- The Washington Times - Thursday, June 30, 2016

Pepco asked the District’s utilities oversight board for a 5.25 percent rate increase Thursday, just two weeks after the Public Service Commission struck down a final challenge to Pepco’s $6.8 billion merger with Chicago-based energy generator Exelon.

The rate increase will affect residences and businesses, adding about $50 a year on average to the electric bills of about 282,000 customers in the District.

The increase will net Pepco an extra $85.5 million, which the energy supplier said would go toward recovering the $658 million it spent over the past three years to upgrade equipment to make service more reliable.

“We realize that a rate increase has a direct impact to our customers, and so we will continue to work with our customers to identify ways to reduce their energy usage and manage their bills,” said Donna Cooper, Pepco’s regional president. “The reliability and infrastructure upgrades that we have made have reduced the number and length of power outages while delivering improved service to our valued customers.”

In April, Pepco asked for a 10 percent increase to rates in Prince George’s and Montgomery counties in Maryland. That request is being reviewed but could generate about $127 million for Pepco.

The PSC is expected to take about a year to review the proposed 5.25 percent increase and will hold public hearings on Pepco’s plan. If approved, the rate hike likely would take effect next summer.

Pepco said residential customers might not feel the effects because of a merger agreement that will give $25.6 million to the PSC to offset the proposed increase.

“Pepco has proposed that the entire amount be applied to residential and master metered apartment customers,” the energy supplier said Thursday.

The utility commissioners can dole out the money as they see fit. If they decide it should all go to residences, those customers’ rates would not rise until at least January 2019, assuming the increase takes effect in July 2017. The merger also included a one-time credit of $54 per residential customer, totaling $14 million, which Exelon gave customers in April.

Christina Harper, communications director for D.C. Mayor Muriel Bowser, said the PSC has the money to make sure residents aren’t affected.

“They must apply the $25.4 million that Mayor Bowser negotiated, and they redirected, toward shielding D.C. residential ratepayers from any increase for three years,” Ms. Harper said. “To do otherwise would be to the detriment of D.C. residents.”

Anya Schoolman of D.C. Solar United Neighborhoods, which has long opposed the merger, said the rate increases bolster their argument.

“Today’s announcement confirms what we have been saying from the start: This is a bad deal for D.C.,” Ms. Schoolman said. “It is why we are continuing to explore legal options to protect D.C. residents from Exelon.”

Pepco last increased its rates in the District about three years ago, before the Exelon merger began. That hike garnered about $8.8 million and cost the average residential customer an extra 1 percent in 2013. Pepco halted all rate increases during merger negotiations.

The rate increase was requested two weeks after the PSC struck down a challenge to the merger by the city’s Office of the People’s Counsel, clearing the way for the merger and creating the largest public utility in the country.

Ms. Bowser, D.C. Attorney General Karl Racine and People’s Counsel Sandra Mattavous-Frye all opposed terms of the merger.

Ms. Mattavous-Frye said her office “will be vigilant in examining this monumental filing to ensure that any rate increase is based only on the expenses necessary to keep the lights on and not those associated with Exelon’s lengthy journey to merge with Pepco.”

The merger set aside at least $72.4 million for the District in an escrow customer investment fund, which includes $25.6 million to offset rate increases, $14 million for the one-time credit for residential customers, $11.25 million for energy-efficiency programs for low-income residents and $21.55 million for grid modernization pilot projects.

• Ryan M. McDermott can be reached at rmcdermott@washingtontimes.com.

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