Pepco seeks rate increase in District of Columbia

Potomac Electric Power Company (Pepco), in a July 12 filing submitted to the Public Service Commission (PSC) of the District of Columbia, opposed a motion by the Office of the People’s Counsel (OPC) for the District of Columbia to reschedule a prehearing conference in connection to the company’s proposed rate increase.

As noted in the company’s filing, while the PSC scheduled the conference for July 27, the OPC requested that the PSC postpone the conference until Sept. 2. To justify its request, the OPC contended that the existing schedule provides inadequate time to prepare, and that it is unable to participate in the prehearing conference before the receipt of its assessment on its Notice of Agency Funding Requirement (NOAFR), the company said.

Noting that the OPC suggests that the case merits different treatment because of the number of pages in Pepco’s application or the company’s recent merger with Exelon (NYSE:EXC), Pepco said that those claims “collapse on inspection. There is nothing unusual about this case that would justify a month-plus delay in the preliminary tasks to be addressed at the prehearing conference, such as setting a procedural schedule and issues list.”

Pepco on June 30 filed its application with the PSC requesting authority for an increase of about $85.5m in its electric distribution rates for service in the District. That translates to about $4.36 per month in increased electric rates for a typical residential customer who uses 675 kWh per month, Pepco said.

The company requested that for the residential, residential AE and master metered apartment (MMA) classes, this increase be offset by the $25.6m customer base rate credit and the annual $1m incremental offset provided for in the PSC’s order approving the merger.

Discussing the need for the rate increase, Pepco said that it has continued to invest in its system to maintain and improve reliability and to serve load growth in the District. The company said that its revenue growth has not kept pace with the resulting growth in operating costs and rate base, and the current rates do not allow Pepco a reasonable opportunity to recover its costs and earn a fair return.

The increase would be offset until about January 2019 for the residential and residential AE customers and February 2019 for the MMA class if, as the company requested, the PSC applies the entire $25.6m customer base rate credit and $1m annual incremental offset to those classes. Pepco added that on a monthly basis, the bill impact would represent about a 5.25% increase after expiration of the proposed credit and offset.

Pepco said that it is requesting an increase in the authorized return on equity (ROE) from 9.4% to 10.6%, with no offset for the billing stabilization adjustment. Pepco noted that it has proposed an overall rate of return (ROR) of 8%, increased from the 7.65% authorized in the last rate case. At current rates, Pepco’s adjusted earned ROR is only 5.12%, which is less than that which was authorized by the PSC in the company’s last rate case decision, the company said.

Among other things, Pepco urged the PSC to approve the increase and permit the rate schedules to become effective at the earliest possible time and in any event by June 30, 2017.

“We realize that a rate increase has a direct impact to our customers and so we will continue to work with our customers to identify ways to reduce their energy usage and manage their bills,” Donna Cooper, Pepco region president, said in a June 30 statement. “The reliability and infrastructure upgrades that we have made have reduced the number and length of power outages, while delivering improved service to our valued customers.” 

Pepco said in the statement that during the past three years, it has spent more than $658m to strengthen and modernize the District’s electric distribution system, and as a result, Pepco’s District reliability performance exceeded PSC service standards from 2013 to 2015. Compared with 2011, customers last year experienced 42% fewer power outages and 33% shorter outages, the company said.

Pepco said that its last delivery rate adjustment in the District was filed in 2013 and took effect in 2014. Delivery rates cover the cost of the poles, wires and other equipment that carry electricity to customers’ homes and businesses, the cost of staff for customer service and for preparing and processing customers’ bills, the company said.

About Corina Rivera-Linares 3235 Articles
Corina Rivera-Linares, chief editor for TransmissionHub, has covered the U.S. power industry for the past 15 years. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines. She can be reached at clinares@endeavorb2b.com.