Pepco is trying to raise rates by 20% under the guise of climate readiness

The Potomac Electric Power Company (known as “Pepco” to residents) submitted their request to raise prices by a whopping 20% over the next three years to collect an additional $180 million from DC residents. This comes on the heels of a previous multi-year increase.Pepco has repeatedly cited “grid improvements” for their ever-increasing rates, but expert testimonies and independent analyses have pointed out these claims lack evidence. Instead, it seems Pepco is using this as a smokescreen to increase their shareholder profit and plug holes in their poor business planning.

How did we get here?

Pepco has a long history of corporate greed and malfeasance, but it’s become especially apparent in the last few years, especially following its acquisition by Illinois-based Exelon Corp, the largest investor-owned electric utility in the United States. Now, Pepco is trying to blame “climate readiness” on the increases—making ratepayers shoulder the cost of DC’s ambitious climate goals—and barely even bothering to offer evidence to back up their request to raise rates on DC residents. 

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, community groups voiced their opposition toPepco’s move—the DC Public Service Commission and Pepco reached a stalemate with no settlement achieved.

The public office advocating for ratepayers stated in a release that Pepco “failed to justify significantly increasing its rates,” clearly saying that Pepco’s tactics are aimed to advance their shareholders’ interest with few, if any, benefits to the community. It gets worse when digging 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 government handout. 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 another 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, offering little accountability from government bodies or community groups. On top of this, Synapse Energy Economics found 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 beneficially spent. Synapse’s analysts argue that continuing to okay Pepco’s every request creates zero incentive to reign in cost, allowing for wayward spending, ballooning budgets, and artificially high corporate profit at the detriment of the consumer.

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 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 comparably. This compounds with the fact that one in four residents are eligible for bill assistance, only causing more strain on the most vulnerable of DC residents.

The DC government and other community groups are still at odds with Pepco, but this represents 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.