Maryland Commission Approves Nearly $45 Million Rate Increase for Potomac Electric

The Maryland Public Service Commission has approved a rate increase of $44.6 million for Potomac Electric Power Company (Pepco), which translates to an estimated electric bill increase of $5.72 per month for the average residential customer. The commission approved a significantly lower amount than the company’s initial request and authorized rate changes for only one year of the proposed multi-year rate plan.

In its initial application filed in May 2023, the Exelon subsidiary requested approval of a multi-year rate plan for the period of April 1, 2024 through March 31, 2027, with a proposed nine-month extension from April 1, 2027 through Dec.31, 2027. The company requested a first year rate increase of $117.2 million, reaching  $213.6 million over the course of the plan.

Pepco’s proposal had also included the acceleration of remaining electric tax benefits stemming from a reduction in the federal corporate income tax rate. After offsets, the proposed incremental revenue requirement was modified to $74.4 million in the first year, and $59.4 million each in the second and third years, with an added $20.4 million for a nine-month extension of the third year.

In approving changes for only one year, the commission reminded parties that any multi-year plan approval would be subject to the “lessons learned” from the pilot multi-year plan, as indicated in its order adopting alternative forms of ratemaking. The commission is currently awaiting the outcome proceedings in the pilot plan filed by Baltimore Gas and Electric in 2020.

The commission also addressed a number of other issues pertaining to Pepco. The first was the Livingston Road battery energy storage project, which faced complaints from residents in the community. The complaints requested that Pepco should exclude recovery costs of this project within the rate increase. During the case it was agreed that $3.1 million in project costs would be removed. The project has since been withdrawn and replaced.

The case also addressed billing discrepancies highlighted in a previous complaint about street lighting. The case revealed billing errors in 10 municipalities. The commission accepted a recommendation for Pepco to remove costs related to billing errors from the rate increase.

Another issue that drew attention was Pepco’s Climate Solutions Program. The company had proposed 12 climate solutions programs, some of which cover electric vehicles and increased building electrification. In March 2024, the commission allowed the Maryland Office of People’s Counsel to scrap the programs, except the Smart Inverter Pilot Program which will contribute to Maryland’s grid modernization.

The Maryland Public Service Commission also accepted the recommendation to exclude the budgeted reconstruction cost of Benning 69kV Substation. This is a part of Pepco’s 69 kV Feeder Rebuild Program, which has the objective of having at least one hardened 69 kV feeder supply to every Distribution substation in case of heavy storm disruptions.