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Monday, August 6, 2012

Accountability for Pepco

In my conversations with Montgomery County residents, the driving question they have is, Where is the accountability for Pepco??

Who is going to make sure that the company will improve its service and that the unacceptable service we have received since 2004 will change?

There is an answer to this question.  Accountability lies first with the PSC and second with the Governor.

And they have the tools to make Pepco change.  Here is what we need to do.

What the PSC can do
The Maryland Public Services Commission (PSC) has the power to regulate Pepco.  In response to our dire circumstances and the outcry from our residents, the PSC has established a framework that can solve our problem, if they follow through:  

  1. Pepco will be required by the PSC to reach “average” service standards within 4 years.
  2. If Pepco does not meet those standards, the PSC will fine Pepco.
  3. Pepco will not be eligible to charge ratepayers to “catch up” for its neglect in the past.
  4. The PSC will reduce Pepco’s profit or rate-of-return in order to fund improvements without putting the entire burden on ratepayers.

In a recent appearance before the County Council, PSC Chair Douglas Nazarian described the commission’s new standards for Pepco. He also promised to aggressively enforce them.  Nazarian told the council that the PSC expected to see better performance for Pepco.

" And if we don’t… I promise you, not only as a regulator and as someone who shares the public’s frustration, the council’s frustration with the outages of the last couple years, but as someone who is charged with the obligation under Maryland law to enforce these regulations to hold the company accountable, I promise you that we will do that.  And we will do that in a very meaningful and very significant and, if necessary, very painful way."

This framework that the PSC has established will only work if they follow through on it.  Already we are seeing Pepco fighting back aggressively, arguing that if they don’t get higher rate hikes we won’t get better service.  We will need to keep the PSC on the job by:

  1. Ensuring that fines are consistently large enough to force Pepco to change.
  2. Ensuring that Pepco doesn’t charge ratepayers for their past mistakes, by blocking unfair rate hikes and reducing Pepco’s “rate of return on equity.”
  3. Raising the service standards that Pepco must meet above “average.”

What the Governor Can Do
The Governor is a key player in this reform process because the Governor decides who serves on the PSC and can make it clear what expectations he has for their actions.  In response to the crisis, the Governor has launched an executive review of our electricity system.  While this is indeed urgent, dealing with Pepco will require a different set of actions than what might be required to improve utility reliability in response to climate change.  With Pepco, the problem is the company’s culture and management, not climate change.  The solution is tough regulation.

The Governor can:

  1. State clear support for the Pepco-oriented regulatory agenda outlined above.
  2. Only nominate PSC members who clearly support this agenda.
  3. Help reform how the PSC engages with residents so that we can be heard, as we work with the Governor to hold Pepco accountable.  From a resident’s perspective, I believe the PSC is impenetrable, and this is part of the reason that the crisis at Pepco was not recognized by the PSC for years.

What you can do
Not only the PSC and the Governor, but all elected officials at every level should support a tough regulatory agenda for Pepco.  The 2014 election cycle is underway, and it will be essential to combat Pepco by obtaining clear commitments to support this agenda from statewide and local candidates.

You can do three things to hold Pepco accountable right now.

1.  In the aftermath of the derecho storm on June 29, I launched a petition calling for the PSC to be fired for not dealing more aggressively with Pepco.  Nearly 5,000 county and state residents have signed that petition.  By adding your name to this petition, you will receive communications about ongoing efforts to hold Pepco accountable.  

2.  The PSC is holding a hearing on August 7 at 7 PM in the County Council’s hearing room.  Our address is 100 Maryland Avenue in Rockville and the hearing room is on the third floor.  This is your chance to tell the PSC directly what you think of Pepco’s storm performance.  Please attend.

3.  Several Montgomery County residents are working with other residents to organize a grassroots organization to hold Pepco accountable.  You can contact Abbe Milstein at powerupmontco@gmail.com.  An organization of this kind can help give Pepco customers a direct voice and help hold the company, the PSC and all political candidates accountable on this issue in 2014.

Finally, there is the question of revoking Pepco’s franchise and establishing a publicly-owned distribution system.  I am a strong supporter of pursuing a public power option, because I believe it would save Montgomery County taxpayers countless millions of dollars that are now diverted to shareholders.  Our first step, though, must continue to be solving the problem at hand: holding Pepco accountable.  Let’s make that happen. 


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