O'Malley Backs Public Service Commission, Outlines Its Challenge

This is the second of two articles based on comments made by Gov. Martin O’Malley this week about Pepco, the state Public Service Commission and the future of Maryland’s power grid. . 

Gov. Martin O’Malley laid out the challenge for Maryland’s Public Service Commission this week, calling on regulators to work to strengthen the state’s power grid as utilities rethink their service model.

Speaking at , O’Malley (D) called 1999 legislation that deregulated the state’s utilities “a mistake,” saying it led to a reduction of preventive maintenance by Pepco that went unaddressed until the PSC intervened in 2010. 

Now, the PSC, which regulates state utilities, must address “how to adjust for the shorting of proper maintenance in the recent past, while at the same time laying out a policy that makes our grid more resilient into the future,” O’Malley said.

The challenge comes as the PSC is scheduled to vote today on Pepco’s request for a rate increase that would collect more than $67 million from customers. The proposed hike would increase the average residential bill by $5.50, The Washington Post reported.

State regulators have come under fire in the weeks following that left hundreds of thousands without power across Maryland.

Montgomery County Councilman Hans Riemer (D-At large) of Silver Spring has .

“As a county government, we have no direct power over Pepco,” . “I can talk until I turn blue about what I think Pepco needs to do better, the fact is that only the PSC can change Pepco, and only the Governor can change the PSC.”

An NBC4 report of a Montgomery County Council debriefing on Pepco’s storm response on Thursday included a clip of Riemer telling PSC Chairman Douglas R. M. Nazarian: “If you don’t turn them around, and I speak to all the members, the governor needs to replace you with people who will.”

On Monday, O’Malley backed the PSC while laying out the challenge for regulators.

“I think most people are aware that there’s nothing free in this world,” he said. “And we can’t expect at the one hand to lower a regulated utility company’s rate of return and magically expect dollars to appear to underground the cables and the wires.”

Pepco is studying the possibility of locating power lines underground, NBC4 reported.

Changing the model

The state has set a goal of reducing the amount of electricity it consumes by 15 percent by 2015.

Part of the initiative includes using building a “Smart Grid” featuring “Smart Meters” that allow utility companies and customers to track and, in the case of customers, reduce their energy consumption. (Some in their homes, citing health concerns.)

While utilities make upgrades intended to reduce the amount of electricity consumed the state must find a way to guarantee a “basic rate of payment,” O’Malley said.

But what about —as will happen with some of the time customers spent without power following the June 29 storm? 

“In the event of prolonged power outages, there needs to be some accommodation that’s made," O'Malley said. "Because if nobody’s using electricity because there’s a blackout and a power outage, there needs to be some exception to that rule when the power goes totally out.” 

A “bill stabilization” adjustment allows utilities to collect billings for the first 24 hours after a power outage. The automatic adjustment lowers rates when the utility is collecting more revenue than approved by the PSC and raises rates if the utility is receiving less than approved, according to Pepco's Web site.

“You also hope that your power gets turned back on in that 24-hour grace period too,” O’Malley said. “So these are the issues that the Public Service Commission is trained and has the experience to wrestle with.”

Moving forward

There are many new ideas about how to upgrade the state’s power grid, O’Malley said.

He cited to fine Pepco and BGE more than $100 million and use the money to create a 'Surge Reserve' fund to pay for additional trained workers to help restore power faster during future outages. He also cited (D-Dist. 1) of Potomac.

The PSC will hold a hearing on Pepco’s storm response at 7 p.m. on Aug. 7 at the in Rockville.

“At the conclusion of the Public Service Commission hearings, I think what you will see emerging is a new and stronger consensus to do whatever we must in the years ahead to strengthen, harden and make more resilient the reliability of our electric grid,” O’Malley said. “And I think most people are understanding of the importance of doing this. And I think most people are willing to pay a little more if there is the guarantee and the hope that at the end of these upgrades that their power goes out a lot less than it has been over the last few years.”

What do you think of Gov. O'Malley's comments? Should the state push for undergrounding of power lines? Should Pepco get the requested rate increase? Does the Public Service Commission need to push utilities harder to upgrade the power grid?