There has been some confusion about the grid resiliency charge and why we included it in our Maryland rate case filing. I wanted to use our blog to explain why we think the grid resiliency charge is a good thing for both the company and our customers.
We began working more than two years ago on the biggest reliability effort in our 117-year history, and we are reducing the number and length of outages. We are committed to improving reliability and the customer experience, and that work will continue.
Our proposal for accelerating some of that work stems from a report issued by the Grid Resiliency Task Force. With an increase in frequency and intensity of storms, Governor O’Malley convened this task force in July 2012 to address resiliency and reliability of the Maryland electric distribution system. This task force held eight roundtable discussions featuring community leaders, policy experts and industry stakeholders from across the country. In September, it released a report that recommended accelerating reliability investment and raising reliability standards.
In response to that task force report, we put together a plan that would accelerate improvements in resiliency and reliability for customers. We propose to:
- Underground six distribution feeders (three in Montgomery County and three in Prince George’s County), reducing the frequency and duration of outages for customers
- Accelerate our four-year tree-trimming cycle (approximately 1,000 miles each year) to complete the cycle in three years, which would reduce power outages caused by tree branches falling onto power lines
- Upgrade 12 additional feeders per year for two years
- Raise the reliability performance beyond the level required by Maryland’s Service Quality and Reliability Standards
The Grid Resiliency Task Force also recommended that the Public Service Commission authorize timely recovery for the accelerated investments and expenses. We proposed to do that through a grid resiliency charge. If approved, customers would see a small increase in their bills. Starting in January 2014, a typical residential customer’s bill would increase about $0.96 per month. In 2015 the surcharge would increase from $0.96 to $1.70 per month, and in 2016 it would increase to $1.93 per month. We want to make significant improvements in resiliency and reliability while keeping the additional charge to customers under $2 per month.
Because reliability work would be accelerated, we think it’s fair to raise the reliability standards that we must meet. If we don’t meet the new accelerated reliability standards by 2015, we will refund customers up to $1 million. If we do meet the new reliability standards, we may receive up to a $1 million incentive.
As I noted earlier, the work we have been doing to improve reliability is paying off. From 2011 to 2012, outages on feeders that we worked on decreased by 39 percent and those outages that did occur were 42 percent shorter. We expect to meet the reliability standards that are currently in place without performing the proposed grid resiliency projects. However, by doing the work proposed as part of the grid resiliency charge, customers will experience a more resilient and reliable electric system in a much shorter time period. I welcome you to post questions in the comment section below.
President, Pepco Region