PEPCO seeks a hefty price tag for the energy transition
It can be argued that no major city or state in the nation is planning as rapid a renewable-powered transformation of its energy use as Washington D.C. The capitol’s newly minted 100% by 2032 renewable energy mandate makes even Hawaii look like a laggard, and its goals for local solar and electrification of transportation lead the nation.
Late last week we got a look at how the district’s utility plans to handle this transition in terms of investments and customer rates. And while investor-owned utilities are rarely shy in terms of asking for more from regulators, the price that PEPCO is asking for its part in enabling this transition is particularly steep, as revealed in a recently filed multi-year rate case.
For starters, The Potomac Electric Power Company (PEPCO) is planning to invest more than $300 million annually over the next five years in its distribution system, which it says is preparation for the move to a city powered by behind-the-meter solar and where electric car charging is ubiquitous.
And for this ROE, the company would like to reward itself with a 10.3% return on equity (ROE) by 2022, up from the 9.52% that it currently earns. And on top of this, PEPCO would like to raise its fixed charges on residential customers to $21.60 by that date, which would be one of the highest such charges in the nation.
Ben Inskeep, senior analyst at EQ Research, notes that none of these requests are particularly unusual for a utility, but that while utilities often make such big asks, that they are usually rebuffed by state regulators. ROEs usually come back in at less than 10%, and the residential fixed charge increases that are granted are usually much smaller than what utilities ask for.
