Protests Begin Against Pepco's Most Recent Rate Increase Request
Seven Montgomery County Council members call the rate increase request "suspect, unwarranted and unjustified."
Little more than a week has passed since Pepco filed its most recent rate increase request (for $60.8 million) with the Maryland Public Service Commission, and the protests have begun already.
Town of Somerset Council Member Cathy Pickar proposed that the Somerset Council write a letter of protest to the PSC to say that the town council is opposed to the rate increase, which Pickar described as "regulatory ransom."
"[This rate increase suggests that] if you want improvement, you pay for it first."
The rate increase—the second that Pepco has filed this year—has two parts to it, Patch reported last week:
- An increase in rates (about $7.13 more a month for typical customers) that would pay for improvements that Pepco began making to its distribution system in 2010, and which are still in progress.
- A three-year grid resiliency charge to cover additional, accelerated enhancements to the distribution system to meet the recommendations of the Maryland Grid Resiliency Task Force. For typical customers, this charge would be $0.96 a month in the first year, $1.70 a month in 2015 and $1.93 a month in 2016, according to a Pepco statement.
(A "typical" residential customer is one who uses approximately 1,000 kilowatt hours a month, Pepco said.)
"There’s no question that we are going to be paying higher rates … if we want this system improved," Pickar said at a Town of Somerset Council meeting last week.
But, "I don’t like to see having a rate increase to pay for resiliency before they’ve done the work," she added. "We don’t want to pay for upgrades before they’re made. Pepco should have some skin in this game."
In July 2012, the PSC approved $18 million of a $60 million rate increase request made by Pepco earlier in the year, Patch reported.
Pepco also is requesting an "authorized rate of return on equity of 10.25 [percent]," according to its rate increase request. But, Pickar "think[s] their return on equity ought to be tied to their performance."
Pickar is not alone in her criticism of the rate increase request. Earlier this month, seven Montgomery County Council members—Roger Berliner, Nancy Navarro, Phil Andrews, Marc Elrich, Valerie Ervin, George Leventhal and Hans Riemer—issued a statement, MoCoVox reported:
We oppose Pepco’s request for a rate hike. We believe Pepco’s financial fortunes should be directly tied to its performance and that performance does not justify an increase in its rate of return. As it is, shareholders have fared a lot better than ratepayers.
We also do not believe that Pepco should be able to avoid a review of the prudence of its expenditures in return for expediting their reliability work. Rather, we believe that Pepco owes it to this community to expedite its reliability work using the traditional ratemaking process that ensures that Pepco can only recover from ratepayers costs that the Commission finds are just and reasonable. We fully expect that our County will fight this suspect, unwarranted, and unjustified request, and that the Commission will, as it has recently, protect Montgomery County ratepayers that have suffered for far too long.
Do you agree with these council members that the rate increase is "suspect, unwarranted and unjustified"? Tell us in the comments.