BALTIMORE -- Eliminating the surcharge that allows electric companies to charge customers for power during an outage could make it harder for the utilities to prevent future outages, company officials told the Maryland Public Service Commission, or PSC, on Monday.
The surcharge helps pay for fixed costs that don't go away when the power is out, said Wayne Harbaugh, Baltimore Gas and Electric's vice president of pricing and regulatory affairs. In fact, he said, BGE's costs increase after a storm because the company hires outside contractors to help restore power.
"We're making the revenue we need so that we can invest in the system," he said.
The surcharge is intended to help utilities earn the revenue they are legally entitled to in months when customers use less electricity than expected, like if a summer month is cooler than usual. This usually amounts to a small sum on an individual customer's bill -- sometimes less than a dollar -- though it means a difference of millions of dollars for utilities.
When 10 percent of a utility's customers lose power after a storm, the companies are not allowed to collect revenues lost after the first 24 hours of the outage. But after the June 29 derecho left thousands of Washington-area residents without electricity for a week, they became outraged at the idea of reimbursing companies for even a tiny portion their lost revenue.
Residents had to pay for hotels, backup generators and replacing spoiled food, said Commissioner W. Kevin Hughes at a Monday hearing as part of the PSC's investigation into the surcharge. Charging them to reimburse the electric company is "like pouring salt in their wounds," he said.
The customers who suffered the longest outages after the derecho are responsible for the bulk of the revenue that the surcharge earns, said Maryland Assistant People's Counsel Ron Herzfeld. Only 35.9 percent of the revenue that Pepco seeks to recover and 18.7 percent of the revenue that BGE seeks to recover came from customers whose power was restored within 24 hours.
PSC Chairman Douglas Nazarian said the PSC will issue a ruling on the matter soon.