Formal Cases

OPC asks the Commission to Review Local Utilities Efforts to Obtain Inflation Reduction Act Funds

At OPC’s request, the Commission has expanded oversight of utility applications to obtain federal funding for “greening the grid” or adopting more forms of renewable carbon-free energy and creating more reliable services. On September 14, 2022, OPC filed a motion to modify reporting requirements under Order No. 21176 to include information related to the Inflation Reduction Act (IRA) of 2022. The IRA contains over $300 billion for clean-energy and climate programs that could benefit the District of Columbia. Pepco and WGL have the opportunity to acquire financial resources at no cost to ratepayers to fund projects that can assist the city in meeting its climate goals and improving the local energy infrastructure.

Due to OPC’s effective advocacy, the Commission has mandated Pepco and WGL to include in their monthly reports any efforts they undertake to pursue federal funds available under the Inflation Reduction Act.

Specifically, the utility companies reports are required to tell the Commission:

(1) about funding for which Pepco and WGL have applied, noting the applicable section of the Bipartisan Infrastructure Law and the Inflation Reduction Act;

(2) indicate the purposes for which the funding is intended to be used and its connection to achieving the District’s climate commitments and the utility’s capital investment plan;

(3) the status of funding applications;

(4) the conditions that must be met to obtain the funding;

(5) information on whether a particular planned project has funding implications with respect to future rate cases;

(6) the balance of the Bipartisan Infrastructure Law-regulatory asset; and

(7) the balance of the Inflation Reduction Act-regulatory asset.

OPC will review and comment on the reports and continue to inform the public of efforts towards meeting its climate goals and improving the energy infrastructure.

OPC’s win before the DC Court of Appeals Pepco Update
During FY 21 and 22, OPC actively litigated a rate case that examined a proposal from Pepco that would change the way in which rate are established and two cost recovery proposals – the environmental cost of the Benning Road facility and cost recovery for two energy efficiency programs.

The Commission approved Pepco’s new ratemaking proposal on a trial basis and approved the two cost recovery projects. The Office sought reconsideration of all three issues. The Commission denied OPC’s request for reconsideration. OPC then appealed the two cost recovery proposals to the DC Court of Appeals.

The DC Court of Appeals ruled in favor of OPC on the two cost recovery projects. The Court of Appeals agreed with OPC that there was a longstanding agreement in place to prohibit Pepco from recovering the costs for environmental damage at Pepco’s Benning Road facility.

The Court of Appeals also agreed with OPC that Pepco did not meet the legal requirements to recover the costs of a number of energy efficiency programs. The Court’s decision required the Commission to correct the agency’s order.

This win at the Court of Appeals was significant for OPC and consumers because it made it clear to the Commission that it must adhere to the law before allowing costs to be recovered from consumers.

The Office of People’s Counsel (OPC) continues to monitor PROJECTpipes 2, as it enters 2023, its final year. Approved in 2020 by the Public Service Commission (Commission), PROJECTpipes 2 is an initiative that requires Washington Gas and Light Company (WG), to upgrade and replace old metal piping along its aging infrastructure, with newer plastic piping over a three-year period.

PROJECTpipes 2 was introduced by WG as part of its larger 40-year pipeline replacement plan, known simply as PROJECTpipes. Phases of the plan have been introduced, modified, and approved by the Commission, with input from OPC and other stakeholders. The Commission approved the first phase of PROJECTpipes – PROJECTpipes 1 – in 2013, which spanned from June 2014 to December 2020. PROJECTpipes 2 was approved in 2020 and runs from January 2021 to December 2023. WG is expected to introduce its proposal for PROJECTpipes 3 next month in January 2023.

An audit of PROJECTpipes 2 will also take place in 2023, to make sure that PROJECTpipes 2 has been implemented properly. Spending for PROJECTpipes2 is currently capped at $150 million, all financed by ratepayers through accelerated cost recovery. A core component of PROJECTpipes, accelerated cost recovery allows WG to add a surcharge to customers’ bills to pay for the project’s hefty price tag, without having to go through the traditional rigors of a ratemaking case. Addressing leaks along WG’s distribution system is important in providing safe and reliable delivery of natural gas, and methane leaks contribute to climate change, hindering the District’s climate goals. For these reasons, it is important that the program correctly prioritize the replacement of leaky pipes.

