The News Journal | by Jeff Neiburg
Delmarva Power customers won’t be subject to a rate increase for their electricity after all. In fact, they’ll be paying a little less.
The Delaware Public Service Commission and the Division of the Public Advocate executed a settlement Wednesday that will result in a rate reduction of $6.85 million for Delmarva Power customers,
Instead of an initial $65, or 4.7 percent, hike proposed for typical Delmarva electric customers, they will see a more than $15 annual decrease in their electric costs, a drop of 1.4 percent.
“This is a big deal for our ratepayers,” said Public Advocate Drew Slater. “Simply put, this case went from an increase in rates to a decrease in rates thanks to the parties involved in these negotiations and the Commission’s support of our petition to ensure money from tax breaks flowed back to customers in the form of reduced rates.”
The settlement ends a saga that began with Delmarva Power’s initial request last year of a rate increase for electricity in order to raise $31.2 million to help with distribution costs. The Newark-based utility planned to raise electric rates by $5 a month for electricity and $4 a month for natural gas. Combined, Delmarva Power wanted the extra $44 million or so to offset more than $50 million the company spent on infrastructure maintenance in 2016, Delmarva’s Nicholas Morici told The News Journal last fall.
But corporate tax cuts passed in Congress caused the company in February to lower its power rate increase request in Delaware by $26 million. That move came after more than two dozen members of the General Assembly backed a petition filed by Slater in a letter they sent to the Delaware Public Service Commission.
Slater, who lobbies on behalf of ratepayers, filed his petition before the new year and argued that the cash windfall from lower corporate taxes should flow to electricity and water consumers.
Public Service Commissioners regulate privately owned electricity, water and telecommunications companies, including Delmarva Power. In markets that lack competition, commissioners set utility rates to ensure they are “reasonable.”
A utility company is allowed to earn up to 9.7 percent return on its equity in Delaware.
“Delmarva’s customers win big in this case and the settlement reflects an agreement among the parties that the reduction in federal tax rates are reflected in customers’ bills,” said Raj Barua, executive director of the Public Service Commission.
The settlement has been signed by Delmarva Power, Commission staff, the Public Advocate and the Delaware Energy Users Group. Other parties included the Department of Natural Resources and Environmental Control and Rep. John Kowalko. The Hearing Examiner and the five-member Public Service Commission are responsible for ultimate approval of the settlement.
In a statement, Delmarva Power said: “We are pleased to have reached a settlement for electric delivery rates that, if approved by the Delaware Public Service Commission, will lower bills for our Delaware customers. By passing along tax savings through this process, we are able to provide customers with a $6.85 million decrease on their electric bills, while also sustaining our important efforts to enhance the local energy grid and provide our customers with the safe, reliable and affordable service they have come to expect from Delmarva Power.”
No settlement has been made yet regarding natural gas costs.
“We continue discussions with interested parties regarding the current regulatory rate review for natural gas rates,” a Delmarva Power spokesperson said.