Updated Sept. 1 at 11:58 a.m. with a response from Pepco.
New Pepco electric rates take effect today, Monday, August 31. Montgomery County’s Pepco rate increase is $3.94 more a month. It’s lower than the $10.24 the utility company originally asked for.
The Maryland Public Service Commission approved about $50.9 million of Pepco’s $119.9 million rate increase request. That’s less than half, largely because regulators rejected costs tied to a Pepco project in Rockville.
Why the Pepco rate increase is smaller
A big part of the smaller Pepco rate increase for Montgomery County traces back to the county itself. The Commission rejected $164.9 million in costs tied to Pepco’s White Flint substation, a project built on Nebel Street in Rockville to support growth in the North Bethesda area.
Pepco said the substation was needed to improve reliability and support new homes, businesses and jobs as the area redevelops. The Commission disagreed. It sided with the Maryland Office of People’s Counsel, the Maryland Energy Administration and the Apartment and Office Building Association, who argued Pepco’s spending on the project was not prudent.
The Commission also rejected Pepco’s request to raise rates based on projected future inflation, labor and capital costs.
How regulators explain the decision
Commission Chair Kumar Barve said the decision followed months of hearings and testimony from Pepco, consumer advocates, and other stakeholders.
Regulators also lowered how much profit Pepco is allowed to earn on its investments, a factor that affects how utility rates get set. Pepco wanted a 10.5% return; the Commission approved 9.40% instead.
Pepco’s response
Chuck McDade, Pepco’s communications manager, said the company is still reviewing the Commission’s decision on the White Flint costs. He didn’t say whether Pepco plans to appeal.
McDade also noted this is Pepco’s first distribution rate increase in over two years. He added energy supply costs, set by generators, not Pepco, rose about $13 this year, more than three times the $3.94 increase from Pepco’s own rate case.
What’s next
Maryland recently passed a new law aimed at lowering utility costs for residents. Regulators are opening a second review to see if it means more savings for Pepco customers down the road.
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