Delmarva Power’s Proposed New Rate Plan Unfair to Customers, Includes $91.7 Million in Unjustified Capital Spending, OPC Says
BALTIMORE – The Public Service Commission should deny $91.7 million of Delmarva Power & Light’s proposed spending and reject its effort to shift economic risks to customers, the Office of People’s Counsel said in filings late last week.
“Delmarva Power has failed to support its proposed capital projects with technical analysis and data,” said People’s Counsel David S. Lapp. “The utility’s distribution planning fails to consider alternative technological solutions that cost less, and its proposal insulates the utility from virtually any economic risk by removing consumer protections normally found in rate cases.”
OPC’s filing—consisting of expert witness testimony—responds to Delmarva Power’s proposal to increase customer rates over three years by $37.5 million, reflecting new capital expenditures of about $750 million. Delmarva Power proposes to offset the immediate effects of the rate increases by giving customers advance return of tax credits for two years, but customers would feel the effects of those increases in subsequent years.
Delmarva Power is the third Maryland utility to file a “multi-year rate plan” (MRP), following a 2020 PSC order providing one utility the opportunity to “pilot” an MRP for evaluation of the MRP’s impact on rates and service for customers. The PSC has since allowed additional utilities to file MRPs. All three of the MRPs filed with the PSC are for utilities owned by Illinois-based Exelon. Unlike typical rate cases, which are based on historical expenses, MRPs give utilities the chance to get advance approval of rate increases that reflect projected revenue needs. In theory, MRPs provide regulators and customers greater transparency into utility planning and the ability to set utility performance targets under which performance failures mean lower utility revenues.
But the PSC found that transparency was lacking in the MRP filings by the first two Maryland utilities (BGE and Pepco). And although its proposal included some improvements over previously filed MRPs, Delmarva Power’s proposal still reflects a lack of transparency and does not justify its projected revenue needs, OPC’s filings last week noted. The utility’s filing fails to demonstrate that it fully considered alternatives to its proposed capital projects, for example, less expensive “non-wires” alternatives like batteries, energy efficiency, and demand management.
“Delmarva Power’s proposal eliminates performance risks and the incentive for the utility to perform more efficiently and keep costs low for consumers,” Lapp said. “It would allow the utility to collect more money from customers if its spending exceeds its projections. The PSC should reject that proposition as fundamentally antithetical to customer interests.”
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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