AARP Responds to MD Public Service Commission Decision Granting Pepco Request for Rate Increase

AARP Maryland spoke out against today’s decision by the Maryland Public Service Commission (PSC) to grant Pepco a ‘reasonable profit’ in its decision to partially approve Pepco’s rate hike request.

The decision will go into effect immediately and puts the costs for infrastructure charges – yet to be made – squarely on the backs on consumers, allowing the utility giant to continue spending its revenues and profits on corporate shareholders, instead of investing in its own company.

“We are disappointed that the PSC has authorized the monthly surcharge on everyone’s bill for a promise to do work, paid for in advance," says AARP MD Advocacy Director, Tammy Bresnahan.  "We will see whether these additional funds actually result in improved reliability.  What we DO know is that we will be paying up front."

Bresnahan added, "The company track record does not bolster confidence.”

AARP MD State Director, Hank Greenberg, added that while Pepco was looking for higher rates, its customers were still looking for better service. "Our goal remains to seek, on behalf of consumers, reliable electric service and customer service, clear communications during storm events, and affordable electric rates."

AARP Maryland hired an attorney and consumer consultant specializing in electric utility surcharges to represent its members in the Pepco service territories.

AARP Maryland has consistently opposed Pepco’s request for an increase in their rates and/or surcharges for the following reasons:

• The rate increase and surcharge is NOT about reliability and safety.  Pepco wants the PSC to raise rates and let them collect from customers now for infrastructure repairs by adding a surcharge. AARP MD agrees that reliability is important but the company has demonstrated they have the operational and financial means to make the necessary improvements.

• No compelling circumstances exist to justify a surcharge when the current rates include replacement costs. If costs exceed current rates, the utility can petition for a rate increase.

• Trackers/Surcharges shift financial risk from the power companies to the ratepayers, and decreases cost-containment incentives.

• Pepco should use profits to fund infrastructure.  Proponents of this increase would have consumers believe that they have no internal funding to make needed infrastructure repairs and that without upping rates, additional outages are certain.  The fact is that Pepco has made profits and paid shareholders and needs to invest its funds in its own business and infrastructure before again, asking consumers to pay more.

AARP released a report in May 2012 about the Increasing Use of Surcharges, and how dangerous it is to the consumer to simply remove one piece of a very complicated rate case process.  The full report, which includes specific justifications utility companies use to push surcharges past regulators and information about why these claims are so often invalid, can be found at www.aarp.org.

Learn more about how you can get involved with AARP MD's utility watchdog group.