To that end, steps are underway to contract with an independent management company to perform the audit of PROJECTpipes 2. This is not the first time such an audit has taken place. An audit of PROJECTpipes 1, performed by Liberty Management, indicated that there were areas where WG had to improve. The audit provided insights when considering approval of PROJECTpipes 2. The audit of PROJECTpipes 2 will hopefully shed light on whether WG is meeting the recommendations from the first audit, and this will be critical in determining how the next phase of PROJECTpipes is implemented moving forward.

Verizon Copper-to-Fiber Transition

In the District of Columbia, some Verizon consumers were recently informed that the company will no longer provide telephone services over copper lines and to maintain service with Verizon, they must migrate to their fiber-based product.

OPC has been actively involved in the copper-to-fiber transition proceedings on the local and national level, including recent conversations with Verizon about the Company’s commitment to retaining the same pricing and consumer protections provided with their current copper service. Here’s what you need to know.

Why is this happening?

At one time, copper wires provided the backbone of voice and internet communications in the United States. Over the last few years, however, the largest telecom providers are increasingly replacing Plain Old Telephone Service (POTS) over copper wire infrastructure with service via internet-based fiber optic cables. According to the providers, there is decreasing support for traditional landline service and the newer fiber optic infrastructure is more reliable, cheaper to maintain, and able to transmit more information than POTS wiring. 

What does this mean for consumers?

According to Verizon, these residential consumers voice services will be transferred from copper to fiber. Verizon will deactivate and may remove its copper infrastructure. The transfer to fiber will be at no additional cost to consumers. The telephone service will retain the same price, terms, and conditions. Customers who subscribe to Verizon’s High Speed Internet Service over copper will need to choose a fiber-based product or obtain internet service from another provider.

Many consumers associate copper-wire based “POTS” (Plain Old Telephone Service) with reliability because the copper lines carry enough electricity to allow traditional corded telephones to work. Therefore, these “old school” telephones would still operate in the case of a power outage without the need for a battery backup. On the other hand, fiber-based infrastructure does not carry electrical current. As such, telephone systems on a fiber network must always be connected to the home’s electricity or a battery backup unit (BBU).

On its “Fiber is Coming” webpage, Verizon states that during the transition and installation process: “We will provide you with a backup battery device at no charge that will power your voice service in the event of a power outage, allowing you to make and receive calls, including to 911, on your corded telephones. “ These BBU’s contain D-cell batteries that consumers may replace on their own, if need be.

As the advocate for landline phone consumers, we urge consumers to contact OPC at (202) 727-3071, should you experience problems or have questions about the transition.

Below are the federal cases in which OPC was active, either individually or jointly with others, since 2014.

U.S. Supreme Court

Brief for Delaware Division of the Public Advocate, Office of the People’s Counsel for the District of Columbia, Maryland Office of the People’s Counsel, New Jersey Rate Counsel, Pennsylvania Office of Consumer Advocate, West Virginia Consumer Advocate Division, Conservation Law Foundation, Environmental Defense Fund, The Environmental Law and Policy Center of the Midwest, Natural Resources Defense Council, The Sierra Club, and Citizens Utility Board as Amici Curiae in Support of Petitioners, Federal Energy Regulatory Commission v. Electric Power Supply Association, 2016 U.S. Lexis 853 (2016)

Federal Energy Regulatory Commission – Since 2014 with dates cases opened

Docket No. ER17-367-000 – Aggregation of seasonal capacity resources (11/17/16)

Docket No. RM16-5 – Notice of Proposed Rulemaking on Offer Caps in wholesale markets. (1/21/16)

Docket No. ER16-561-000 – Permanent funding for the Consumer Advocates of the PJM States, Inc. (12/18/15)

Docket No. EL15-83-000 – PJM’s load forecasting (6/30/15)

Docket No. ER15-1470 – PJM Request for Base Residual Auction Waiver (4/7/15)

Docket No. EL15-31 – Offer Price Cap (12/15/14)

Docket No. ER15-623-001 – PJM’s Capacity Performance Construct proposal (12/12/14)

Docket No. ER15-623-002, et al., Request for Expedited Clarification re: Annual Demand Resource participation (12/12/14)

Docket No. ER14-2940 – Triennial Review of VRR Curve (9/25/14)

Docket No. EC14-96-000 – Exelon/PHI Merger Application (5/30/14)

Docket No. EL14-55 – First Energy’s Demand Response Complaint (5/23/14)

Docket No. EL14-36 – First Energy’s Request for Declaratory Order on Seller Offer Caps (4/7/14)

Docket No. ER14-1145 – Offer Price Cap/Waiver (1/23/14)

Docket No. RP16-302-000 – Columbia Gulf Transmission, LLC.

