Local Pepco Critic Says Rate Decision Shows Utility ‘Controlling’ State Regulators

Photo via Abigail ReidA local activist and frequent critic of Pepco says a recent rate decision by state regulators makes it clear utilities are controlling Maryland’s Public Service Commission.

Abbe Millstein, a Rockville/North Bethesda resident who runs a group of volunteers called “PowerUpMontco,” claims the PSC’s decision in July to grant Pepco a controversial “Grid Resiliency Charge” came because the utility company used “veiled threats” that it would not make reliability improvements otherwise.

Montgomery County has filed an appeal of the PSC’s decision. County Executive Isiah Leggett called the Grid Resiliency Charge “a terrible precedent.”

The PSC approved $27.9 million of Pepco’s requested $60.8 million rate hike. The rate increase will mean an additional $2.19 on the monthly bill of average residential customers.

But the decision included the Grid Resiliency Charge – $24 million for a “Priority Feeders” project, known as a “tracker,” to “accelerate the hardening of 24 feeders that are prone to outages during major storm events, 12 feeders each in 2014 and 2015.” (You can read the full decision here.)

The Priority Feeders project will mean an additional 6 cents on monthly bills in 2014 for average residential customers, an additional 19 cents per month in 2015 and 27 cents per month in 2016.

The PSC said it granted the $24 million for the feeders project on the condition that Pepco provide a detailed description of the work, performance objectives for each feeder project, incremental milestones and estimated costs. Pepco must submit annual filings so the PSC can monitor the progress of the project.

“As a county, we fought hard to stop Pepco from getting automatic trackers (immediate return) for reliability investments –investments we believe Pepco should be required to make to satisfy their fundamental obligation to provide reliable service,” County Councilmember Roger Berliner said after the decision. “In this decision, the Commission allowed some trackers, but limited them to a few feeders, which represent approximately 12.5 percent of Pepco’s request.”

Millstein took that one step forward, claiming Pepco campaign contributions and lobbying efforts “contribute to a culture in Annapolis where Pepco can control elected officials’ voting behavior.” She also criticized Gov. Martin O’Malley and the General Assembly for not nominating and confirming a fifth commissioner to the PSC.

The five-member Commission is currently down to four members, a fact Millstein said played a role in the Grid Resiliency Charge being allowed:

With the departure of Chairman Douglas Nazarian at the beginning of 2013, there are only four Commissioners, rather than the required number of five Commissioners , currently serving on the Maryland Public Service Commission.  This is important directly in Order No. 85724 because Commissioner Brenner did not want to vote to approve the GRC tracker, but felt compelled to do so to break an otherwise 2-2 tie:

“I am concurring with the result reached in the Order on approval of the accelerated priority feeders to avoid a split Commission stalemate which would have had the result of not approving a project that I think is worthwhile, because of a disagreement over the cost-recovery mechanism.” [Order No. 85724 at p. 169]

More broadly, the fact that the Governor and General Assembly went through the entire 2013 legislative session without nominating and confirming a fifth Commissioner to the Public Service Commission to prevent “ties” in determining Commission orders,  speaks volumes regarding the abject failure of our elected leaders to provide the Commission with an adequate number of personnel (at both the Commissioner and Staff levels) with appropriate expertise and experience, and the necessary financial resources to comprehensively and actively review, inspect, audit, adjudicate, and otherwise regulate the electric and gas utilities under the Commission’s jurisdiction, of which Pepco is only one.

Pepco has also appealded the PSC’s decision. The company argues it needs all of the requested rate hike to provide adequate service and better ensure reliability.

While Pepco is a frequent target of criticism, it’s not the first time the PSC has come under the spotlight.

In May, Berliner filed a a formal pleading with the PSC to implement a utility pilot program that would include power micro-grids and adjustable rates based on how a utility company performs.

“While the technology exists to support a revolution in utility service, our regulatory model is a vestige of century-old thinking and our utilities are inherently conservative and not innovators,” Berliner said in a statement. “It is the job of our state regulators who have 100 percent control over our utilities to ensure that we fully grasp the benefits of a transformed utility system. I urge them to accept this challenge and move Montgomery County and Maryland forward.”

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