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Experts: Pepco customers may have to pay more for better service

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Photo - Della Stoloworth holds at sign that says "Numbers dont lie, Pepco does" at a meeting on the performance of Pepco's service following the storms that hit the Washington area on June 30, 2012. (Examiner file photo)
Della Stoloworth holds at sign that says "Numbers dont lie, Pepco does" at a meeting on the performance of Pepco's service following the storms that hit the Washington area on June 30, 2012. (Examiner file photo)
Local,Maryland,Hayley Peterson

ANNAPOLIS - Marylanders who suffer from perpetually unreliable electricity service might have to start paying a premium for better service, even though they already pay the 13th-highest power rates in the nation, energy experts said Tuesday.

"Reliability -- it all boils down to money," said Rajnish Barua, executive director of the National Regulatory Research Institute, which offers consulting services to utility regulators. "It depends on how much you want to pay for it."

Barua made the remarks during the first of nine round-table discussions among energy experts, lawmakers and industry professionals on improving Maryland's energy reliability, especially as it relates to service provided by Pepco, a utility notorious for frequent and lengthy power outages.

The work group, formed after an executive order by Gov. Martin O'Malley, was run by O'Malley energy adviser Abigail Hopper.

Pepco estimates the cost of improving its reliability to be roughly $900 million -- an investment that Montgomery County Council President Roger Berliner said the public can't afford to ignore.

"What we know in Montgomery County is that Pepco's substations are still vulnerable, their transformers too old, and the wires susceptible to weather events," Berliner said. "The net result has been that our county has had some of the least reliable power in the country and some would argue in the world since 2006. It is, quite frankly, an outrage."

To contain costs, Berliner suggested the state consider lending Pepco some of the money it needs to make improvements, since the state can borrow money at lower rates than the utility.

In the meantime, the state should plan an overhaul of the utility system.

"We need a new utility model," he said. "We need a utility that our constituents can trust to implement it. We need Utility 2.0."

Utility companies are not equipped to confront increasingly stringent environmental standards or to adapt to rapidly changing technological advances, said John Jimison, managing director of the Energy Future Coalition, a D.C. think tank involved in energy policymaking.

"The utility business model must change," he said. "You cannot just hang those same wires on that same pole and expect things to be different."

Several members of the work group objected to entertaining a discussion on overhauling the utility system, since they have just 60 days to report to O'Malley with recommendations for legislative changes and regulatory reforms.

As for short-term changes, Jimison suggested utilities limit reliability improvements to areas where customers are willing to pay more.

Maryland customers have told the Public Service Commission, the agency that regulates Maryland utilities, they would support paying more for better service.

"People were expressing that they were happy to pay more to get [better] reliability," said Leslie Romine, staff counsel to the commission. "When they get the bill, I don't know if that will still be the case."

hpeterson@washingtonexaminer.com

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