WHAT EMERGES from the exhaustive record so far compiled in Maryland’s investigation of Pepco is just how poorly customers have been treated. Service has been inferior and unreliable; the need for improvement is clear. Still to be resolved — and here state regulators will show whether they have any mettle — is who should bear the cost of improvements: ratepayers, who suffered from the bad service, or shareholders, who made a profit?

Last August the Maryland Public Service Commission (PSC) launched a formal review of Pepco’s electrical distribution system in the wake of public outcry over frequent and sustained outages. Four storms in February, July and August 2010 were major culprits, but there were also recurrent, inexplicable interruptions of service on “blue sky” days. Montgomery County, which accounts for 308,000 of Pepco’s 531,354 Maryland customers, was most affected, and its officials lead the call for state action.

Indeed, so outraged are Montgomery officials by what they call the utility’s “imprudent manner” of “knowingly providing unreliable electric service” that they are recommending that state officials consider modifying or revoking Pepco’s operating franchise if service isn’t improved. That’s not apt to happen, but Montgomery officials are right in insisting on the need for the state to take strong action against Pepco. A report into Pepco’s operations by a work group commissioned by County Executive Isiah Leggett paints a devastating picture of a utility that didn’t pay sufficient attention to its problems or make the needed investments in its operation. The result is electric service so unreliable it has ranked in the bottom quartile overall nationwide since 2005.

In its filing with the PSC, Pepco acknowledges that there is room for improvement but maddeningly argues that it is not accountable because Maryland has no standards for reliability, although some are under consideration. Pepco essentially says that no state action is needed because it plans to spend $250 million over the next five years to enhance reliability of service. The time for promises is long past. Pepco, as Montgomery officials pointed out, is “not exactly a self-starter” when it comes to improving customer service; witness its desultory tree-trimming operation or its lackadaisical approach to customer communication.

That service was allowed to deteriorate is an indictment of the PSC’s lax regulation. Late to appreciating the magnitude, the commission now has an opportunity to make amends. It should insist that Pepco make the needed improvements and submit detailed reports documenting progress and that it not require the people denied service to pay the tab. A decision by the commission is expected in September.