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PEPCO FOCUSED ON WORK TO IMPROVE RELIABIILTY; DOES NOT PLAN TO APPEAL MARYLAND PUBLIC SERVICE COMMISSION'S 2010 STORM FINE

"Our focus and commitment is to upgrading our system.

We are looking forward," says Pepco CEO Rigby

(December 21, 2011) In response to the Maryland Public Service Commission's (the Commission's) announcement of a fine for power outages due to major storms in 2010, Pepco's CEO said that the company is squarely focused on its work to improve reliability for its customers and does not plan to appeal the decision. Joseph M. Rigby, Chairman, President and Chief Executive Officer of Pepco Holdings, Inc., emphasized that system upgrades which began last year, are ongoing and include trimming trees that threaten power lines, replacing underground cables and adding advanced technology to increase reliability and restore power quicker after an outage.

"We are very focused on the work we are doing to ensure that our customers have reliable power service," said Rigby. "While we do not agree with the Commission's decision and we believe it is harsh, we have heard our customers loud and clear and our total commitment is to upgrading our system."

Over a year ago, Pepco began aggressively implementing a plan to improve reliability, speed the time for power restoration and improve customer service. Since September 2010 in Maryland, Pepco has trimmed trees along more than 2,700 miles of power lines, upgraded 53 distribution feeders which are critical power lines that serve a significant number of customers, installed 41 advanced control systems which identify outages as they occur and re-route power quickly to speed restoration, and renewed or replaced 307 miles of neighborhood underground cable. In addition, Pepco has taken important steps to improve customer service, doubling the number of phone lines coming into its customer service center, enhancing the outage map on its web site and improving its methods of providing global estimated times of restoration. The Company has also developed and recently launched new applications for smart phones to aid customers in obtaining information about their service and communicating to Pepco quickly to report outages.

"We recognize our responsibilities and we have taken aggressive and sustained actions to improve reliability and customer service, and we will continue this work with an unrelenting focus. While we know there is more to do to improve reliability, we believe the actions we have taken are beginning to pay off. Hurricane Irene left more than 225,000 Pepco customers without power. We restored service to more than 98% of these customers within 50 hours, o ur customer service center answered more than 250,000 customer calls, nearly all within 60 seconds, and the time we estimated to have power restored to all our customers was accurate," stated Rigby. " We are making progress, but our work is ongoing."

The Company appreciates the Commission's recognition in its Order that, "Pepco has presented an aggressive, detailed reliability enhancement plan to improve its electric service and has begun substantial implementation of that plan." The Order went on to state, "…the Commission observes that Pepco has made good faith efforts to improve its system reliability by implementing its comprehensive REP (reliability enhancement plan) to improve reliability."

Following major storm events that occurred in July and August 2010, the Commission initiated a proceeding to investigate the reliability of Pepco's distribution system and the quality of distribution service Pepco provides to its customers. In its order, the Commission imposed a fine of one million dollars, which the Company believes was harsh, and established certain conditions with respect to reliability performance and Pepco's reliability programs. The Company continues to evaluate these conditions which will be addressed in further proceedings before the Commission.

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About PHI : Pepco Holdings, Inc. (NYSE: POM) is one of the largest energy delivery companies in the Mid-Atlantic region, serving about 1.9 million customers in Delaware, the District of Columbia, Maryland and New Jersey. PHI subsidiaries Pepco, Delmarva Power and Atlantic City Electric provide regulated electricity service; Delmarva Power also provides natural gas service. PHI also provides energy efficiency and renewable energy services through Pepco Energy Services.

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