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Council Protests Pepco Rate Hike Request

by BethesdaNow.com — December 4, 2012 at 9:50 am 851 0

Seven members of the Montgomery County Council offered their disapproval of Pepco’s latest rate hike request, which came Friday and would mean an increase of about $7.13 per month for the average customer.

Councilmembers Roger Berliner (D-Bethesda-Potomac), Nancy Navarro (D-Colesville), Phil Andrews (D-Gaithersburg), Valerie Ervin (D-Silver Spring) and at-large representatives George Leventhal, Marc Elrich and Hans Riemer said they want to see reliability upgrades before supporting a rate hike:

We oppose Pepco’s request for a rate hike. We believe Pepco’s financial fortunes should be directly tied to its performance and that performance does not justify an increase in its rate of return. As it is, shareholders have fared a lot better than ratepayers.

We also do not believe that Pepco should be able to avoid a review of the prudence of its expenditures in return for expediting their reliability work. Rather, we believe that Pepco owes it to this community to expedite its reliability work using the traditional ratemaking process that ensures that Pepco can only recover from ratepayers costs that the Commission finds are just and reasonable. We fully expect that our County will fight this suspect, unwarranted, and unjustified request, and that the Commission will, as it has recently, protect Montgomery County ratepayers that have suffered for far too long.

Pepco says it needs the money, which includes a $60 million rate increase, an increase on return on equity and a grid resiliency surcharge, to improve reliability.

Berliner called the rate increase request “a little like Groundhog Day.” Pepco was denied a similar request about four months ago by the Maryland Public Service Commission, which decides on utility rate requests.

At that time, Pepco officials indicated they would turn around and ask for a rate increase again, a common occurrence in the utility industry, Berliner said.

“I don’t begrudge them their corporate interest in helping their shareholders,” Berliner said. “I’m not confident that the system has gotten fundamentally stronger. If we had another major storm, we still have a weak system.”

Berliner said he expects Pepco to be in the top quarter of reliability rankings nationally and even though the company’s return on equity is below the industry norm he is opposing the increase because its performance is also below the industry norm.

“My perspective is its return should be related to its performance,” Berliner said.

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