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Just One Month After Merger, Pepco Files for Major Rate Hike in Maryland

April 27, 2016 By Cheryl Kaften

Pepco – which promised benefits and savings to its 560,000 customers in Montgomery County and Prince George’s County, Maryland, when it merged with Exelon on March 23 –filed a 10 percent rate increase request on April 19 with the Maryland Public Service Commission.

The reason for the filing, which would garner the utility another $127 million in revenue, Pepco said, is to recover the costs of reliability investments that have reduced the number and length of power outages, as well as the price of the implementation of a five-year smart grid initiative.

Under the proposed rate adjustment, the typical Pepco Maryland residential customer bill would increase by about $15.80 per month; an average monthly bill is currently $152.

Nobody likes to pay more for their electric bill, but the reality is we have been investing hundreds of millions of dollars,” said Jerry Pasternak, Pepco’s region vice president for Maryland Affairs, told Fox 5 News. “These dollars have proven to be effective over the last couple of years. Customers have seen a dramatic decrease in frequency and duration of outages.

“The rate adjustment application has nothing to do with the merger between Pepco and Exelon and would have been filed regardless of the merger,” commented Pasternak. “The merger actually provides customers with some funding in order to offset the impact of any rate increase.”

Even if the new rates are approved, the utility said, its customers’ monthly bills are down 9 percent from where they were five years ago because of dropping energy prices. And many customers continue to take advantage of Pepco’s smart energy management programs to save on their bills.

“Pepco customers benefit from the strong progress we’ve made on our commitment to accelerate investments in our system, improve reliability and modernize the power grid,” said Pepco Region President Donna Cooper in a company statement.  “Our customers are realizing the results by experiencing fewer and shorter outages as a result of an upgraded electric distribution system that is more efficient.”

During the past two years, Pepco said, the utility has invested $327 million into improving reliability of the electric distribution system – and fully $890 million in reliability and other programs since 2012. In addition, during the last two years, Pepco implemented a $24 million grid resiliency program, which reinforced 24 major distribution lines in Maryland

“The rate request would extend the grid-resiliency program, which has had dramatic results in improving service.” Pepco said. The company also has invested in technology to benefit customers by installing more than 560,000 smart meters. Pepco’s filing claims that for every dollar invested in smart grid, customers gain more than $3.50 in benefits.

Finally, Pepco made the case that its delivery rates in Maryland have not changed since 2014– and that the rate hike will not affect its District of Columbia customers

As was to be expected, the rate request got an immediate reaction from the community. All nine Montgomery County Council members on called on County Executive Ike Leggett on April 19 “to intervene, protest, and fight” Pepco’s proposed 10 percent rate increase, Bethesda Magazine reported.

“The fact that Pepco would file for such an increase so soon after the merger underscores why our council unanimously opposed the merger as approved,” the letter read. “Consumers face even greater threats than before. If the past is prologue, this rate increase is wholly unjustified.”

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