IN DECEMBER, DC residents were staring down a $180 million bill: The electricity utility, Pepco, was once again petitioning to raise rates, shaking out to a near 20% increase. For 10 months, following the initial filing in April 2023, the three-person board of the Public Service Commission (PSC) had debated Pepco’s dealings. Testimony against Pepco’s spending and the overall truthfulness of the company’s data were presented for months. But in the end, the PSC approved Pepco’s outrageous rate hike, giving the monopoly utility $123 million more in rates and cementing five straight years of spiking rates. Commissioner Richard Beverly was the only “no” vote.
How did we get here? Beverly’s scathing dissent (found at the very end of this document) gives us an answer: Instead of ensuring a monopoly utility acts in the best interest of DC’s residents and businesses, the PSC is acting as a rubber stamp for corporate greed. In short, the District’s regulators are fundamentally failing to do their job, instead bending to the will of the local utility to increase electric rates, bloat project costs, and guarantee consistent shareholder payouts. In his dissent, Beverly raises so many red flags about this process, it looks like a carnival.
To approve this rate increase, the following needed to be properly reviewed: Pepco’s spending efficiency, Pepco’s climate strategy, and the public benefit of Pepco’s last rate increase. None of this happened. When Pepco said jump, our regulators asked how high . Or, as Beverly put it, they approved millions of dollars simply because Pepco asked.
That was a lot of jargon, so let’s dig in. Washington, DC is fresh off three years of constant rate increases. In 2021, the PSC approved a multi-year rate plan (MRP), which allowed Pepco to bump rates on DC residents and businesses by $108 million to pay for infrastructure improvements. This had never been done in the District before, and the PSC promised to review Pepco’s spending and performance.
Cut to today: That review hasn’t been done. This means regulators don’t know whether Pepco’s initial rate increase served the public or was even necessary — but the commissioners approved more rate hikes anyway. At a time when over 20% of DC residents are in utility debt, approving a rate increase without ample evidence is both baffling and dangerous.
And what about Pepco’s spending review? Typically called a “prudence review,” regulators analyze how Pepco is spending its money on projects and whether that is efficient and necessary enough (i.e., prudent) to be factored into rate increases. If Pepco is spending haphazardly and conducting bad business on projects, regulators will order Pepco to shoulder the burden of those costs, not ratepayers.
The prudence review was never done. This means that Pepco could be — and given their track record, likely is — spending ratepayer money both lavishly and incompetently, and our regulators would have no official document that proves it. Instead, and even worse, our regulators are operating on a “100% prudence” assumption, meaning Pepco says every dollar they spend is necessary. This means when Pepco demands more money, it’s necessary.
Pepco’s spending has been so dubious that critics have expressed concern that Pepco is manipulating its reporting. DC’s Office of the People’s Council, Apartment and Office Building Association of Metropolitan Washington, We Power DC, and others have all taken issue with Pepco’s spending and plans, with outside firms like Synapse Energy Economics casting major doubt on Pepco’s most recent increase application.
On top of all this, Pepco’s sole excuse for this rate increase was climate resiliency. Missing from their final plan were any comprehensive strategies to integrate solar projects or battery storage. Even plans on Pepco’s fuel mix are sparse, leading skeptical readers to believe Pepco never cared about renewables, or even cared to pretend. If raising rates is supposed to accelerate our city’s clean energy independence, this plan is an abject failure.
So to summarize: in addition to getting fleeced by Pepco and failed by regulators, our utility has no concrete plans to stop burning toxic oil and gas anytime soon.
In the end, the District’s PSC approved $123 million more for Pepco with no spending review, no public benefit review, and seemingly, no actual oversight. Cases like these beg the question: What are these regulators good for besides rubber-stamping million-dollar packages for billion-dollar corporations?
The question with these situations is always: What do we do from here? Our elected officials would reign in Pepco, or reform the PSC, or even create a new structure for how our utility is judged, but that doesn’t solve the main crux: the profit incentive. Removing the profit incentive—Pepco and its shareholders and its endless greed backed up by teams of lawyers—is the only way we can ensure long term affordable, clean energy for DC’s future.
Across the country, public power thrives and delivers reliable, affordable power to its residents. From Los Angeles to San Antonio to the entire state of Nebraska, people rely on public power without shareholders fleecing them on every bill. That reality is possible here in the District too. We just need to be brave enough to make it happen.
