In May of 2009, Pepco filed a rate case requesting $51.7 million in additional revenues, less than 16 months after a $28.2 million rate increase went into effect.

The evidentiary hearing was held in November. The Office’s witnesses presented an exceptional case for a rejection of Pepco’s requested increase. OPC-DC presented the testimony of several witnesses who supported a reduction in current revenue by $15.7 million and a return on equity of 9 percent. Their conclusions were based in part on Pepco’s poor performance as an electric distribution service company and its inability to provide credible evidence to support its proposed request. If Pepco’s rate increase is granted in its entirety, it will result in an increase of approximately 47 percent in the monthly rate for a typical residential consumer.  

OPC-DC recommended the PSC reject a number of proposals made by Pepco in its request including:

•    Pepco’s request for authority to include a nearly $6.5 million difference between its 2009 pension expense and the amount of such expense in          rates approved in 2008.

•    Pepco’s proposal to include in rates an annual allowance for federal and D.C. incomes taxes at tax rates Pepco never pays to the federal or District    governments.

•    Pepco’s allocation of affiliate charges to the District of Columbia.
•    Pepco’s overstated depreciation rates that include future inflation costs charged to current ratepayers.
•    Pepco’s proposed jurisdictional and class cost allocations of its distribution service rates as unreasonable.

Throughout the proceeding, OPC-DC advocated that Pepco had not met its burden of proof that its request was just and reasonable. The Office maintains there is nothing wrong with continuing to protect consumers from rising electric service costs, particularly when Pepco’s performance as a distribution service company is so poor.

For more detail, see “OPC’s Summary of Pepco’s Rate Increase Request”. 

A decision from the PSC is expected in early 2010