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Pepco fined $1 million by PSC

Thursday - 12/22/2011, 8:27am  ET

windy_pepco (WTOP Photo/Kristi King)
A Pepco worker trims branches on a powre line on a windy day. (WTOP File/Kristi King)

Kate Ryan, wtop.com

WASHINGTON -- After customers complained for years about outages on snowy and sunny days, Pepco -- one of the region's largest utilities -- has been hit with a $1 million fine.

In a 94-page ruling, the Maryland Public Service Commission, which regulates utilities in the state, pulled no punches, stating, "Pepco offers myriad excuses for its performance, but we are not buying."

The PSC slammed Pepco for allowing its system to slip to the fourth quartile of industry standards for reliability.

The report reads, "After conducting a full evidentiary hearing...we conclude that Pepco failed to provide an acceptable level of service during 2010 and for at least the preceding few years."

The report was the result of years of pent up frustration from rate payers, county officials in Montgomery and Prince George's counties and Maryland state lawmakers, who at one point, questioned the Public Service Commission's oversight of the utility.

Under Order No. 84564, Pepco is ordered to pay the $1 million fine, file a detailed five-year work plan within 60 days, file a year-end review and quarterly reports, and keep the PSC up to date on its development of a position of a Consumer Advocate and manager who can keep tabs on estimated times of restoration, or ETRS.

The PSC says Pepco's failures were in large part of its own making. While the utility complained that dense tree canopies led to increased and prolonged power outages, regulators found that Pepco's own erratic tree trimming in the past exacerbated the problem. And, the PSC faulted Pepco for failing to keep customers up to date on the progress of restoration during outages.

Along with having to demonstrate improvement, Pepco also will find its request for rate increases under more scrutiny. The commission telegraphed its intent to take a hard look at the most recent $68 million dollar "rate adjustment" request by writing "In the Company's next rate case, the Commission will review reliability spending in 2011-2012 and will disallow the amount that is larger due to the Company's imprudent management in earlier years."

Pepco says it does not plan to appeal the decision.

Pepco provides power to approximately 800,000 customers in Washington as well as Montgomery and Prince George's County in Maryland.

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(Copyright 2011 by WTOP. All Rights Reserved.)