People's Counsel may oppose Pepco's 3.7% rate-increase request

November 03, 1990|By Graeme Browning

The state's representative for utility customers says he will probably oppose Potomac Electric Power Co.'s request for a 3.7 percent rate increase -- which would be the company's third in Maryland in the last two years -- on grounds that the company is already making a healthy profit.

Pepco asked the Maryland Public Service Commission Thursday for authority to increase its annual revenues by $28.3 million, or 3.7 percent. The increase would boost Maryland residential customers' monthly electricity bill by an average of $2.76.

"I anticipate we'll be presenting opposition to this eventually. We don't think any increase in Pepco's profits is justified at this time," said John M. Glynn, an attorney who, as People's Counsel, represents consumers' interests in utility matters.

The executive director of a consumer group that monitors utility costs, however, said the rate-increase proposal is not unreasonable. "We've never said utilities shouldn't make money. The question usually is, 'Under what conditions?' and 'How much?' " said Janelle Cousino of the Maryland Citizen Action Coalition.

Pepco said the rate increase, which would apply to its 427,000 residential and commercial customers in Montgomery and Prince George's counties, is necessary to cover the increased costs of providing service.

Such costs include the cost of operating and maintaining facilities already in use and the costs of four new generating units under construction at Pepco's Chalk Point Generating Station in southern Prince George's County.

The four units, which will cost Pepco $141 million, are expected to be in operation by June 1, when the Public Service Commission's decision on the rate increase is also expected, Pepco spokesman Steve Arabia said.

Pepco also needs the rate increase because "there is a need to increase our rate of return to a level that is more appropriate for these financial times," Mr. Arabia said.

Pepco has had two rate increases since the beginning of 1989, a $13.8 million increase that went into effect in June, and a two-part increase that became effective in February and June of 1989. Before that, the company had not had a rate increase since 1983, Mr. Arabia said.

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