Attorney General Racine Announces Agreement with Pepco That Will Return $24.1 Million to District Ratepayers

Parties Agree That Ratepayers Should Get Benefit from Utility’s Federal Tax Savings

WASHINGTON – Attorney General Karl A. Racine announced today that the District government has reached an agreement with Pepco Holdings Inc. and nine other parties that will result in $24.1 million in savings for electricity users in the District

 

These savings result from a settlement in which Pepco has agreed to pass on to ratepayers a significant share of the tax cut it received from the recent federal law reducing corporate tax rates. Under that law, the top federal corporate tax rate was slashed from 35 percent to 21 percent.

 

“This is a significant win for District residents, and I’m proud that the Office of the Attorney General played a key role in helping reach this agreement,” said Attorney General Racine. “With this settlement, residents will see a reduction in their electric bill instead of the increase that Pepco originally requested. The groups we joined with in this negotiation represent a broad range of interests, but we were united in the idea that it is only fair that if a public utility receives a tax cut, the benefits of that cut be shared with the public.”

 

The other parties that agreed to the settlement terms are the Office of the People’s Counsel of the District of Columbia, the Apartment and Office Building Association of Metropolitan Washington, D.C. Climate Action, Baltimore-Washington Construction and Public Employees Laborers’ District Council, Maryland-D.C.-Virginia Solar Energy Industries Association, D.C. Consumer Utility Board and Solar United Neighbors DC, Small Business Utility Advocates, and Tesla, Inc.

 

Under the agreement, all classes of Pepco ratepayers will see some reduction in rates as early as July 1, 2018.

In addition, District government taxpayers will benefit from a significant change in how Pepco bills the District government for street and traffic lighting. Instead of a flat rate, Pepco will charge the District government based on the actual amount electricity its street lights use. That means the District will reap savings from using highly efficient LED lighting.

 

In December 2017, Pepco filed an application with the District of Columbia Public Service Commission (PSC) for a rate increase of $66.2 million. When Congress passed the federal Tax Cuts and Jobs Act of 2017, Pepco amended its application to seek a $26.3 million increase.

 

The agreement requires Pepco to file a rate reduction proposal with the PSC. These rates would remain in effect through 2019. The commission will hold a public interest hearing and will issue a final order affirming or denying the settlement.