Skip to content

Saying No to Rate Hikes

Utilities ask Public Service Commission for $92 million

A request by two Pepco subsidiaries to raise electricity delivery rates in Maryland by more than 4 percent has sparked strong resistance from consumer groups and residents who say the increases are too burdensome and unjustified.

Sign up for the AARP Money Newsletter.

AARP Maryland is moving on several fronts to oppose the rate requests. It has hired an attorney to intervene in the cases and a consultant to testify before the Maryland Public Service Commission (PSC) on the issue of Pepco's reliability. AARP also plans to hold town hall meetings in Montgomery and Prince George's counties, as well as a tele-town hall for the Eastern Shore. It will also conduct a postcard campaign to make members aware of the issue.

"We feel that Pepco needs to bring its service into line with reliability and stability standards before asking for a rate increase," said Tammy Bresnahan, AARP Maryland associate state director for advocacy.

After Hurricane Irene in August and other storms caused long power outages in Pepco service areas, the Maryland PSC fined the company $1 million — the commission's largest fine ever. The PSC cited Pepco's "inadequate vegetation management and insufficient inspections" as well as "failure to perform preventative maintenance work that could have lessened the severity of interruptions."

730,000 customers affected

In December, Pepco and Delmarva Power — both subsidiaries of Pepco Holdings Inc. — separately asked the PSC for rate hikes.

"We are dedicated to maintaining safe and reliable service and enhancing the customer experience through replacing and upgrading electric system infrastructure, trimming trees that threaten power lines, and installing advanced technologies," said Thomas H. Graham, Pepco Region president.

Gary Stockbridge, president of Delmarva Power Region, which requested a $25.2 million increase, said: "We are working diligently to maintain safe and reliable service and to enhance technology to benefit our customers. We're replacing and upgrading our infrastructure and reducing potential service interruptions by trimming trees around power lines."

The nearly $67.7 million Pepco request — about a 4 percent increase for residential customers — affects 530,000 customers in an area that covers most of Montgomery and Prince George's counties. If approved, it would add about $5.50 to the monthly bill of a residential customer using 1,000 kilowatt hours.

Delmarva Power's request for $24.3 million — about a 5.6 percent increase for residential customers — would add about $7 to a monthly bill. Delmarva serves 200,000 customers in parts of Harford County and all nine counties on the Eastern Shore.

"That's a significant increase, especially for our members who are living on fixed incomes such as Social Security benefits," said Bresnahan.

Next: Montgomery County backs residents. »

The PSC has granted Montgomery County's request to join AARP and others in opposing Pepco's rate increase. Montgomery County Executive Isiah Leggett (D) and County Council President Roger Berliner (D) announced that the county would "vigorously contest" Pepco's request. They urged the PSC to hold "Pepco financially accountable for its failure to honor its fundamental public utility obligation to provide reliable power."

In its petition to intervene in the rate case, Montgomery County told the PSC that "Pepco's rates must not include any costs or expenditures that result from attempting to rectify the imprudent conduct of Pepco in providing unreliable service to its customers while … failing to properly inspect and maintain its infrastructure."

The Maryland Office of People's Counsel, the state's advocacy office for utility consumers, is another party to the case. The office previously argued strongly before the PSC in favor of the fine levied against Pepco for its maintenance lapses.

Gene Gary-Williams, 76, of Kettering, a volunteer member of the AARP Maryland executive council, knows that speaking up can make a big difference. Angry Prince George's County residents confronted Pepco at a meeting several years ago after repeated outages. They argued that such service lapses would not have been allowed to continue in wealthier, nonminority neighborhoods.

Since then, the area hasn't had any major outages "even in the worst storms," she said.

In its application filed with the PSC, Pepco said its rate requests are justified because the company has not been able to earn as much on its investments as the PSC has guaranteed. The commission approved a 9.83 percent return on equity in its latest rate case, Pepco said, but the utility's actual return on equity was minus 0.36 percent.

"Simply put, the company is losing money on its Maryland operations," Pepco told the PSC.

A PSC decision is expected by July.

Also of interest: A guide to your home energy consumer rights.

Art Dalglish is a writer and editor based in Rockville, Md.

Note: We are currently in the process of replacing our commenting service, so it may take a few days for previous comments to appear. Login or register on to join the conversation.