U.S. Federal Trade Commission

Docket No. P161200 – Solar Electricity Project (4/12/16)

One of the merger commitments is a requirement for Pepco to develop an arrearage management program (“AMP”). An AMP is a billing program that supports qualified low-income customers’ ability to pay off large utility arrearages. In short, an AMP works as follows the utility forgives the arrearage if the customer consistently pays for new utility charges over a period of time. As the customer makes regular, on- time payments on new utility charges, a portion of the arrears is forgiven. Once all payments for new charges have been made over the length of the plan, the arrearage is totally cancelled and the customer can start anew.

OPC’s Actions: Subsequent to the issuance of the PSC’s merger decision, OPC has worked with Pepco and a diverse group of stakeholders to develop the mechanics of the AMP. The AMP proposal was recently filed with the Commission and the Office is now developing comments to address non-consensus issues.

WGL Rate Case Fact Sheet PDF available for download

The Office of People’s Counsel continues to vigorously fight to make Washington Gas accountable for rising leak rates due to its aging infrastructure. For the past six years, Washington Gas has operated under authority of the DC Public Service Commission to collect a surcharge on customers’ bills to replace the Company’s aging natural gas pipeline infrastructure in the District, with the goal of targeting the District’s oldest and leakiest pipes to ensure safety and reliability. After five years of PROJECTpipes 1, OPC repeatedly pointed out that Washington Gas had failed to timely meet its goals and had consistently spent above budget on its stated tasks and projects.

When Washington Gas filed its application for PROJECTpipes 2 in December of 2018, OPC was quick to point out that the Company sought an unjustifiable increase in budget to continue “business as usual” without showing any tangible progress in cleaning up its act after the first five-year trial period. Further, Washington Gas sought to include additional projects outside the scope of necessary safety and reliability work, which would have resulted in a much higher surcharge for ratepayers. After almost two years of zealous litigation, OPC was able to convince the Public Service Commission to deny these extraneous projects, yet, the Commission approved Washington Gas’ “business as usual” approach for an additional three-year period on December 11, 2020.

On January 11, 2021, OPC filed a Motion for Reconsideration, Clarification, and/or Modification of the Commission’s Order, because the PROJECTpipes 2 Plan as constituted does not ensure that the safety and reliability of Washington Gas’ system. OPC will point out that Washington Gas has failed to incorporate lessons learned from PIPES 1 and has disregarded multiple key recommendations from the Commission-ordered independent auditor of the program. Further, OPC challenges how the approved PROJECTpipes 2 plan will further the District’s climate goals, where the plan forecasts replacing natural gas pipe through 2044 under an accelerated timeline, and the District’s environmental policies require greenhouse gas reductions by 2032 and carbon neutrality by 2050. OPC will continue to press the Commission to mandate Washington Gas to engage in only the necessary repairs to keep the natural gas system safe, while maintaining affordability and also harmonizing that effort with the District’s climate goals.

Like the year 2020, Formal Case No. 1156 was unlike any previous electric distribution rate case in the District. In addition to Pepco’s unprecedented request to change the way rates are set in the District and to institute massive rate increases of at least $135.9 million, the case included setting the policy that the PSC will use to judge utility alternative form of ratemaking proposals; reviewing and addressing two different multiyear rate plans, three different rate increase requests, and multiple sets of data that continued to change even at the last minute; and most importantly, the devastation of the District economy and ratepayer finances due to the COVID-19 pandemic.

On December 23, 2020, OPC filed its reply brief, bringing to close the evidentiary phase of Pepco’s rate case application. During the nineteen-month evidentiary portion of the case, OPC advocated vigorously to ensure ratepayers received their due process and that the Commission has a well-developed record on which to base its decision.

