Utilities At Issue - September 2017

The 2017 Pepco and Washington Gas Rate Case Horizon

Below is an update for the 2017 regulatory year. There have been a number of filings by the electric and natural gas utilities that will impact future rates paid by AOBA members.

Utility regulatory proceedings that are currently being litigated before the DC and Maryland Public Service Commissions and the Virginia State Corporation Commission or are expected to be filed in the remainder of 2017 through 2018 are as follows:

Pepco:
 

Washington Gas:
 

AltaGas to Acquire Washington Gas Light for $6.4 Billion

On January 25, 2017 WGL Holdings, Inc. and AltaGas Ltd. announced that the Board of Directors for both companies have approved an agreement and merger plan for AltaGas to acquire WGL for $6.4 billion. WGL has stated it will retain its headquarters in Washington DC to manage its utility business and will remain regulated by the Commissions in DC, MD, and VA.

On April 24, 2017, AtlaGas Ltd and WGL Holdings, Inc. filed their Merger Application with the DC Public Service Commission, Formal Case No. 1142, the Maryland Public Service Commission, Case No. 9449 and with the Virginia State Corporation Commission, Case No. PUE-2017-00049. AOBA submitted expert witness testimony in Maryland on August 14, 2017 stating that “from the perspective of Washington Gas utility customers, this merger is not well-conceived and well-structured, and it will expose them to substantial harm if approved” and will submit testimony in the District of Columbia on September 29, 2017. Testimony in DC is due on September 29, 2017.

DC PSC Denies Pepco’s Request for a $77.49 Million Rate Increase in the District of Columbia – Formal Case No. 1139

On July 24, 2017, the DC PSC denied Pepco’s request for a $77.49 million increase in rates and reduced Pepco’s request by 52% to $36.888 million. The Commission also reduced Pepco’s requested return on equity from 10.6% to 9.5% and approved an overall rate of return of 7.46%. AOBA had recommended that the Commission authorize an ROE for Pepco of 9.25% and an overall rate of return for the Company of not greater than 7.33%.

In its final order, the Commission stated it will use $15 million of the funds from the $25 million customer base rate credit that were provided to District ratepayers as a benefit of the Pepco/Exelon merger to offset the increase imposed on the residential class, including master metered apartments. The net result will provide residential and master metered apartment customers with a credit which is intended to offset the approved distribution increase costs for up to two years.

Pepco filed revised rate schedules with the Commission on August 8, 2017. New rates became effective August 15, 2017.

Pepco’s proposed increases and the approved increases (based on class revenue) to distribution rates for each customer class are shown in the chart below. However, the below increases may be misleading since Pepco has approved disproportionate increases for the individual distribution bill components. For example, the GT_LV class has the following increases: 20.5% increase to the customer charge, 7% increase to the kWh charge, and a 24 % increase to the demand charge (kW). As a result, bill impacts to commercial customers may vary widely depending on the customer’s rate schedule and load factor. Therefore, AOBA strongly recommends that members carefully review the tariff pages found in the current tariff on the Pepco website for the individual increases per rate class when making 2018 budget determinations.

Pepco Files New Biennial Undergrounding Plan for the District

As a result of an emergency amendment passed by the Mayor on May 17, 2017, the DC Public Service Commission opened a new proceeding (FC 1145) to consider applications for Biennial Underground Infrastructure Improvement Projects. AOBA was an active participant in the last undergrounding cases, FC 1116 and 1121, and strongly opposed Pepco’s proposed undergrounding project plans.

On July 3, 2017, Pepco and DDOT filed a Joint Application for Approval of the First Biennial Underground Infrastructure Improvement Projects Plan. The Biennial Plan identified six feeders that DDOT and Pepco plan to place underground. The Application also requests approval of an Underground Project Charge (UPC) to recover the costs Pepco incurs during the undergrounding of the feeders. The Application states the UPC will remain in effect for two years and will collect $5,602,940 in total revenues.

