Delmarva Power is requesting one of its largest rate increases for electric customers

Delmarva Power is requesting one of its largest rate increases on electric customers in recent history.

The price hike would increase the average heating customer's monthly bill by more than $10. It would raise Delmarva Power's total electric distribution rates $72.3 million annually, or roughly 25%.

To raise distribution rates, utilities must go through the Public Service Commission. Over several months, the utility's request is scrutinized by the commission, which hears arguments from Delaware's Public Advocate and other "interveners," as well as public comment. The sides often work toward a compromise between the utility's and public advocate's positions decided by the commission.

Here's what you need to know.

How much will my Delmarva Power bill increase?

Delmarva Power wants to raise rates for space heating customers — customers that use electricity to heat their homes — by 13.2%, an addition of more than $11 to an average monthly bill. Residential customers who use another source for heat face a 10.6% increase, equivalent to a $10.41 per month increase for a typical customer.

Delmarva Power spokesperson Zach Chizar said the company determined the revenue required to cover the costs of residential space heating customers had fallen behind that of non-space heating residential customers.

The rate increase is a combination of a requested distribution rate increase and the Distribution System Improvement Charge. DSIC, started in 2019, is placed on customer bills to provide a more routine way to pay for infrastructure and reliability expenses. It adjusts every six months and is automatically folded into the rate request.

The proposed cost increases will go into effect on July 15 but are subject to a refund based on the Public Service Commission's decision. A law passed by the General Assembly in 2018 allows utilities to implement the charges as the case is proceeding so they can recover costs related to capital improvements and associated expenses.

Why does Delmarva Power want to raise rates?

The company says the most significant factors driving its proposed rate increases are inflation, investments in system reliability and safety and increased costs to "harden" the grid against more frequent severe weather.

In their application to the Public Service Commission, Delmarva Power cites the impact of Tropical Storm Isaias and other severe weather events in 2020 that affected thousands of customers. The company expects the effects of climate change to make these events more frequent in future years.

The storms occurred after Delmarva Power's last rate increase request, which was submitted in March 2020. The company says it has since invested in its system to "mitigate flood risks," repair and replace equipment damaged from storms and modernize.

According to an infrastructure plan prepared for the commission, Delmarva Power is planning more than $430 million worth of improvements through 2024. A large component of the improvements is replacing decades-old wooden poles with larger steel poles, Chizar said.

"[The rate increases] are necessary for us in order to continue to provide the reliable service our customers expect," Chizar said.

Another element of Delmarva Power's argument is that as remote and hybrid work and electric transportation proliferate in future years, customer expectations for reliability will increase. The company's application also says that having a financially strong utility benefits customers by allowing the company to attract capital on "reasonable terms." If Delmarva Power is viewed as a more risky investment, it could face challenges accessing needed funds, which would increase costs for customers.

What is the Public Advocate's position?

The Public Advocate has been trying to reel in Delmarva Power's spending for several years to keep rates manageable.

"While we acknowledge reliability is extremely important, we are also very cognizant of affordability for customers," Delaware Public Advocate Andrew Slater said. "This is one of the largest requests we've ever seen."

"They see inflation as a significant issue for them. I'd like to point out that inflation is a big issue for customers," Slater added. "We need to really make sure we keep rates affordable for customers."

Delmarva Power's merger with Exelon in 2016 capped spending for several years, but since those caps were lifted, spending has increased significantly. The planned $430 million spending through 2024 represents an increase of 155% over Delmarva Power's 2019 plant spending, according to the Public Advocate division.

Slater said Delmarva Power's reliability already rates among the best in the nation. He argued at some point the continued investment reaches "diminishing returns," and said the commission needs to make sure what is being invested is "to the benefit of customers."

Slater said the investments will increase sales, which is good for the utility, but from the customers' perspective, the state needs to continue to consider energy efficiency and renewable sources. He suggested "non-wire alternatives" should be a larger part of the state's approach moving forward.

"We are going through a generational shift in energy and we need to be prepared for that," Slater said. "We need to have a wholistic approach to distribution planning."

Chizar said that although Delmarva Power has strong reliability now "it's not just if we don't touch it, it's going to be perfect." He said they need to continue to upgrade and repair equipment to maintain reliability. He cited the company's payment assistance programs when asked about the impact on customers’ finances.

When did Delmarva Power electric rates last increase?

The Public Service Commission approved a $16.7 million increase on Aug. 5, 2021. Delmarva Power had asked for an increase of $24.4 million.

Are there rate increases for natural gas customers?

Delmarva Power filed requests for electric and natural gas rate increases separately.

The company in March requested a $19.5 million natural gas increase, equaling a monthly increase of about $11 for typical customers. The increase went into effect on a temporary basis on Aug. 14. Natural gas supply rates have increased nearly 60% over the past two years, according to the Division of the Public Advocate.

When and where are there opportunities for public comment?

Written comments may be sent by mail to Delaware Public Service Commission, Docket No. 22-0897, 861 Silver Lake Blvd., Suite 100, Dover, DE 19904, or by email to psc@delaware.gov. The Public Service Commission will hold an in-person public comment session once a procedural schedule is established.

How can I get help with my Delmarva Power bill?

• The Delaware Energy Assistance Program offers grants to homeowners and renters to help pay for home heating and cooling. The state administers the program through Catholic Charities with money from the Low-Income Home Energy Assistance Program. More information is available on the state's website at dhss.delaware.gov/dhss/dssc/liheap.html.

• Delmarva Power customer care representatives can be reached at (800) 375-7117 to discuss payment options. More information is available on Delmarva Power's website.

Contact Brandon Holveck at bholveck@delawareonline.com. Follow him on Twitter @holveck_brandon.

This article originally appeared on Delaware News Journal: Why the Public Advocate says Delmarva Power needs to reel in spending