Dive Brief:
- Maryland regulators yesterday approved a partial rate request for Potomac Electric Power Co., allowing the utility to increase distribution rates by $52.5 million, less than half the $127 million it had requested.
- The Maryland Public Service Commission noted that Pepco’s request included recovery of $97.2 million related to its six-year investment in advanced metering infrastructure (AMI).The commission denied Pepco’s request to extend a surcharge related to its Grid Resiliency Program.
- Average customer bills will rise about $7/month, or 4.76%, regulators said. Had the full increase been approved, customers would have paid almost $16 more per month.
Dive Insight:
In the first rate increase since Exelon and Pepco finalized their $6.8 billion merger, Maryland regulators have cut almost $75 million from the utility's request. And in addition to cutting revenue requirements, regulators also denied Pepco's request to increase its return on equity and instead reduced it.
Pepco had requested a ROE of 10.6%, up from its current 9.62%. Instead, regulators trimmed the company's return back to 9.55%.
"Economic conditions are now better than they were in 2014, interest rates are lower, and the merger makes Pepco a less risky company than it was before," the commission said in a statement.
The PSC also denied Pepco’s request to extend its Grid Resiliency Program, saving customers to nearly $32 million over two years. Regulators said the surcharge was implemented in 2014 and was intended as a temporary measure to recover costs rfor reliability and safety improvements identified after the 2012 "Derecho" storm.
Pepco requested almost $100 million related to its AMI capital investment over the next six years. While the commission said it heard testimony as to the benefits of smart meters, and Pepco's AMI investments are cost beneficial, regulators also said Pepco "should continue to develop ways to increase the types and amounts of direct monetary benefits that customers can receive from its AMI program."