Why Should Delaware Care?
Delmarva Power is the largest energy provider in the state, serving more than 300,000 customers. If its rate increase request is approved by regulators, customers will see higher monthly bills. The utility company argues the money is needed to maintain an aging infrastructure.
Last month, Delmarva Power filed a request for a rate increase with state energy regulators that could raise an average homeowner’s utility bill by 4%.
It is the third rate hike request filed by Delaware’s largest energy provider in five years, drawing criticism from the state’s Public Advocates and legislative leaders. The new request also seeks to raise the maximum profit the regulated utility could earn by about $9.4 million.
But the president of Delmarva Power, which serves roughly 344,000 residential or commercial customers in Delaware, told Spotlight Delaware the increases are necessary to ensure its aging electric infrastructure is maintained for reliability.
The utility is seeking to increase its total revenue from base rates by $67.8 million compared to 2024, when its last base rate case was approved by the Delaware Public Service Commission, which regulates state utilities to ensure fair market prices in an industry with no competition.
The proposed increase includes $44.6 million in new revenue, but also moving $23.2 million from a temporary price hike known as a Distribution System Improvement Charge into the base rate, making those costs permanently higher for customers.
If the proposal is approved, a residential customer using an average of 810 kilowatt hours per month would see a bill increase of $6.42, or 4.13%, from $155.37 to $161.79, according to Delmarva.
Public advocate expresses concern
In regulated utilities, providers are able to recoup the costs of infrastructure upgrades through rate increases.
In order to ensure their financial stability, utilities are able to temporarily increase costs to consumers while arguing their justification for them before regulators. In this case, consumers will begin seeing higher rates as of July 9.
Often, those increase requests are ultimately cut by regulators, though, and any money paid in the interim period in excess of the final agreement is returned to customers as refunds.
The application will first be reviewed by a hearing examiner before being presented to the five-member Public Service Commission, likely late this year.
Customers have several allies in fighting the rising costs, led by Delaware Public Advocate Jameson Tweedie, an appointed official who represents their interests before the Public Service Commission.
“If granted by the Commission, this request would significantly increase electricity bills for Delmarva customers, at the same time they are already being squeezed by other rising costs, including rising costs of electricity and natural gas, and rapidly rising regional costs like capacity costs that flow through to customers,” he said in a statement.
Tweedie takes particular issue with Delmarva’s request to earn a 10.5% return on equity for its investments – or essentially that the utility would earn 10.5 cents of profit on every dollar invested by the company as part of its rate case. Delmarva is proposing to fund roughly half of the investments with company funds and half with long-term debt.
In its last approved rate case, Delmarva was allowed to earn a 9.6% return on its equity invested.
Tweedie said raising the profit rate “when customers are facing an affordability crisis is a complete non-starter for my office.”
“We will carefully review Delmarva’s application and will vigorously argue before the Commission for the lowest reasonable rates necessary to deliver reliable service,” he added.
Separately, State Senate President Pro Tempore David Sokola (D-Newark) criticized the rate request, saying it was “disconnected from the economic realities facing our constituents and dismissive of the very real strain higher utility costs place on working families.”
Noting that thousands of families expressed concern amid skyrocketing energy bills last year, which kick-started an investigation by state lawmakers, Sokola said he opposed Delmarva seeking further increases at this time.
“Instead of providing relief, Delmarva is coming back to ratepayers for millions more, once again expecting families to shoulder the burden,” he said in a statement.
Infrastructure needs are growing
Delmarva Power has argued that the upgrades it is making in its network have been necessary as demand is growing and severe weather is becoming more frequent in the region.
Marcus Beal, Delmarva Power region president, told Spotlight Delaware in an interview that among the issues the utility has remedied are a substation that is sinking into the ground and transformers that are more than 50 years old.
Should those transformers fail, it could lead to “very long-term outages for a large number of customers,” he said.
“We’re always gradually making prudent investments in the grid for the safety, reliability and the potential future growth of our state,” he said.
In an effort to reduce costs for low-income families in Delaware, Delmarva Power is also proposing to institute a new income-based discount rate to customers enrolled in the Low-Income Home Energy Assistance Program or the Delaware Energy Assistance Program.
Enrollment in one of the programs would automatically qualify a ratepayer for a 20% discount on their total electric delivery charge.
Tweedie’s office is supportive of such aid, but noted that its “mission is to represent all residential and small commercial customers and will work to ensure that these discounted rates are implemented in a manner that does not increase rates for other residential and small commercial customers.”