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Pepco is seeking to raise the bill of its residential customers in Maryland by 4 percent, or an average of about $5.56 a month, according to a filing Friday with the state utility regulator. The $68.4 million rate increase would go into effect in January, unless the Maryland Public Service Commission calls for a review of the request, which the commission typically does when a utility seeks a rate hike.
The utility also wants to set rates based on forecasts of future costs, and to use a “rate rider” that forces customers to cover the total costs for infrastructure improvements.
The request to raise rates comes just two weeks after the utility topped a list of 68 companies that paid little to no state income taxes in three years.
And in July, Pepco was declared the “most hated” company in America by Business Insider after it scored a 54 on the American Customer Satisfaction Index — Pepco’s lowest score in the nine years it was ranked. The score placed Pepco at the bottom of the 25-largest investor-owned utilities and was no surprise to the more-than 150,000 customers in Montgomery and Prince George’s counties who lost power during January snowstorms, many for several days.
The new hikes come after rates increased 3.1 percent for residential customers last year.
To justify the requests, Pepco’s application points to the need to give investors a “fair return” and to cover the costs of infrastructure improvements. “Revenue growth has not kept pace with the growth in operating costs,” the application describes. “Simply put, the Company is losing money on its Maryland operations.”
The same is true across Pepco’s parent company operations, said spokesman Clay Anderson. Delmarva Power, the subsidiary that supplies power to Delaware customers, has also filed for a rate increase.
But the company’s past performance has some questioning whether a rate increase makes sense.
“They certainly haven’t earned this,” said Montgomery County Council President Roger Berliner, D-Bethesda. He suggested that the company’s investors’ rate of return be reduced as a result of Pepco’s past performance.
The Maryland Office of the People’s Counsel opposed the “rate rider” sought by Pepco, as well as its request to set future rates based on forecasts of the company’s costs. These “non-traditional” tactics put ratepayers at a disadvantage said Paula Carmody, head of the office.
Pepco Holdings reported operating income of $624 million and net income of $32 million in 2010. The company posted $80 million in earnings from operations in the third quarter of 2011, nearly four times its earnings for the third quarter of 2010.
