FREQUENTLY ASKED QUESTIONS
HIGHER UTILITY BILLS
Q. When will the rate increase take effect?
A.Customer bills will reflect the new delivery rates beginning August 16, 2007; The new delivery rates will be applied, however, to services rendered and electricity use that occurred on and after June 16, 2007.
Q. Why are you charging me more for electric service already received and paid for?
A. Our rates are generally designed to recover annual revenue over a 12-month period. However, due to timing of the Maryland distribution rate case, the new rates that were to take effect on June 16, 2007 did not become effective until August 16.So, to make up for the revenue shortfall that Delmarva Power would have received for the two-month period – June 16 to July 16; and July 16 to August 16 – the delivery rates have been “compressed” into 10 months from August 16, 2007 through June 15, 2008. What that means is the dollar difference between the present rate revenues and the new delivery rate revenues for the two months between June 16 and August 16 was spread over the remaining 10 months.
Q. Does that mean my delivery rate will go down slightly next June?
A. Yes, the “compression” period ends on June 16, 2008, at which time you will see a slight decrease in your delivery rate.
Q. You just increased electricity rates on June 1st. How can you increase them again?
A. The rate increase that took effect on June 1st was on the supply portion of the bill, which is tied to the current cost of fuels used to produce electricity. If you look at your bill, you’ll see there are supply charges and delivery charges. The supply rates are reset annually on June 1st and reflect the cost of power that Delmarva Power buys on behalf of its Maryland customers who do not contract with an alternate supplier.
Delivery rates are set by the Maryland Public Service Commission and reflect the costs of moving electricity through the poles and wires to customers. Regardless of whom you purchase electricity supply from Delmarva Power will always deliver your power and charge you accordingly.
Q. What is this “Bill Stabilization Adjustment” I’m also hearing about?
A. The Maryland Public Service Commission approved a monthly adjustment in customers’ electric delivery charges. The adjustment will be transparent to the customer since it will be included in delivery charges and will have little to no dollar impact on the customer. The adjustment will help ensure that the Company’s fixed level of revenues, approved by the Commission, is not impacted by increased conservation and/or abnormal weather conditions. Furthermore, this adjustment will enable the Company to further explore and expand energy efficiency programs that will benefit its customers.
Q. Is there anything customers can do to offset the rate increase?
A. The company offers a popular budget billing option, which helps customers better manage their energy costs by keeping their monthly payment the same every month. How it works is electricity usage for a year is divided by 12 to determine a monthly budget bill
amount. Periodically, Delmarva Power reviews customer usage and may adjust the budget amount if customers are using much more or less electricity. If not the budget amount remains the same. In addition, customers are encouraged to use energy wisely to save on costs. I can send you a brochure with tips on how to save on energy costs, if you’d like. Or, you can visit the company web site for energy saving tips at: www.delmarva.com
Q. I'm on a fixed income - what will I do?
A. As always, Delmarva Power will work with customers who may be having difficulty with their utility bills. We offer payment plans and other methods to help make it easier to make payments.
Q. Is this increase part of deregulation?
A. This rate increase on the delivery portion of the bill has nothing to do with deregulation and neither do the miscellaneous fee increases.
Q. What is the difference between supply and delivery rates?
A. The delivery (service) portion of the bill is separate from the fuel (supply) rate. Delivery rates reflect the costs of moving electricity through the poles and wires to customers. Supply rates reflect the cost of the fuels used to produce electricity and are a pass-through to the customer.
Q. Why are you increasing my electric (delivery) rates?
A. Delmarva Power has not filed for an electric delivery rate increase in more than 10 years. We work hard to keep our operating costs low. However, today's rates simply don't reflect our true costs for continually making upgrades to maintain safe and reliable service and to satisfy the increasing growth and demand for power. For example, in just the last three years, the cost of transformers has more than doubled and the cost of electric cable jumped 85 percent.
Q. What fees are you increasing?
A. The only fee set to increase is when Delmarva has to send a collector to the service location to receive payment. The cost for doing so will increase from $15 to $38.
Q. How come Delmarva is increasing its delivery rates in Maryland but not in Delaware?
A. Delmarva Power's delivery business is regulated by the respective Public Service Commissions in the states in which it operates. That means our rates (and pricing structure) are set and determined by the respective Public Service Commissions in those states.
When seeking a rate increase in its delivery business, Delmarva Power must provide sufficient data that justifies the request. Delmarva Power requested this rate increase to offset the escalating cost of improving service reliability for Maryland customers via upgrades to facilities and equipment. The Maryland PSC, after careful review, then decided to approve the request.
