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Delmarva Power rates to rise in 2013

PSC approves $22 million settlement
The installation of smart meters will mean higher rates for Delmarva Power customers in 2013. BY KARA NUZBACK
December 5, 2012

Delmarva Power customers will see higher rates in 2013.  Delaware Public Service Commissioners Jay Lester, Joann Conaway and Jeffrey Clark voted unanimously Nov. 29 to approve a $22 million settlement between Delmarva Power and the state, allowing rates to go up for the utility’s customers.

The settlement calls for advanced metering infrastructure, or smart meters, to be installed for all Delmarva Power customers.

According to the settlement, a typical residential Delmarva Power customer using an average of 1,000 kilowatt hours per month will see an increase of 3.3 percent in their electric bill, from $136.86 per month to $141.35 per month.

Customers who were subject in an interim rate increase in July will receive a credit or refund.  According to the settlement, those customers will see their rates reduced from $141.93 per month to $141.35 per month.

Customers will see the increase in phases.  Twenty percent of the increase will go into effect Tuesday, Jan. 1, 2013; 50 percent will go effect Saturday, June 1, 2013; the remainder of the costs of the smart meters will go into effect Sunday, June 1, 2014.

Before the vote, PSC Chairman Dallas Winslow, who did not vote or attend the meeting, spoke to commissioners on speakerphone.  Winslow said it is the role of the commission to favor settlements.  “This is the legislative intent we must follow,” he said.

Winslow then urged commissioners to approve the settlement.

Those who testified in favor of the settlement included Deputy Attorney General Regina Iorii, representing Public Advocate Michael Sheehy, state attorneys and representatives from Delmarva Power, all of whom called the agreement a compromise.  The only person who testified against the settlement, was Rep. John Kowalko, D-Newark South.

In a Nov. 26 press release, Kowalko encouraged members of the public to attend the hearing.  More than 60 people crowded into a small room in the Cannon Building in Dover to watch the vote.

“The practice of charging the ratepayers for business decisions and efficiencies whether benefiting the ratepayers or not is a persistent attitude of Delmarva, and I will ask the Public Service Commissioners to reject this unfair burden being forced on the many economically stressed families in Delaware,” Kowalko said in the release.

Why is the settlement $22 million?

Delmarva Power filed its initial application with the Public Service Commission in December 2011.  The utility requested a rate increase of 19 percent, nearly $32 million.  On Jan. 10, 2012, the PSC suspended the increase pending evidentiary hearings to justify the rate hike.

In April, the PSC conducted a series of public hearings – one in each county – about the proposed rate hike.  One member of the public testified against the hike at the hearing in Wilmington, no members of the public went to the hearing in Dover, and in Millsboro a letter from American Association of Retired Persons was read into the record opposing the increase.

On May 15, 2012, the PSC filed testimony that Delmarva Power should be allowed to raise prices by nearly $16 million, half of Delmarva Power’s proposal.  The PSC sought to reduced the power company’s current return on equity from 10 percent to 9.55 percent.

The Public Advocate said Delmarva Power should be allowed to raise rates by only $17.5 million.  The PA also suggested making adjustments to the power company’s rate base and operational expenses, reducing its return rate from 10 percent to 8.7 percent.

In its June 21 rebuttal, Delmarva Power filed testimony seeking to increase its revenue request to nearly $35 million.

The approved compromise allows Delmarva Power a rate of return of 9.75 percent, a 0.25 percent reduction from its rate of return before negotiations began.