Delaware oversight commission debates authority to reject utility rate hikes

Delmarva Power objects to applying legislation to interim rate

The debate among commissioners over the breadth of their oversight on utility rates comes as the company has pushed back on the group, limiting its interim rate increase to half of its total request, even while it faced criticism from commissioners that it is “cruel” and “tone deaf” for continuing to press for rate hikes.

Delmarva Power, an investor-owned utility, serves 344,000 residential and nonresidential customers in the state. Its parent company, Exelon Corporation, is the nation’s largest regulated electric and gas utility.

Its customers pay a supply and a delivery charge for gas and electricity. The supply of energy comes from PJM Interconnection, a regional grid serving Delaware, Pennsylvania, New Jersey and several other states. Delmarva Power profits through the distribution fee.

Delmarva Power Region President Marcus Beal said they need to file rate hike requests to recoup money it spends on improving and maintaining the infrastructure.

“Our equipment is extremely expensive, the items that we buy, the transformers, they’re very large, complex things to build,” Beal said. “Even something as simple as a treated pole of a certain size can be very pricey, so we spend a lot of money on the grid itself.”

Under Delaware law, interim rates can be approved seven months after a rate case is filed, while the full petition is being considered by the commission. Prior to the legislation, 100% of the rate request could be implemented. The bill caps interim rates at 50% and allows 75% of the ask to go into effect after 12 months. The bill also puts limits on Delmarva Power’s infrastructure spending.

Delmarva Power spokesperson Matt Ford said the commission overstepped its authority to cut the interim rate as much as they did and the company has argued in its PSC submissions that SB 326 did not apply to the rate increase request filed in December because it had yet to be signed into law. Meyer said he signed the bill Monday.

“Delmarva Power further reserves its objections to the applicability of the legislation, should it become effective, including its impermissible retroactive application,” the utility company said in comments filed Monday afternoon with the commission.

In addition, Delmarva Power has objected to halving $23.2 million in distribution system improvement charges as part of the interim rate commissioners approved. The fee allows utility companies to recover project costs and depreciation between full rate case proceedings.

“My suggestion is, if you don’t like it, appeal it,” Iorii said.

It’s unclear whether the utility plans to appeal the order. Ford said they were reviewing it and its implications.

Tweedie said he hopes they decide not to appeal.

“If they appeal this, what they are essentially saying is, ‘We want to extract more money from our customers than the commission intended to allow,’” he said.