Delaware utility regulators have ruled that Delmarva Power should automatically move commercial electric customers to less expensive rate classifications when they are eligible, rather than forcing customers to ask to be moved.
The Public Service Commission last week granted a petition by PSC staff and the Division of the Public Advocate to change Delmarva’s tariff so business customers do not unnecessarily overpay for their electricity. The commission could sign a written order as soon as next week’s meeting.
The petition was filed after informal talks with Delmarva Power failed to resolve the concerns of PSC staff and the Public Advocate, which represents the interests of consumers in utility cases.
Officials urged Delmarva Power customers earlier this month to contact the utility and ask if they qualify for lower electric billing rates. The move came after officials learned that more than 5,000 Delmarva Power business customers may be paying more than they need to.
The issue came to light after The Associated Press recently published an article about a complaint filed by a Sussex County businessman. That complaint involved Delmarva’s solar energy tariff, but it brought to light the broader issue of how Delmarva bills its business customers.
Under Delmarva’s tariff, a business customer with a “small general service” rate classification pays only for actual kilowatt usage plus a nominal monthly service fee. But a “small” customer is automatically moved by Delmarva to a more expensive “medium general service” classification if it consumes 3,500 kilowatt hours or more for two consecutive months.
The medium classification comes with a monthly “demand” charge that can amount to several hundred dollars or more based on a customer’s peak usage that month. A customer also must remain at the medium classification for 12 months, without exceeding the 3,500 kWh threshold, before being allowed to return to the less expensive “small” classification.
The problem is that, while Delmarva Power automatically moves customers from small to medium service, it has not been notifying customers that they are eligible to be restored to the lower rate classification after a year has passed. Instead, a utility customer must proactively make that request. In documents submitted to support a pending request to raise its electricity rates, Delmarva admits that businesses that have been eligible for lower rate classifications “rarely made such a request.”
The PSC agreed that customers should no longer have to bear that burden.
“It makes it automatic both ways,” Public Advocate Drew Slater said Wednesday.
Slater also contends that Delmarva not only has been allowing customers to overpay for electricity, but has actually been violating its tariff.
In support of the proposed rate increase, Delmarva submitted testimony by Kevin McGowan, vice president of regulatory policy and strategy for parent company Pepco Holdings. McGowan testified that when a business customer moves into facility formerly occupied by a previous customer, the new customer is automatically assigned the same service classification its predecessor had.
Delmarva’s tariff states that when two or more service classifications are available, the customer “shall” select the service classification.
“Regarding Kevin McGowan’s testimony, Delmarva Power is following the processes and procedures in its existing tariff, as approved by the Public Service Commission,” Pepco spokesman Jake Sneeden said in an email Wednesday. “Customers can contact the company at any time to request a review of their account.”
Sneeden also said Delmarva Power is working with state officials to develop a plan to transfer eligible customers to new service classifications “as quickly and efficiently as possible.”
Delmarva has said more than 5,000 of its roughly 13,700 “medium” businesses customers currently qualify for the “small” rate classification, and that half of its “large” business customers qualify for “medium” rate classification.
Nevertheless, Delmarva argued that the rate classification issue should be folded into the commission’s deliberations over the proposed rate increase, a process that will take several months.
“An over-simplistic revision of the electric tariff may facially appear to provide a ‘quick fix’ for commercial customers, but … in the absence of a holistic and measured approach, such rash action may have unintended negative consequences for other ratepayers,” wrote Delmarva Power attorney Pamela Scott.
Meanwhile, Slater said Delmarva is opposing his request that it send letters to business customers within 30 days of the PSC’s order notifying them of the change.
“In these times in particular, where business have closed due to COVID-19, I think it could be a significant benefit to some of these small businesses to at least be notified,” he said.
Slater said that if Delmarva Power won’t notify customers, he will request their names and addresses and do it himself.
“The customers of the utility deserve to know what is going on,” he said.