquarters in Northwest.
State Sens. Brian E. Frosh (D-Montgomery) and James C. Rosapepe (D-Prince George’s) have urged the PSC to impose more than $100 million in fines on Pepco for what they call poor performance after the June storm.
Last year, Maryland regulators issued an unprecedented $1 million fine against Pepco, citing sustained power outages and poor tree-trimming practices. In 2010, Pepco began a $910 million, five-year plan in Maryland to increase tree trimming and improve reliability.
Pepco has vigorously defended its work since the June storm, saying in self-assessments filed with regulators that it responded aggressively and effectively.
“I look back at Irene, and we had a very strong performance, and this one we did as well,” Rigby said during the conference call.