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Pepco seeks $66.2M increase in electric revenues starting in 2019

The District of Columbia's power company Potomac Electric Power Co. applied to increase its revenues from retail electric rates by $66.2 million beginning on Jan. 1, 2019. The company, or Pepco, on Dec. 19 filed an application with the D.C. Public Service Commission that, if approved, would increase monthly electric bills for an average residential customer by $7.56, or roughly 9%. Pepco, a subsidiary of Chicago-based Exelon Corp. also asked the agency to increase its rate of return on equity to 10.1%. A prior rate case that the PSC decided in July authorized a 9.5% return on equity.

In its latest rate application, Pepco seeks to recover investments since 2016 in its distribution system. Some of its 2017 projects include replacing or installing 11 miles of underground cable, replacing about 25 miles of above-ground cable and installing 65 reclosers, which are equipment to automatically restore power after short-term interruptions, Pepco said in a Dec. 19 press release.

"Furthermore, as customers use the grid differently by adding distributed resources, feeding excess generation back to the grid, or changing load patterns by charging electric vehicles at night, Pepco must make the necessary modifications to keep up with these changes," Wendy Stark, Pepco's vice president and general counsel, said in the rate application. Pepco Holdings, the parent of Pepco, distributes power to 842,000 customers across the District and Maryland.

The average customer bill would still be 16% lower than it was seven years ago, thanks to lower electricity supply costs, operating efficiencies and energy efficiency programs, Pepco officials said. As part of finalizing its $6.8-billion merger agreement with Pepco Holdings LLC in 2015, Exelon agreed as part of a settlement with the PSC to provide a $25.6 million customer base rate credit to prevent increases to distribution rates through March 2019.

D.C.'s top consumer advocate, the Office of the People's Counsel, worried that the commission ruling on Pepco's application could affect distribution rates.

"During the Pepco Holdings-Exelon merger proceedings, [the Office of the People's Counsel] successfully fought for residential rates to be offset by a bill credit. As a result, the distribution portion of DC residents' electric bills has not increased since April 2014. That could change however, depending on a commission ruling on today's application expected sometime toward the end of 2018," officials with the office said in a press release.

Pepco, in its release, said it is not proposing any modification to the use of the customer base rate credit and "recommends [the credit] continue to be provided to residential customers, including master-metered apartments and some small commercial customers until it expires in July 2019." (Formal Case No. 1139; Formal Case No. 1150)