D.C. Public Service Commission FC 1139
Application of Potomac Electric Power Company for Authority to Increase Existing Retail Rates and Charges for Electric Distribution Service
Testimony of Mark Rodeffer, Chair, D.C. Chapter of the Sierra Club
March 4, 2017
Chairman Kane and Commissioners Phillips and Beverly, thank you for allowing me to testify today. My name is Mark Rodeffer. I'm the chairman of the D.C. Chapter of the Sierra Club. The Sierra Club is the nation's oldest and largest environmental advocacy group. We are a grassroots organization with 3,000 dues-paying members in the District of Columbia and more than 10,000 supporters in D.C. Our top priority is combatting climate change, the biggest threat the planet has ever faced. We work to shift away from dirty fossil fuels that cause climate change and instead move toward a clean energy economy.
We believe the rate increase Pepco is seeking in Formal Case 1139 – $82 million from ratepayers – is excessive. The $82 million request is far higher than increases in the past five rate cases. This is the first rate increase filed since the Pepco - Exelon merger, so the Public Service Commission must ensure in this case that the requirements agreed to in the merger are met.
An $82 million rate increase is not prudent. Pepco is entitled only to recover costs necessary to provide reliable service and to protect the environment. The Sierra Club supports the revenue requirement adjustment advocated by the Office of the People's Counsel. OPC's figure is $20 million– a whopping $62 million less than requested by Pepco.
Pepco should not focus on spending ratepayer money to accommodate higher peak demands with electricity from a central source. Instead, Pepco should invest in distributed energy resources as a means to meet anticipated demand.
According to OPC, Pepco's 2015 system load factor is 56.27 percent. That means Pepco must meet peak demands at almost double average use. In the order opening Formal Case 1139, the Public Service Commission directed Pepco to implement environmentally beneficial and load-reducing measures because they would be in the public interest. We agree and we believe ratepayer money should go to load-reducing measures, not chasing higher and higher peak demand.
Under the old model, utilities show they need new capacity to meet system peak and then pay for that extra capacity with rate increases that hurt families and businesses. With new technology and serious environmental threats that can no longer be ignored, we must discard the old model. Instead, regulators such as the D.C. Public Service Commission should reward utilities for investing in technology on the demand-side of the meter, which increases system load factor and makes the system more reliable at a lower cost and with less pollution.
In Vermont, we have an excellent example of this new model of increasing system load factor by reducing demand. For more than 20 years, Central Vermont Public Service Company successfully increased average system load factor from 55 percent to 70 percent, largely with innovative strategies such as seasonal rates and time-of-day rates. And Vermont saw a reduction in costs to the electric system of 4 percent. D.C. should follow this model and use smart-metering technology to increase system reliability by decreasing demand.
I am testifying on behalf of the Sierra Club, but I would like to say on a personal note that I live in Southwest D.C. in a co-op that is about 10 feet above sea level. We are on the front lines of climate change. Rising sea level is a threat to the entire globe and especially to thousands of residents in D.C., such as myself. Our money – as ratepayers – should not go toward making sure more and more fossil fuels are burned to allow higher and higher energy consumption levels. We need energy efficiency measures to reduce energy use. And we need distributed energy that will meet the demands of D.C.'s growing population. Distributed energy is more cost-effective than spending hundreds of millions of dollars on infrastructure such as new substations. And in the face of climate change and the threat of rising sea levels, clean renewable energy generated and stored at or near the energy user is a necessity, not a luxury.
The Sierra Club urges the Public Service Commission to reject Pepco's $82 million rate increase request. And we urge the commission to limit all future rate increases until Pepco gets serious about distributed energy.
Thank you.