Last week, the Maryland Public Service Commission wisely rejected Pepco's request for a $68 million rate hike, allowing them a more modest rate hike. Pepco had already been fined $1 million last December for its poor record of reliability prior to the June 29 derecho. And the utility's performance in the aftermath of that storm made it clear that the commissioners made the right call. However, this week, petulant Pepco officials warned that without more money, their already poor service would get even worse.
Locals have heard such veiled threats before. Metro has repeatedly warned that rail service would deteriorate unless the transit agency got more money for neglected maintenance and equipment upgrades. Such threats won them repeated fare hikes and, in 2008, a $1.5 billion federal subsidy, yet Metro's service continues to get worse, not better.
District residents were told that DC Public School teachers needed higher salaries and bonuses before they could teach low-income students how to read and write. Educators got the extra cash but still haven't delivered the higher test scores they promised.
Pepco, Metro, and DCPS have something in common. These government-protected monopolies believe they should be financially rewarded despite poor performance. It's about time somebody drew the line.
That was easy to do in Pepco's case because its record of reliability is damning. According to an analysis sent to the Montgomery County Council by Rep. Chris Van Hollen, D-Md., "Pepco has meaningfully underperformed its industry peers on a number of broadly accepted reliability metrics for most of the past decade."
After the June 29 storm, Dominion in Virginia experienced more than twice as many outages as Pepco. But by the following Sunday, "Dominion had restored electricity to almost 60 percent of its customers ... whereas Pepco had restored electricity to just over 20 percent," Van Hollen noted. "It took Pepco until Wednesday, July 4, before its outage restoration percentage was on par with Dominion."
This wasn't dumb luck. Dominion had three times as many crews out removing trees and repairing downed power lines as Pepco. Dominion management negotiated mutual aid contracts with other power providers they could call on for help in an emergency.
After limiting Pepco's rate increase to $18.1 million, the PSC's job is far from over. State regulators should punish Pepco's public tantrum with greater scrutiny and make sure the utility does not take its displeasure out on captive customers.