Assisted by OPC’s advocacy, PSC rejects much of Pepco’s added rate hike on top of 2023 increase
BALTIMORE – Buoyed by evidence and argument presented by the Office of People’s Counsel, the Public Service Commission this week denied all but $13.36 million of Pepco’s request to recover an additional $30.6 million in rates for the final year of its multi-year rate plan. The plan, approved by the Commission in 2021, was effective from June 2021 through March 2024, and included a $15.3 million rate increase in its final year.
In 2024, Pepco sought to nearly double the approved rate increase for the final year through a “reconciliation” of cost and revenue variances incurred during that year.
Had the Commission approved Pepco’s reconciliation request in full, Pepco’s rate increase for the final year would have totaled $45.9 million, bringing the company’s three-year rate increase to $91.1 million—74 percent above the $52.2 million the Commission initially approved. The smaller increase the Commission approved will result in a 64-cent monthly bill impact for a typical residential customer using 824 kilowatt hours of electricity, the Commission’s order said. The reconciliation rates will be effective through March 31, 2027.
“We welcome the Commission’s decision to deny more than half of Pepco’s request,” said Maryland People’s Counsel David S. Lapp. “Customers cannot afford the continuous growth in rates that Pepco is requesting, and customers should not have to pay extra due to Pepco’s inability to operate within the Commission’s authorized budgets.”
The increase is separate from, and in addition to, the rate increase Pepco requested in October 2025 that is now pending before the Commission. OPC opposes Pepco’s proposed 23 percent rate increase in its entirety, arguing that Pepco’s distribution rates should be reduced, instead.
A recent OPC analysis shows that, in general, utility rates and customer costs increase faster during periods governed by rates set based on utility forecasts, compared with growth in rates and costs over a comparable period in which rates were set using the Commission’s standard rate-setting practices. Pepco’s currently pending rate increase relies on a “fully forecasted test year” which, like multi-year rates, would shift to customers the risks of overstated utility forecasts.
The Commission’s Tuesday order, among other expenses, denied Pepco’s request to recover:
- The entire $4.1 million cost for its canceled Livingston Road battery energy storage project, adopting OPC’s initial position.
- The entire $3.6 million cost for the Wheaton Substation transformer replacement, the entire $2 million for a circuit breaker replacement, and $9.7 million for unnecessary installation of “tree wire”—a more costly form of distribution system power lines—adopting OPC’s positions in each instance.
- $14 million in operations and maintenance spending for which OPC argued Pepco had failed to provide any explanation whatsoever, despite the company’s burden to prove such spending was prudent.
The order allows Pepco to seek recovery of many of the disallowed costs in subsequent rate cases.
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.
* * *
|
