District of Columbia
Bill Stabilization Adjustment
Frequently Asked Questions
1. What is the Bill Stabilization Adjustment?
The Bill Stabilization Adjustment (BSA) is a monthly adjustment that will lower rates if Pepco is receiving more revenue than The District of Columbia Public Service Commission (PSC) has approved and will increase rates if Pepco is receiving less revenue than the PSC has approved. The BSA applies only to the distribution portion of your electric bill. Distribution charges pay for the expenses Pepco incurs to deliver electricity to your home or business. The PSC approves the amount of revenues Pepco receives for this distribution service. The BSA removes the link between electricity use and utility revenue. Until now the more electricity customers used, the more revenues Pepco received. This previous rate structure created a disincentive for the utility to encourage customers to conserve energy since it lowered Pepco’s revenues. The BSA allows Pepco to promote energy efficiency programs that will help customers reduce their energy use and drive down electricity supply costs, which are the largest portion (75 percent to 80 percent) of your bill.
2. Will my bill increase because of the BSA?
That depends. When customers use more energy because of weather or for other reasons, the BSA will tend to be negative or a reduction in the rate. While the distribution rate will be lower, the bill will tend to be higher because of the higher usage. When customers use less energy because of energy efficiency, conservation, or milder than normal weather then the BSA will be increase. This increase will also tend to be more than offset by the decreased use of energy. Any increase or decrease will be relatively small, generally less than 3 percent. The commencement of the BSA is accompanied by a decrease in the distribution rates.
3. What percentage of my bill goes to cover distribution charges?
Distribution rates typically represent between 20 percent to 25 percent of a customer’s bill.
4. When will the BSA begin?
The BSA goes into effect on Nov. 1, 2009, along with the lower distribution rates. The BSA adjustments will begin with the January 2010 bill.
5. When will the BSA end?
The BSA is an ongoing adjustment.
6. Where will I see the BSA on my bill?
The BSA will be included in the distribution charge and will not be shown as a separate line item.
7. Is there a range that the BSA will fluctuate in – a maximum amount?
Yes, the adjustment rate will not fluctuate more than plus or minus 10 percent of the distribution portion of the bill, which amounts to less than plus or minus 3 percent of the average total bill.
8. Do other utilities have BSA rates?
Yes, Delmarva Power has a BSA. In addition Consolidated Edison, Orange and Rockland Utilities as well as California utilities and others have similar mechanisms that decouple distribution revenues from electricity consumption.
