Residents, Leaders Testify Against Proposed Pepco Rate Increase

Several residents testified Wednesday against letting Pepco raise its electric rates, with many saying they have not been stabilized after the utility’s merger with energy giant Exelon last year.

A hearing was held at the County Council Office Building in Rockville as Pepco seeks to raise its electric distribution rates by $68.6 million. The average residential customer would pay about $7.37, or 5.5 percent, more per month.

The Public Service Commission, the state’s utility regulator, is weighing whether to approve the rate increase. Commissioners were on hand Wednesday night to listen to public testimony.

Montgomery County Council member Marc Elrich, who is running for county executive, said that a little more than five years ago, Pepco’s reliability rates were in the lowest quartile compared to other utilities’. Although the utility has improved reliability, he said, customers shouldn’t be charged for their efforts to improve substandard service.

“Pepco’s record of poor performance is largely a self-inflicted wound due to its historical record of refusing to make adequate infrastructure investments in repairs and improvements,” Elrich said. “The merger was supposed to keep rates down and improve quality.”

“In essence, consumers are paying for these improvements twice—first in rates from years past, and now in current rates where we’re being asked to pay for things that Pepco should have addressed with money from previous rate increases,” Elrich added.

Pepco merged with Chicago-based Exelon last year, creating the largest publicly held utility in the country.

Pepco said in a statement that it’s requesting the rate increase to continue funding service-reliability improvements. The utility said it plans to spend $150 million this year on improvements, after spending about $138 million on improvements in 2016.

The Public Service Commission approved a $52.5 million rate increase for the utility in November, partly to offset reliability improvements.

In written testimony, County Council President Roger Berliner, who is also running for county executive, said the rate increase request this year would give Pepco a 10.10 percent return on equity. Berliner said this is far too high of a rate and Pepco should not be rewarded for making long-needed improvements.

“[Pepco] should face financial consequences for failing to honor its commitment,” Berliner wrote. “Instead, in the case before you, the company has requested extraordinary treatment as part of its rationale to again increase rates. They are not entitled to extraordinary treatment.”

Rockville residents Ellen Ryan and Matteo Colombi also made similar points at the hearing.

Colombi said it appears as if the Public Service Commission is a “rubber stamp” for Pepco.

“We are being milked to help Exelon pay for its takeover,” Colombi said. “You should resist Pepco’s extortionate approach.”

On the other side, Jean Sperling, of Chevy Chase, encouraged the commissioners to approve the rate increase because she has experienced reliability improvements. She described “almost flawless service” in her community.

“Surely the commission has heard of and witnessed itself the stellar performance of Pepco that has resulted from their reliability improvements,” Sperling said.

Three other speakers, who said they led engineering firms, also supported the rate increase.

“If this Pepco rate increase can help facilitate the infrastructure in this area to provide better service, I think it’s a great thing,” Jim Soltesz said.

Soltesz is the CEO and president of Rockville-based Soltesz, Inc. which says on its website that it’s working on a “number of task orders” with Pepco for civil engineering design services.

The Public Service Commission is scheduled to hold hearings on the proposed rate increase at its offices in Baltimore from Sept. 5 – 15. It must issue a decision by Oct. 20 on whether to approve or deny the request.


As featured in Bethesda Magazine