The Public Service Commission (PSC) of the District of Columbia, in a Sept. 22 order, designated the issues in the case and established a procedural schedule for the proceeding in which the commission considers the rate application of Potomac Electric Power Company (Pepco).
As noted in the order, Pepco in late June filed its application requesting authority to increase existing distribution service rates and charges for electric service in the District by $85.5m, representing an increase of about 23.7% in the company’s distribution revenues. Pepco, which stated that the requested rates are designed to collect $447m in total distribution revenues, requested authority to earn an 8% rate of return, including a return on common equity of 10.6%, the PSC added.
According to Pepco, its application would translate to an increase in distribution rates of about $4.36 per month for a typical residential customer who uses 675 kWh per month. The PSC also said that Pepco proposed to offset that increase for residential customers until about January 2019, by applying the customer base rate credit and incremental offset that the PSC approved in the Exelon (NYSE:EXC)/Pepco Holdings merger.
The PSC said that the designated issues include:
- Is Pepco’s proposed rate increase just and reasonable?
- Are all merger commitments properly reflected in the application?
- Are Pepco’s short-term and long-term load forecasts reasonable?
- Should the PSC explore alternative ratemaking structures, such as performance based ratemaking? If so, which, why and what elements of Pepco’s rates, incentives and operations and expenses are potential candidates for performance based ratemaking?
According to the procedural schedule, evidentiary hearings are to begin in March 2017, and a final order is to be issued in July 2017.
In other merger-related news, the Delaware PSC on Sept. 23 said that upon the District of Columbia regulators’ approval of the Exelon/Pepco Holdings merger, the “Most Favored Nation” clause in the Delaware settlement became effective.
That clause assured that if any other state involved in the merger was given a better deal to obtain approval of the merger, Delaware would receive a comparable offer, the Delaware PSC said, adding, “The ‘Most Favored Nation’ clause and other jurisdictional settlements resulted in an additional $27.1 million allocated to Delaware for public interest projects.”
The Delaware PSC said that it held on Sept. 20 a publicly noticed hearing on the final settlement of the merger, and its final decision on the allocation of the additional $27.1m is as follows:
- Delaware Department of Natural Resources and Environmental Control (DNREC) Energy Efficiency (Large Commercial & Industrial): $8m
- DEDO Economic Development: $6m
- DNREC Energy Efficiency Investment Fund: $4m
- Arrearage Management Plan: 3.1m
- Delmarva Power Energy Efficiency Low Income: $2m
The remaining $4m was proposed to be set aside for public interest projects, the Delaware PSC said, adding that it felt that more details were needed regarding how projects would be selected and what qualifications would be required. The final $4m from the settlement will be allocated at a later time, the PSC said, noting that a reversion of funds was also agreed to so that if any of the above funding has not been fully allocated within five years, it will revert to the Arrearage Management Plan for Delmarva Power customers.
Three additional benefits that were granted in other jurisdictions were included in the final settlement, the PSC said:
- Exelon will make $3m available at capital market rates for any government agency wishing to develop renewable generation
- Exelon will develop or assist in the development of 5 MW of renewable generation
- Exelon will consider the possibility for one microgrid project in Delaware, deferring full implementation until progress is made in other jurisdictions
Delmarva Power and Pepco are Exelon companies.