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Delaware PSC Approves $16.7M Revenue Increase for Delmarva Power

Wednesday, January 19, 2011

Regulators delay decoupling measure for additional customer education

NEWARK , Del. – The Delaware Public Service Commission (PSC) voted Tuesday to approve an overall $16.7 million increase in Delmarva Power’s electric distribution rates for its Delaware customers. This increase is the first delivery rate increase for Delmarva Power in approximately 15 years. The PSC decision allows for a rate of return on equity of 10 percent.

Although the PSC’s decision increases electric delivery rates by approximately 2.4 percent, Delmarva Power’s Delaware customers will see a decrease of approximately 1.3 percent from current rates, effective Feb. 1.

Last April Delmarva Power implemented new electric delivery rates based on its request for an additional $26.2 million in total revenues. Customers now will see a decrease because the Commission did not approve the Company’s full revenue request and electric delivery rates will be reduced to reflect the Commission’s decision. The difference between the current rates and the approved rates will result in a decrease of $1.98, from $154.99 to $153.01, in the typical residential customer’s monthly bill. The bill impact on commercial and industrial customers would vary according to usage.

Additionally, Delmarva Power’s Delaware customers will receive a refund in the form of bill credits for the months during which the Company’s delivery rates were higher than those approved by the PSC (April 2010 – January 2011). It is anticipated that the customer refund, which includes interest, will be issued on bills in spring 2011.

Distribution rates are separate from supply rates. Distribution rates determine a customer’s delivery charges and cover the cost of the poles, wires and other equipment that carry electricity to customers’ homes and businesses. Customers who buy electricity from a competing supplier will see this decrease in their distribution rates.
Revenue Decoupling Decision

The PSC also approved a process for moving forward on the development of a new rate design, commonly referred to as “decoupling,” for the delivery portion of customers’ bills. Before enacting decoupling, the PSC requested a comprehensive implementation plan, which would include public workshops, be developed and reviewed by the PSC. The decoupling proposal would introduce a new rate design that breaks the link between Delmarva Power’s revenue and electricity sales in order to better align the company’s interests with those of its customers for greater energy efficiency.

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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 over 121,000 natural gas delivery customers in northern Delaware.