Regulators and Pepco’s rates -- Gazette.Net


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The derecho that battered Montgomery County last month was that rarest of storms, meteorologically speaking. In fact, it was almost a perfect storm. It swept in from the Midwest, failed to weaken over the Appalachian Mountains and struck with winds of up to 75 mph. Consequently, the Maryland Public Service Commission, which is responsible for regulating the state’s public utilities, is now witnessing its own perfect storm. It’s fielding complaints about both Pepco and Baltimore Gas & Electric, the state’s two largest energy providers.

Rarely do two sets of consumers and advocates have similar complaints at the same time. But as a result of the storm, a total of more than 1.1 million customers of the two companies were without power at the peak.

As luck would have it, the PSC already was on the hook for a decision on a Pepco rate hike request of 4 percent. The decision is expected soon. PSC Chairman Douglas R.M. Nazarian hasn’t said whether the commission will take into account Pepco’s handling of the most recent outages. It shouldn’t. The two are unrelated.

The state’s utilities are required to file reports on how they performed by 21 days after power is restored. But the utilities have requested that the due date be extended, pushing the report on Pepco’s storm performance into August. That means there’s a good chance the PSC decision will be independent of the utility’s response following the derecho.

A decision in favor of Pepco might open the PSC to as much criticism as the utility is likely to receive. Politicians are already taking aim, imploring the commission to deny a rate increase. Twenty-nine legislators from Montgomery and Prince George’s — the counties served by Pepco — sent a letter last week to the PSC, as did the executives of the state’s six most popular counties and Baltimore Mayor Stephanie Rawlings-Blake. The most telling sentence in the legislators’ letter states: “A rate increase now would simply reward poor performance.”

And Montgomery County Council President Roger Berliner issued a statement last week in which he wrote, “People are beyond angry.”

He continued that the PSC must “hold Pepco’s feet to the fire.” And, he called on the commission to adopt “performance based ratemaking.” Under it, the utility can make money if it performs well. But if it does not, “there are significant penalties,” Berliner said.

It’s certainly no given that the commissioners will rule in favor of Pepco’s rate hike. Last year, after the General Assembly passed legislation allowing the PSC to penalize electric utilities that fail to meet reliability standards, commissioners in December fined Pepco $1 million for its poor performance in outages and for shoddy tree-trimming practices around power lines.

County and state lawmakers are also arguing that serious consideration should be given to requiring the utilities to bury at least some of their power lines. The utilities say it would be prohibitively expensive. But PSC commissioners have a responsibility to weigh heavily what the future might bring in weather as they press utilities to improve their performance.