PSC Hears Opponents And Some Supporters Of Pepco’s Latest Rate Hike Request

PSC public hearing on Pepco's latest rate increase requestAt a public hearing on Monday about Pepco’s latest requested rate hike, the furor the company faced after the 2012 derecho was largely absent.

Only nine people testified in front of the state’s Public Service Commission — the group that will decide whether Pepco gets its desired increase — in a meeting room in the county’s Executive Office Building in Rockville.

Two people testified in favor of Pepco’s requested $37 million rate hike. One talked about the way Pepco’s Jerry Pasternak helped her family deal with her home’s energy costs. Others, including elected officials opposed to Pepco’s request, acknowledged the company appeared to be making reliability and service improvements, though not enough to merit higher rates or return on equity.

Jean Sperling, the manager of the one-square mile Village of Martin’s Additions in Chevy Chase, spoke glowingly about Pepco, even going so far as to read an email from a resident who claimed he hadn’t experienced a power outage in two years.

The resident did qualify his claim by writing his memory could be faulty.

Monday’s hearing didn’t include much like the rancor directed at Pepco and the PSC in a similar Rockville hearing a little more than a month after the June 2012 derecho. The local news stations that flocked to that event didn’t show Monday. Whether it’s the passing of time or the hard to digest nature of rate cases, the mood on Monday was much different.

Councilmember Roger Berliner and District 20 Del. Tom Hucker (a County Council candidate) both spoke out against the PSC granting Pepco any more money in a rate increase — it’s third request in two years — until Pepco achieves top-quartile performance compared to other utilities around the country.

Abbe Milstein, who runs the Powerupmontco group and has been a harsh critic of Pepco and the PSC, took the four members of the Commission to task for even considering the latest rate increase request.

In July 2013, the PSC granted Pepco a $27 million rate increase and $24 million grid resiliency charge, or tracker to allow the company to do infrastructure improvements. Pepco requested $60 million.

Last December, as is common for natural monopoly utilities seeking to recover costs, Pepco filed another rate increase request — this time for a $43 million rate increase it says it needs to make its system perform better.

The request includes records of the $238.5 million the company spent from October 2012 to September 2013 to improve infrastructure. The company claims it plans to spend an additional $234 million in 2014.

Since the PSC began its hearings on the most recent rate increase, Pepco has revised the request to $37 million. It appears the utility will get at least a portion of it.

PSC staff has recommended Pepco receive a $15.7 million increase with a return on equity of 9.62 percent. Pepco requested an ROE of 10.25 percent. Montgomery County, also a party to the case, recommended a revenue increase of $14.3 million while holding the ROE at 9.36 percent. The Office of the People’s Counsel, a state-run agency meant to represent consumers in rate cases, was the only party to recommend a revenue decrease. It recommended a decrease of $5.1 million and a reduction of the ROE to 9 percent.

Much of the testimony on Monday included anecdotal evidence — either of blue sky outages or of how there had been fewer outages recently. Some talked about how Pepco had treated them well in recent specific issues in their own neighborhoods.

Berliner told the PSC it should take Pepco’s proposed sale to Exelon as an opportunity to require improvements and benefits for ratepayers.

Jordan Cooper, a candidate for the House of Delegates in District 16, spoke about his neighborhood’s experience with Pepco when the company discovered a broken underground cable there in January.

But he closed by wondering why Pepco should receive another rate increase so soon after last summer’s decision. That decision is under appeal from Montgomery County and Pepco, which also opposed the granting of less than half of its request.

“We’ve already given Pepco prospective payment for the increase in reliability that we’ve seen,” Cooper said. “Why pay them a second time for what they said this prospective payment last June 30 was going to cover?”

Written comments can be filed by Friday, May 30. All comments should be addressed to David J. Collins, Executive Secretary, Maryland Public Service Commission, William Donald Schaefer Tower, 6 St. Paul Street, 16th Floor, Baltimore, Maryland 21202. The comments should reference “Case No. 9336.”

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