The Public Service Commission this week granted Delmarva Power a $15.1 million electrical rate increase, the Delaware Division of Public Advocate reported. The office is headed by David Bonar.
The overall increase granted to Delmarva is approximately $15.1 million, or about 36% percent of the $42 million initially requested by the Company. That would have amounted to a typical reisdential customer paying an additional $7.63 a month or a 5.4% increase. The new rate would appear to cut that increase to less than $3.
A difference with temporary increase of $27.5 million granted by the PSC in October 2013 will be refunded to customers, with interest in coming months.
“We are very disappointed with the decision. This action by the commission is likely to impact our planned investments in the infrastructure of the state, and we will be reviewing these investments in the days and weeks ahead.” said Gary Stockbridge, Delmarva president. “The work our employees have done and the investments we have made in the system have improved the reliability for our Delaware customers, but we will have to review whether we can continue to make those investments.”
The full findings will be released by a commission at a late date.
The proposed increase was aimed at increasing the reliability of the Delmarva electric delivery system and increasing the utility’s return on investment.
Delmarva, which serves a large part of Delaware, minus a number of municipalities and the area served by Delaware Electric Cooperative, has seen improvements in system performance and fared well during a tough winter.
At the same time, Delaware largely escaped devastating ice damage that hit in areas just north of its border with Pennsylvania and most of the wrath of Hurricane Sandy.
Critics claimed the utility did not need as high of a rate of return on its investment and further argued that the costs were high in relation to the impact of improvements on reliability. However, a lower return on investment can increase debt costs for the utility and lead to further rate requests.
The rates for the cost of providing delivery are separate from the costs of buying electric power from wholesalers.
Delmarva passes on those costs as well as the added costs of state mandates for purchasing solar, wind and Bloom Energy fuel cell generation.
Those costs have led to concerns that Delaware’s economic recovery and ability to draw businesses in manufacturing and other areas has been hampered by high utility costs.
That could have played into the decision by the PSC to limit Delmarva’s return on investment.
Until now, the state had been viewed as a friendlier environment for utilities than neighboring Maryland. Several years ago, Delmarva sold its Eastern Shore Virginia operations, due to regulatory issues.
