Surcharge should be election issue
What amounts to only 6 cents on a monthly Pepco bill is anything but a penny ante change in Maryland policy.
The addition will pay for “grid resiliency” projects — projects meant to strengthen the utility’s electrical grid to withstand unusual weather events. It’s a first for the state. Florida put such a “tracker” in place, and other states are considering similar surcharges.
Before, Pepco — and by definition, its shareholders — would have been expected to fortify its power lines to protect against big winter and summer storms. Now, some projects will be forward-funded with those pennies, transferring the responsibility to ratepayers.
The 6-cent surcharge will increase to 19 cents in 2015 and 27 cents in 2016, raising $24 million for the company. This is on top of a general rate increase that will add $2.41 a month to the average Pepco customer’s bill.
Power companies have been asking for similar charges for some time, and the Public Service Commission — the state agency that approves utility rates — has turned them down previously. In Pepco’s 2012 rate case, the PSC said it opposed the surcharge, in part, because it would reduce incentives for innovation and efficiency.
The flip-flop follows a September 2012 report from a state task force that looked at how utilities can improve reliability in the face of ravaging storms that favored such charges.
Curiously, less than a year before, the PSC fined Pepco after a series of stunning power failures. After hundreds of thousands lost power after the June 29, 2012, storm, Gov. Martin O’Malley (D) promised, famously, that he would keep his boot up the company’s backside until power was restored.
Montgomery County and other interested parties have filed appeals to the PSC’s rate decision, in part because of the grid surcharge, meaning the policy change is likely to face judicial review. (Pepco also is unhappy with the results of its rate request and has filed its own appeal.)
It should be a policy change also reviewed by voters. Utility regulation arcana is rarely grist for the campaign trail, but the surcharge looks and smells like a tax and voters should think of it like one. When gubernatorial and General Assembly candidates ask for your vote, you should ask them — a penny for their thoughts — what they think of the surcharge and why.