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The PSC had regulated utilities based on each company’s total cost of service to determine whether the resulting rates were “just and reasonable,” but everything changed after the Bell Atlantic divestiture.
States across the country began restructuring efforts to introduce competition into their own markets, and by the mid-90s, the push for regulatory reform and competition had intensified. The changes taking place nationally affected the utility environment in local settings — and D.C. was no exception. OPC opposed the introduction of competition into the utility market because it believed prices would increase as a result, but despite OPC’s opposition, the PSC allowed competitive suppliers entry to the local D.C. utilities market.
Trifecta Rate Case Against Major Utilities
Alongside huge changes and uncertainty in the utilities market, the federal Tax Reform Act of 1986 moved the needle in the right direction for D.C. ratepayers. As a result of the Act’s passage, utility consumers saw savings to the tune of $42 million18 — and it was because of Dorsey’s work with OPC that D.C. ratepayers were the first in the country to benefit from the tax cuts.
Though the tax reform act reduced corporate tax rates, utility companies that benefited from this tax cut had no intention of passing any savings on to utility customers. The utility companies continued to charge customers the same as they did before, so in 1986, before the tax cuts took effect, OPC took the lead and sought a reduction in consumer rates across three of the major utilities: Pepco, C&P Telephone, and Washington Gas. OPC initiated discussions with the utility companies in hopes of avoiding more complicated proceedings.
These discussions resulted in settlement proposals in which the utility companies voluntarily agreed to reduce their rates — thus avoiding time-consuming hearings.
Settlement agreements resulted in approximately
$20 million
for D.C. ratepayers,19 underscoring OPC’s value as a consumer advocate.
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OPC’s Journey to Protect Utility Consumers