WASHINGTON -
Pepco customers are lashing out at the utility in the aftermath of June's derecho. At a packed hearing, Maryland regulators heard from customers fed up with Pepco's performance. Hundreds of thousands of customers lost power for days after the storm. Now Pepco is fueling another firestorm calling for another rate increase.
The company estimates it cost $70 to $85 million to restore power and it intends to get that money back from the very customers it has angered.
"A rate increase for Pepco is just rewarding nonperformance. It's inexcusable," said Rise Goldstein, who was at the public hearing in Rockville.
The derecho took out trees, knocked out power and left Pepco customers fuming in the heat.
"I do not understand how you can rationally justify rewarding incompetence," Ed Levian told the public service commission.
Frustrated customers urged Maryland's Public Service Commission to hold Pepco accountable.
"I'm asking you to do the right thing. Tell them they've had three strikes and they're out," Catherine Picar told the commissioners.
All that outrage didn't stop Pepco Holdings' Chairman, President and Chief Executive Officer Joe Rigby from telling investors during a conference call it will seek a rate hike in the fall. He did not say how much Pepco would seek to increase rates.
Last month, regulators rejected all but $18 million of the $68 million Pepco requested.
"We view the commission's unwillingness to adopt mechanisms that would enable timely cost recovery to be disappointing in that it will necessitate the filing of frequent rate cases," Rigby said.
During the height of the June 29th storm, more than 702,000 Pepco customers lost power in the region - equal to 38 percent of its customers. The company took heat for its response in the aftermath of the storm from people without power, some more than a week in excessive temperatures. State and local lawmakers criticized the utility, calling for fines against Pepco for what they called poor performance.
News of the request for a new rate hike came while Pepco Holdings, the utility's parent company, released its second quarter earnings. The company earned a $62 million profit, down from $95 million a year ago. The utility itself earned $27 million, a loss of $5 million from a year earlier.
Company executives suggested they would seek legislative relief to Pepco's regulatory problems, but that it would continue to push for rate hikes too.
"Our plan B has always been to just keep filing rate cases every nine months and that's what we plan to do ... I just think we keep pounding, pounding the rate cases drum," said Pepco's chief regulatory officer Tony Kamerick.
Consider those fighting words.
"We're going to have to keep fighting, every quarter, every year, every rate increase, everything they put on the table," said Montgomery County Council Member Hans Riemer (D-At Large).
As its customers suffer, Pepco rewarded shareholders with higher dividends for the last quarter. The company's top executive doesn't get the outrage.
"We performed right in line with, and in some cases, better than the other regional utilities, and yet there seems to be a just very harsh tone taken towards Pepco," said Rigby.
These massive outages aren't a one time occurrence for Pepco, with reliability some compare to a third world country.
"I grew up after World War II ... We had bomb craters, but we had electricity. My wife grew up in the former Soviet Union. They had communism and they had power," said C. Ellis, a Pepco customer, as people at the hearing chuckled with laughter.
The hearing was one of two being held by the PSC to assess Pepco's performance restoring power after the storm.
The next hearing is on Wednesday, August 8 at 7 p.m. It is being held at the Rennie forum at Prince George's County Community College: 301 Largo Road, Largo, MD 20772.
To watch a webcast of Pepco's Conference call, go to:
http://phx.corporate-ir.net/phoenix.zhtml?c=62854&p=irol-EventDetails&EventId=4795401
