THE POTOMAC ELECTRIC POWER COMPANY (known as “Pepco” to residents) recently submitted their request to DC’s Public Service Commission to raise prices by a whopping 20% over the next three years. This hike, which would extract an additional $180 million from DC residents, comes on the heels of a previous multi-year increase. Pepco has repeatedly cited “grid improvements” for ever-increasing rates, but the DC Office of the People Council found that 95% of the proposed investments cannot be tied to any reductions in greenhouse gasses. Instead, it seems Pepco is raising rates as a smokescreen to increase shareholder profit and plug holes in poor business planning.
Pepco has a long history of corporate greed and malfeasance, but it’s become especially apparent in the last few years following its acquisition by Illinois-based Exelon Corp (NASDAQ: EXC), the largest investor-owned electric utility in the United States. Now, Pepco is blaming “climate readiness” on the increases—making ratepayers shoulder the cost of DC’s ambitious climate goals—and barely bothering to offer evidence to back up their request to raise rates.
Pepco filed their application for a second multi-year rate increase on April 13, 2023. Now — after a year of testimony, community hearings and a public comment period where hundreds of DC residents, local business associations and community groups voiced their opposition to Pepco’s move—the DC Public Service Commission and Pepco have reached a stalemate without settlement.
This request was already rejected in Maryland. In a review published back in January, the Maryland Office of People’s Counsel, which advocates for ratepayers, found that Pepco “failed to justify significantly increasing its rates.” Pepco’s tactics are aimed to advance their shareholders’ interest with few, if any, benefits to the community. It gets worse when you dig into the details of Pepco’s proposal. The vast majority of grid upgrades listed specifically for climate-readiness are just routine projects. A well-run utility would simply reassess their timeline instead of asking for a handout from long-suffering ratepayers. Especially with their multi-year rate increase, Pepco’s greed is clear: their over 2,000-page request presents poor data that omits key options, manipulates data presentation, and fails to adequately back up their massive rate increase.
Multi-year rate increases are a favorite tool of greedy utilities because they are essentially blank checks. Pepco can be approved for the money upfront and then choose how they spend it later with little accountability to government bodies or community groups. On top of this, a report by Synapse Energy Economics found that Pepco’s previous rate increase hasn’t even been properly assessed. DC’s Public Service Commission approved the last multi-year rate increase with the intention of conducting an evaluation before approving another increase. That study never happened. So now, Pepco is asking for even more money while not bothering to prove their previous money was well spent. Synapse’s analysts argue that continuing to approve Pepco’s every request creates zero incentive to rein in cost, which allows for wayward spending, ballooning budgets, and artificially high corporate profit at the detriment of the consumer.
This rate increase proposal comes at a time of skyrocketing cost of living in the District, from groceries to rent. Higher utility bills would mean yet another burden on DC residents trying to make ends meet. Compared to other cities, low- to middle-income residents in Washington, DC are overburdened with utilities— meaning, the average person pays a higher amount of their income on utilities. This is compounded by the fact that one in four residents are eligible for bill assistance, which only causes more strain on the most vulnerable DC residents.
Community groups across the board are in agreement. The Apartment and Office Building Association (AOBA) testified that Pepco needs to be practical and should focus only on essential expenditures. We Power DC, a priority campaign of Metro DC DSA organizing for a publicly owned utility, pointed out that if Pepco’s poorly-evidenced rate increase is approved, the DC government is just allowing a monopoly company to regulate itself.
This moment is a flashpoint in the power regulation debate. It’s up to us and our elected officials to reign in these greedy corporations, because left to their own devices, they will never pick the people over their own profits. DC residents can keep this 20% rate hike from going into effect in DC by sending a letter to the DC Council today. We Power DC is asking DC residents to contact their council members and ask them to demand the PSC rein in Pepco's spending and put DC residents over the utility's profit margin: residents can send a letter to the DC Council using this form.
Local readers can organize with We Power DC, Metro DC DSA’s utility municipalization campaign, by signing up here.
