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Delmarva Power Files for Adjustment in Gas Delivery Rates

Friday, July 02, 2010

Company Requests 6.3 percent Increase to Recover Capital Investments

NEWARK, Del. – Delmarva Power today asked the Delaware Public Service Commission (PSC) to authorize an increase in its gas delivery rates to cover the increased cost of operations, maintenance and capital investment expenditures. For a residential customer with a usage pattern at or near the class average, the monthly bill impact of the full proposed rate increase is $6.99, or 8.1 percent of their total annual bill. The delivery rates are separate from the fuel (supply) rate. Delivery rates reflect the costs of providing a system and services to move natural gas through a pipeline system to customers.

The company’s $11.9 million request reflects rising capital investment costs required to continue to provide its northern Delaware customers with safe and reliable gas delivery service. Delmarva Power has invested approximately $70 million in its gas distribution system over the past three years. Yet, the company’s operating expenses have increased 33.8 percent since 2006 when Delmarva Power last filed for an increase in its gas delivery rates. Delmarva Power delivers natural gas to approximately 123,000 homes and businesses in northern New Castle County, Del.

“This rate adjustment addresses the rising cost of maintaining our infrastructure and improving our gas delivery system,” said Gary Stockbridge, President, Delmarva Power Region. “We understand these are difficult economic times and will continue to do all we can to control our costs and work with those customers who are in need of energy assistance and a flexible payment arrangement.”

Delmarva Power officials said a decision on the rate increase request is expected by February 2011. The company will, however, implement an interim rate increase, effective August 31, 2010 and subject to refund, of $2.5 million in additional revenue. The monthly bill impact of the interim rate increase is $2.06, from $167.25 to $169.31, or 1.23 percent, for the typical residential customer who uses 120 ccf of natural gas during a winter month.

Delivery rates cover the cost of continuing to provide customers with safe and reliable service, investment in new natural gas service technology and improvement in service capabilities to keep pace with growth and increasing demand. These rates are different than supply rates which are adjusted annually for Delmarva Power’s Delaware customers to reflect the cost of natural gas that the company is required to buy on behalf of its customers.

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Delmarva Power, a public utility owned by Pepco Holdings, Inc. (NYSE: POM), provides safe and reliable energy to nearly 500,000 electric delivery customers in Delaware and Maryland and more than 122,000 natural gas delivery customers in northern Delaware .