In less than a year, three Exelon-owned power companies have filed petitions with the Public Service Commission of Maryland to raise the price of electric bills.
After Baltimore Gas and Electric Co.’s rate adjustment was granted in June, Delmarva Power and Pepco now seek to raise their prices, citing millions of dollars invested into improving their electric systems and services during the past few years.
However, many, including Montgomery County councilmember Roger Berliner, said they believe these rate adjustments are unwarranted and will disproportionately affect lower-income residents already struggling to pay bills.
“There are so many people who are struggling and live on a fixed income,” said Berliner, who also spoke at a public hearing on the rate increase on Sept. 6. “Pepco has a history of asking for more than what is justified.”
Exelon acquired Pepco and Delmarva in March, and Baltimore Gas and Electric in 2012.
Pepco, whose coverage area consists of large portions of Prince George’s and Montgomery counties, seeks to raise the average bill of a customer 8.71 percent or $13.29, making the new monthly average about $165. The new rates will bring in about $103 million annually, according to Pepco’s filing with the Public Service Commission. (2016PepcoMDRateCaseApplicationDirectTestimonyandExhibitsVolIofII041616.pdf ).
The cost of energy is especially burdensome on low-income African-American and Latino households, according to a report published by Ariel Drehobl, a research analyst with the American Council for an Energy-Efficient Economy. The report looked at 48 major U.S. cities, including Baltimore and Washington, D.C. (http://aceee.org/press/2016/04/report-energy-burden-low-income)
African-American and white households pay similar prices for utilities; however, the median energy burden for African-Americans is 5.4 percent of household income, compared to that of whites at 3.3 percent, according to the report. Latinos experience a median energy burden of 4.1 percent of their household income.
In Prince George’s County, African-Americans account for about 64.6 percent of the population, and Hispanic or Latino residents account for 17.2 percent, according to the U.S. Census Bureau (http://www.census.gov/quickfacts/table/PST045215/24033).
“Families who face higher energy burdens experience many negative long-term effects on their health and well-being,” Drehbohl wrote. “These families are at greater risk for respiratory diseases and increased stress, and they can experience increased economic hardship and difficulty in moving out of poverty.”
The $13 average would include both fixed and volumetric fees on a customer’s bill.
“Fixed prices make it more difficult for households to try to mitigate the higher burden because you can’t reduce your bill through energy-efficient measures,” Drehobl said.”Low-income families tend to live in smaller households (but) bills tend to be higher per square foot.”
Delmarva’s proposed rate adjustment would raise the average bill price by $21.48, making it about $168. In total, Delmarva would take in a total of $66.2 million from the hike, according to Nicholas Morici, Delmarva senior communication specialist. Delmarva’s coverage area is spread across the state’s Eastern Shore.
“Delmarva Power realizes that asking for rate increases is never easy and the company will continue to refer customers who may need help with their energy bill to its agency partners that can help with bill payment,” Morici wrote in an email.
During the past two years, Pepco, which filed its last rate adjustment in 2013, says it has invested $327 million into improving the reliability of the electric distribution system, including a $24 million grid resiliency program that Pepco seeks to expand with the profit from the rate adjustment.
Tori Leonard, communications director with the Public Service Commission, said the ratemaking process includes an analysis of the practicality and efficiency of a company's investments, in addition to the cost of capital.
Both our customer satisfaction scores and our reliability is steadily improving and we are using technology and infrastructure improvements to make our electrical system even more reliable and safe. Outages in Maryland are down 43 percent during the last four years.
“In order to continue to meet its obligation to provide safe and adequate service, Pepco must continuously replace and enhance the distribution system infrastructure,” Peter Meier, vice president of legal services at Pepco, wrote in a letter to the Public Service Commission.
Berliner said, however, utility companies should not be compensated for investments made even if they claim those investments provide customers with better service.
“There are no other businesses in America that are compensated on the basis of how much money they invest,” Berliner said during his testimony. “Utilities, like other business, should be rewarded on how well they meet the needs of their customers.”
In compliance with an order issued by the Public Service Commission in September of 2010, Pepco, along with BGE, Delmarva and South Maryland Electric Cooperative, launched a smart grid initiative that aimed to enhance the generation, distribution and consumption of energy, according to Pepco.
As a result, Pepco did away with many of its analog meters and since has invested in more than 560,000 “smart meters” that record energy consumption and communicate information using a central, digital system.
“Smart meters allow customers to better track and manage their household energy use and save money during times of peak demand, such as on a hot summer day,” Pepco said in a press release.
But not everyone values the smart meters.
Director of anti-smart meter advocacy group Maryland Smart Meter Awareness Kate Kheel is a BGE customer but has opted not to have a smart meter installed on her house.
“It is in my estimation that the industry benefited (from smart meters) and customers and the environment have not,” said Kheel, who plans on removing herself from the grid entirely by next year. “It’s not good for the environment to produce these extra smart meters for no reason.”
Kheel argues that the usage of smart meters prevents utility companies from successfully and efficiently utilizing alternative forms of energy such as solar, and increases dependency on fossil fuels.
Earlier this year, Berliner started a change.org petition, which has amassed more than 2,000 signatures against the price hike. He said the county will remain an extremely active participant in fighting to strike down Pepco’s request.
The Public Service Commission plans on holding further hearings with both Pepco and Delmarva moving forward. Leonard said it’s possible that the rate adjustments are approved but at a different, potentially lower, rate.
Baltimore Gas and Electric’s recent rate adjustment of $2.80 that went into effect in June raised customers’ average electric bills to $134.33.
The commission plans to make a final decision on Pepco by Nov. 15 and Delmarva by Feb. 15.