In addition to the Joint Application filed by DDOT and Pepco, Pepco included an application for a Commission issued financing order that would allow Pepco to recover the costs DDOT will incur as a result of the undergrounding of the designated feeders specified in the Biennial Plan. If granted, the financing order would permit Pepco to recover the DDOT costs through an additional charge, i.e., an Underground  Rider charge. The Underground Rider will also remain in effect for two years and is designed to collect $30 million per year.

The updated charges for the Underground Rider and Underground Project Charge for the first year by rate class are shown in the chart  below. Rates are expected to take effect January 1, 2018, pending Commission approval.

AOBA filed testimony opposing  the Joint Application and Pepco’s financing order request on September 13, 2017. A final Commission decision is expected on or about November 7, 2017.

Pepco Seeks Approval for a Demand Management Program for Electric Vehicle Charging in the District, Formal Case No. 1143

On April 21, 2017, Pepco filed a proposal with the DC Public Service Commission seeking approval for a limited and voluntary demand management program for plug-in electric vehicle charging. The proposed program would run through the third quarter of 2019. Included in Pepco’s request for an EV pilot project was the ability of Pepco to include the costs of the pilot in a “regulatory asset” which would be tantamount to the PSC pre-approving Pepco’s costs without examination. Further, allowing Pepco to include these costs in rates would stifle the competitive market for Electric Vehicle charging that already exists in the District of Columbia. AOBA filed comments and reply comments, on May 22^nd and June 5^th, respectively, urging the Commission to reject Pepco’s proposed EV pilot program and consider it in the PSC’s on-going proceeding considering grid modernization. A decision is pending.

Below is the link to AOBA’s Comments:
http://edocket.dcpsc.org/edocket/docketsheets_pdf_FS.asp?caseno=FC1143&docketno=11&flag=D&show_result=Y

Reply Comments:
http://edocket.dcpsc.org/edocket/docketsheets_pdf_FS.asp?caseno=FC1143&docketno=22&flag=D&show_result=Y

Pepco Requests $68,619,000 Rate Increase for Maryland Ratepayers, Case No. 9443

On March 24, 2017, Pepco filed its Application with the Maryland Public Service Commission requesting a $68,619,000 increase in its Maryland distribution rates and an authorized rate of return on equity of 10.10%. Based on the Company’s requested 10.10% return on equity, Pepco initially requested a rate of return of 7.79% but later revised the request to 7.74%. In its Application, Pepco explains the reason for the rate increase request is to recover costs incurred to replace and enhance the distribution system infrastructure and to recover costs for planned spending on reliability improvements.

Based on testimony and analyses completed by AOBA’s expert witnesses, AOBA has recommended the Commission approve a revenue increase for Pepco of not greater than $26,326,000. AOBA also recommended an authorized return on equity of not greater than 9.10% and an overall rate of return of 7.27%.

Hearings concluded on September 13, 2017. New rates are expected to become effective on or about October 20, 2017.

The proposed increases to distribution rates by customer class in Maryland are shown in the chart below.

Maryland Energy Administration Announces FY18 Jane E. Lawton Conservation Loan Program

Members with Maryland properties may be eligible to apply for loans to install energy conservation measures through the Lawton Loan Program. Loans typically range from $50,000 - $500,000. To learn more about this program as well as the application and project requirements, please visit the Program webpage at:
http://energy.maryland.gov/govt/Pages/janeelawton.aspx.

Settlement Reached in Washington Gas Request for Rate Increase in Virginia for $45.6 million, Case No. PUE-2016-00001

On June 30, 2016, Washington Gas filed an application with the VA State Corporation Commission (VASCC) requesting a $45.6 million increase in the rates charged to the Company’s Virginia customers. Interested parties, including AOBA, opposed this requested rate increase and after extended discussion and debate, the parties reached a settlement agreement reducing the rate increase to $34 million. On June 30, 2017, a settlement agreement or “Stipulation” was approved by the VASCC Hearing Examiner.

Of the $34 million rate increase agreed to by the parties, $19.9 million reflects costs previously authorized for the Company’s accelerated pipe replacement programs. If approved as expected, customers will receive a rate refund reflecting the difference between the original $45.6 increase placed in effect Dec. 1, 2016 and the agreed upon $34 million. The VASCC approved the Settlement Agreement on September 8, 2017.