Exelon’s (NYSE:EXC) Potomac Electric Power Company (Pepco) on May 3 said that it is seeking approval by the Maryland Public Service Commission of a settlement agreement regarding the company’s electric delivery rate request and the company’s plan to pass along federal tax benefits to customers.
The company said that based on the settlement, which includes the impact of the federal tax reductions from the Tax Cut and Jobs Act of 2017 (TCJA), the total monthly bill for a typical Maryland residential customer using 812 kWh would decrease by $1.64, or around 1.31%. Pepco said that it is also providing a one-time bill credit related to the Tax Cut and Jobs Act benefits received since Jan. 1, which is about $10.09 per residential customer. The settlement provides customers the benefits of the federal tax reduction as quickly as possible and efficiently resolves the pending requests, according to the company.
Pepco noted that it filed its January rate request to help recover capital costs, including those costs necessary to build a smarter energy infrastructure. According to the company, during the past five years, the number of electric outages has decreased by 49% in its Maryland service area.
Pepco noted that it has recently filed with the District of Columbia Public Service Commission regarding agreements reached on the company’s rate request and tax benefits plan for the District.
According to the April 20 “joint motion for approval of agreement of stipulation and settlement” filed with Maryland regulators, the parties to the settlement are Pepco, Maryland regulatory staff, the Office of People’s Counsel, the Apartment and Office Building Association of Metropolitan Washington, Montgomery County, Md., and the City of Gaithersburg, Md.
As noted in the joint motion, Pepco in January filed an application for authority to increase its rates for providing electric distribution services to its customers in Maryland by about $41.4m. Shortly before Pepco filed its base rate case, the TCJA was signed into law, Pepco said in its joint motion. As a result of the TCJA and in compliance with another order, Pepco filed supplemental testimony demonstrating an approximate $34m reduction in its revenue requirement as a result of the TCJA, offset by a requested proposal to use the dispersion method for pre-1981 cost of removal, resulting in a total revenue requirement reduction of $30.7m. Pepco also said that it filed in March additional supplemental direct testimony updating its case to actuals resulting in a revenue requirement of about $3.3m. The company noted that after conducting discovery and reviewing Pepco’s pre-filed testimony, the parties entered into settlement negotiations.
Among other things, Pepco said that under the settlement, the parties agree that the company is to file rate schedules authorizing a Maryland retail base rate decrease of $15m, with the parties requesting that the new rates become effective for service on and after June 1.
The cost of equity is to be 9.50%, and the parties accept Pepco’s actual capital structure at Dec. 31, 2017, consisting of 50.44% equity and 49.56% long-term debt, Pepco said.
Also, the parties agree that the TCJA regulatory liability, accrued from Jan. 1 until May 31, is $9.7m. Pepco added that it agrees to provide a total of $9.7m to customers in a one-time bill credit that will be posted to customer accounts within 60 days after the commission order approving the settlement.