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FOR IMMEDIATE RELEASE
October 27, 2021 |
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Agreeing with OPC, Public Service Commission denies Potomac Edison’s request for a $11.2 million rate increase
BALTIMORE – Potomac Edison customers will see lower electricity bills under a Public Service Commission order issued yesterday. Rejecting arguments of Potomac Edison, the Commission agreed with the Office of People’s Counsel’s analysis of how the utility should recover its investments. The decision avoids $11.2 million annually in rate increases sought by Potomac Edison and decreases current customer rates by $2.1 million a year.
“Potomac Edison customers will see lower electric bills as a result of the Commission’s order,” said People’s Counsel David S. Lapp. “We are pleased the Commission adhered to long-standing principles, rejected Potomac Edison’s effort to have its current customers pay more than their fair share, and required the rate decreases to be implemented immediately.”
The case addressed the time period over which Potomac Edison may recover from customers the costs of its infrastructure, such as its substations, poles, and other equipment. Those costs are recovered from the utility’s captive customers over time, often 30 years or more. The schedule for recovering those costs is called the “depreciation” schedule. The case addressed Potomac Edison’s schedule, as well as how to reflect the value of the assets—or their negative value, reflected in decommissioning costs—at the end of the schedule. The Commission had earlier ordered Potomac Edison to file a depreciation study because it had not done so in 25 years.
Potomac Edison sought to change long-standing Commission policy for how depreciation should be set, but OPC argued—and the Commission agreed—that the utility’s proposal would unfairly burden current customers and that the company can protect itself by submitting studies more frequently.
The Commission further agreed with OPC’s position on how to consider the fact that a dollar is worth more now than years from now. Under the utility’s proposal, customers would lose the benefit of their current dollars; customers’ losses would be the utility’s gain.
Potomac Edison also sought to delay the decrease in rates until its next rate case—at some unknown time in the future. OPC said the decrease in customer rates should be implemented immediately, and the Commission agreed.
“This a big win for Potomac Edison’s customers, and they will see immediate relief in their utility bills,” Lapp said. “The Commission properly rejected Potomac Edison’s arguments and resolved all the issues as they should have been, and the utility’s customers will benefit.”
The Maryland Office of People’s Counsel is an independent state agency that represents Maryland’s residential consumers of electric, natural gas, telecommunications, private water and certain transportation matters before the Public Service Commission, federal regulatory agencies and the courts.
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