Unhappy with a $24 million rate increase approved in September, Potomac Electric Power Company asked D.C. regulators March 8 for an additional $52.1 million in distribution revenue.
Pepco said it needs the increase because its revenues have not grown enough to support increased spending on reliability improvements. In its previous rate case, Pepco — the subject of harsh criticism over its reliability — received only $24 million of the $42 million rate it requested.
Pepco said its return on equity is only 5.8%, less than half of the rate authorized by the District’s Public Service Commission.
Insulting
D.C. People’s Counsel Sandra Mattavous-Frye had no sympathy for the company’s arguments, calling the rate request “insulting.”
The company said its request would increase the bill of a District resident using 750 KWh per month by about 6%. Mattavous-Frye noted that the request would represent a 36% increase in distribution rates.
“Before the ink is dry on Pepco’s September 2012 $24 million increase … and before anyone can validate whether we have seen even the most basic long term reliability improvements promised, the company is back seeking much, much more,” she said in a statement.
Pepco has been the target of customer ire in D.C. and Maryland as a result of frequent “blue sky” outages and its restoration efforts after the February 2010 blizzard and the June 2012 derecho. The Washington Post reported in 2010 that Pepco ranked near the bottom nationally for reliability.
Outages Down
Pepco said it has reduced outage frequency in the District by 17% and outage duration by 21% since 2010, when it began increased spending in its “Reliability Enhancement Plan.” Customers on improved feeders saw a 28% cut in outage frequency and a 42% reduction in outage duration from 2011 to 2012.
Pepco got better marks for its response to Hurricane Sandy in October — when most of the 130,000 customers who lost power were restored within 30 hours — although the storm’s path spared the service territory from the worst damage.
The company is also asking for an increase in the authorized rate of return on equity (ROE) to 10.25% from 9.5%. Pepco said the increase was necessary for it to maintain investment grade credit ratings.
Maryland Rate Case
Pepco filed a $60 million rate hike request with the Maryland Public Service Commission in November that would increase the average residential bill by $7 per month, a 5% boost. In July, the PSC rejected all but $18 million of the company’s previous $68 million rate request. The commission balked at what it called the company’s effort to increase shareholder returns “before Pepco corrects its sub-par performance.”
