Delmarva Power unveiled its new ‘Forward Looking’ rate plan this week, which would set utility rates through 2017.
The utility filed the new proposal with the Delaware Public Service Commission on Wednesday.
Company officials say the plan will help customers know how much to budget for electricity because they’ll know their rates four years in advance.
The way it works now is each year Delmarva foots the bill for any infrastructure investments, like upgrading its system to work with automated meters, and presents its expenditures to the PSC for review and (dis)approval each year seeking reimbursement via rate increases. Delmarva says the plan eliminates this “time consuming” legal proceeding that can cost upwards of $650,000 a pop; a cost that is passed on to customers.
“Instead of the traditional way we set rates now, which is basically that the company spends money on investments and we come into the Commission and we look backwards at what we’ve done… this is different in that regard in that it’s a forward looking rate plan that would set rates for the next four years,” said Delmarva Power President Gary Stockbridge during a media conference call today.
Essentially, the new rate plan would give the utility a steady revenue stream allowing it to know what money it had up front.
Delmarva says the average residential customer uses about 1000 kilowatt hours a month and would pay an extra $2.40 each month over the four years.
Those concerned about the new plan have spoken out saying they’re worried the new plan will give Delmarva the ability to spend any which way it wants, with very little regulatory oversight.
“The Public Service Commission has all of the same rights they’ve had in the past to oversee and manage our business,” said Stockbridge. “The Commission still has all the rights they used to have in terms of reviewing our books.”
Critics also fear there’s nothing stopping Delmarva from asking for more money if the PSC approves the plan.
Delmarva Vice President Glenn Moore countered by saying, “If [another] Sandy were to hit Rehoboth… and we were to spend $15 million or $20 million dollars, the only thing the plan gives us the right to do is to ask the Commission to consider that that was something that we could not have anticipated, and didn’t anticipate. It then would allow the Commission, under their own rules, to be able to evaluate that particular example and determine whether rates could be changed.”
Delmarva says the plan is designed to fund all “capital, operational and maintenance expenses.” Stockbridge says that includes improving reliability to meet customers’ demands, upgrading infrastructure to keep up with technology and increasing resiliency in severe weather.
If approved, Stockbridge says the plan would replace the utility’s pending rate case filed back in March.
Delmarva Power is holding a public meeting at 5:30 tonight at Delaware Technical Community College in Georgetown and on Oct. 16 at 7 p.m. at the University of Delaware’s Arsht hall in Wilmington. Stockbridge and Moore say the meetings are largely to allow the public to weigh in on what kinds of infrastructure investments they would like to see the utility make. However, both company leaders acknowledge people might ask about the new rate plan during the forums.
No public meetings to discuss the ‘Looking Forward’ rate plan have been scheduled as yet.
The power company expects the PSC to review its new proposal over the coming weeks.
Today’s announcement comes after Delmarva Power residential customers learned next month they’ll have to pay a $4.37 monthly surcharge to help pay for the Bloom Energy project, up from $1.08 a year ago.
Delmarva says Bloom did not play a factor in the utility’s move in this new direction, adding it had been considering new plans since last year, when the PSC asked the utility to look for more creative rate plans.
Delmarva says it will generate 30 megawatts of power, enough to power 22,000 homes, using Bloom’s fuel cells. That power generation is also expected to help the utility meet the state’s clean energy goals, requiring that 25 percent of the state’s energy supply come from cleaner sources by 2025.