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For Immediate Release

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Pepco Files with DC Public Service Commission to Tie Rates to Company Performance

WASHINGTON, D.C. (May 30, 2019) – Pepco today took important steps to continue efforts to provide safe and reliable energy service and modernize the grid for its District of Columbia customers and communities. Pepco is requesting the Public Service Commission of the District of Columbia (PSC) review a multi-year plan to modernize the energy grid and improve company performance in the areas of customer service, reliability, and interconnection of distributed energy resources (DER), like rooftop solar. Pepco's plan builds a smarter, stronger and cleaner energy future, while providing greater transparency and predictability for customers, and accountability for the company.

The proposed multi-year plan builds on our commitment to customers by strengthening the local energy grid through the use of innovative technologies, smarter equipment and strategic investments, making it more resilient, and enabling further deployment of DERs. It also fulfills the company's ongoing commitment to keep energy rates affordable for customers, support the local economy and workforce, and achieve the District's critical and leading climate change and resiliency goals. Even with the investments made over the past several years, District of Columbia residential customers have not seen a distribution rate increase since 2014, thanks to the Customer Base Rate Credit, which was extended due to the benefits of the Tax Cuts and Jobs Act.

"The multi-year plan aligns the goals of multiple stakeholders, while fulfilling the company's ongoing commitments to keeping energy rates affordable for customers and supporting our local economy and workforce," said Donna Cooper, Pepco region president. "To achieve the District's critical and leading clean energy goals, address the ongoing impacts of climate change and support the District's growing economy, we need innovative, forward-looking regulatory policy that will allow us to perform the work to further modernize the local energy grid and enhance the energy experience for our customers. Pepco will not succeed unless we succeed for our customers. That is why this plan provides for greater transparency and predictability for customers and greater accountability for the company."

Based on the proposed plan, the typical Pepco District of Columbia residential customer using 692 kilowatt hours per month would see a monthly increase in distribution charges of about $8.57 in 2020, $3.69 in 2021 and $3.19 in 2022. The distribution rate increase will be offset by approximately $2.48 per month, primarily due to lower electricity supply costs resulting from outcomes achieved in the most recent Standard Offer Service solicitation. With this offset, residential customers will, therefore, receive the benefits of the multi-year plan for an additional $6.09 in their monthly bill in 2020. As a result, the average residential customer will pay 13.4 percent less than they did nine years ago, while receiving significantly improved service.

Pepco is committed to keeping rates affordable and delivering critical energy services for all communities. The multi-year plan maintains the Customer Base Rate Credit. It also maintains existing programs and protections for economically-challenged customers, including the Residential Aid Credit (RAC), which offsets the entire distribution charge for qualifying customers, meaning that a customer receiving the RAC would not see any increase in their bill due to the multi-year plan. Pepco is also working with the PSC and stakeholders toward a discounted rate pilot program for seniors and disabled citizens who do not qualify for the RAC, as well as an Arrearage Management Program to assist customers who are behind on their energy bill. Under the pending rate discount program for senior citizens, participating customers would experience a bill decrease in the first year of the plan.

As part of a previous Pepco rate review order, the PSC recognized the importance of exploring some form of alternative ratemaking and allowed the company to file a multi-year plan alongside a traditional rate plan. Over the past year, the company held multiple workshops to explore and secure stakeholder input to identify the best ways to deliver transparency for customers and regulators, and accountability for Pepco.  The company incorporated these learnings into the filing.

The multi-year plan seeks to recover costs for work the company has performed over the past two years (2018 and 2019) and will perform over the next three-years (2020, 2021 and 2022) to build on historic bests in reliability performance and to enhance programs and tools that have resulted in improved satisfaction among customers. The multi-year plan will be subject to rigorous regulatory review by the PSC and other interested parties. Under the plan: 

  1. Pepco will be subject to financial penalties for failure to meet strict performance targets set by the PSC, known as Performance Incentive Mechanisms (PIMs).
  2. The PSC will continue to have the full authority to determine just and reasonable rates and oversee the actions and spending of the utility on an annual basis, ensuring that Pepco is only charging customers for investments made and cannot over-earn.
  3. The proposal preserves all existing consumer protections, as well as assistance programs for low-income customers and anticipates providing programs for senior citizens and disabled customers.

Across the country, 39 states have already benefited from performance-based policies to better serve customers in our changing energy landscape, which includes more DERs, greater levels of decarbonization, a necessary focus on resilience and increasingly complex infrastructure planning. Implementing a more forward-thinking ratemaking process is essential to building a stronger, smarter and cleaner energy system and succeeding in this changing environment.

Pepco customers are benefitting today from the major enhancements that have been made to the local energy grid. As a result of work to install new devices, stronger poles, and more automated equipment, customers experienced some of the lowest average numbers of electric outages in the company's history in 2018, as well as some of the fastest restoration times ever. In addition, since 2013, the number of electric outages has decreased by 40 percent. The requested revenue increase of $162 million over the term of the multi-year plan will begin recovery of the investments made by the company over the five-year period 2018 through 2022 for improved reliability, customer service, and grid modernization. With this level of investment, Pepco supports approximately 800 full time jobs per year, creates $390 million of economic activity in the District, and other economic benefits in the surrounding region.

For all customers, Pepco offers payment options, like budget billing, to help customers manage their monthly energy bills and lessen the impact of their seasonal usage changes. Customers who wish to learn more or take advantage of these important programs can visit pepco.com/waystosave or call 202-833-7500.

 To learn more, readers are encouraged to visit The Source, Pepco's online news room. Find additional information about Pepco by visiting pepco.com. Follow us on Facebook at facebook.com/pepcoconnect and on Twitter at twitter.com/pepcoconnect. Our mobile app is available at pepco.com/mobileapp.

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