PSC Approves $18M of Pepco's $68M Rate Increase Request
The increase will raise a household's monthly electricity bill by about $2, according to a statement issued by the Maryland Public Service Commission.
Of the $68 million rate increase requested by Pepco, the Maryland Public Service Commission has rejected $50 million.
Still, the $18 million rate increase "translates into a $2.02 typical residential monthly bill impact" (a 1.69 percent increase), according to a statement issued by the Maryland Public Service Commission on Friday afternoon.
In the rejection order, the commission "noted its overall dissatisfaction with Pepco’s performance, and characterized its request to increase returns to shareholders 'before Pepco corrects its sub-par performance' as 'backwards,' " according to the statement.
Pepco filed the request on Dec. 16, 2011. "The full record in the case included testimony from 31 witnesses and 11 days of evidentiary hearings, along with two public evening hearings and extensive post-hearing briefs. The record officially closed on June 25," the statement continued.
“Although the outages resulting from the June 29 ... storm and Pepco’s response to them are not, and cannot be, part of the record or our decision-making process in this case, we recognize that the statutory deadline for this decision comes at an unfortunate time," the commission's rejection order stated.
The commission "disallowed $7.9 million in expenses caused by Pepco’s past failures to maintain a reliable electric system ($6.4 million in tree trimming expenses and $1.5 million in expenses Pepco incurred to defend itself against the Commission’s reliability investigation)," according to the news statement.
The commission also "denied aspects of Pepco’s request that would have created new pre-payment surcharges, increased returns to shareholders and allowed the recovery of other projected expenses," the statement continued.
The $18 million rate increase that the commission did approve "is required to meet the legal and statutory mandates set by law to provide safe and reliable service," according to the statement.
And, the commission reduced the return allowed to Pepco's shareholders from 9.83 percent to 9.31 percent. Pepco had requested that the return be set at 10.75 percent, according to the commission's statement.
"Overall, the Commission found that Pepco’s [rate increase] application lacked the evidence required to substantiate its request. In denying three-fourths of Pepco’s rate request, the Commission considered instead its longer history of substandard performance," and balanced that with Pepco's "responsibility to invest in improving its infrastructure."
The complete 162-page Order No. 85028 may be viewed on the Maryland Public Service Commission’s website at www.psc.state.md.us.
Do you think the $18 million rate increase is justified? Tell us in the comments.