The record is clear that Pepco’s proposals are bad for customers and bad for the District. Indeed, all other active parties in the case—the Federal and District governments, the association representing apartment and office buildings, and the unions—have also called for the rejection of Pepco’s proposals. Moreover, over 500 community members and organizations filed or presented comments in the docket—the overwhelming majority of whom have called for the PSC to reject Pepco’s MRPs. Community comments make plain that consumers are concerned about their finances, the economy, the environment, and their energy futures.

The Public Service Commission is reviewing the entire record and the pleadings of the parties, and it is their responsibility to do so with care in order to issue a reasoned decision.

(MEDSIS Update) Pepco’s Proposal for a Limited Demand Management Program for Plug-In Vehicle Charging in the District of Columbia (Formal Case No. 1130 (Formerly Formal Case No. 1143*)

On April 21, 2017, Pepco filed its Electric Vehicle Charging Program Application with the Public Service Commission in Formal Case No. 1143. Pepco proposed a limited, voluntary Electric Vehicle (“EV”) program in the District of Columbia consisting of five offerings. Offering 1 would be for residential customers with existing Electric Vehicle Supply Equipment (“EVSE”). Offering 2 would be for residential customers who currently lack EVSE. Offering 3 would be for owners/operators of multi-unit dwelling complexes without existing EVSE. Offering 4 consists of the installation of four direct-current fast chargers in the District for public use. Offering 5 would provide a select number of residential customers with EVs the option to select a whole house time-of-use rate. According to Pepco, the proposed offerings “provide options, depending on customer preference, and will allow Pepco to focus on expanding [EV] use within the District of Columbia and creating an important source of data collection.”

The Office filed Initial and Reply Comments with the Commission in May and June of 2017, concerning Pepco’s proposed EV Program. The Office’s lead recommendation was for the Commission to close Formal Case No. 1143 and direct Pepco to refile the proposal in the District’s Grid Modernization docket—Formal Case No. 1130—because doing so would produce a more robust analysis of the EV Proposal and elicit maximum stakeholder input. With respect to the merits of Pepco’s EV Program, OPC recommended, in part, that (1) all EV Program costs be recovered exclusively through participant funding, (2) Pepco’s request to recover capital costs associated with certain fast chargers in a regulatory asset be rejected to protect competition among the District’s EV charging market participants, and (3) the Commission consider certain structural and regulatory changes to protect ratepayers should a wider rollout of the EV Program be authorized.

On October 19, 2017, the Commission, in Order No. 19143, accepted OPC’s recommendation and transferred the entire Formal Case No. 1143 docket into Formal Case No. 1130. The Commission subsequently closed Formal Case No. 1143 on December 8, 2017.

Purpose: The Commission’s examination of Washington Gas Light Company’s application to raise rates by $19.9 million and a review of WGL’s management of Project Pipes and Mechanical Coupling Replacement project.

OPC’s position: OPC’s litigated position is that WGL should not receive an increase higher than $436,000. OPC’s basis is that WGL has consistently and significantly overspent on Project Pipes and Mechanical Couplings Replacements Projects and should not be allowed to continue to recover costs in excess of the budgeted amounts. Additionally, WGL’s request for an increase in its authorized rate of return should be denied because it is higher than the prevailing market rates and would unjustifiably burden DC consumers.

Next steps: OPC filed its initial brief on November 21. Further settlement discussions may occur post trial.

Purpose: The Commission’s examination of Pepco’s request for a rate increase of $82 million.

OPC’s position: OPC is currently in the process of carefully scrutinizing and analyzing Pepco’s $82 million request to develop its comprehensive position on all of the issues. OPC’s litigation strategy is guided by the following factors: 1) Pepco’s request for $82 million is unreasonable on its face; 2) Commission approval of the $25.6 million Customer Base Rate Credit for application to residential consumers, only, is warranted, 3) the Commission should only allow recovery for cost-effective reliability improvement projects currently providing benefits to consumers; 4) a PSC directive that Pepco implement environmentally beneficial and load-reducing measures is in the public interest and; 5) Pepco’s compliance with regulatory commitments outlined in the PSC order approving the merger is mandatory.

Next steps: OPC will file its initial testimony on December 14 and participate in the evidentiary hearings in March 2017. Community hearings have not been scheduled by the PSC to date.