Why Should Delaware Care?
More than half of all residents rely on Delmarva Power to provide electric service to their homes and businesses. A pending rate case could increase monthly bill costs, and the utility is seeking to recoup some of those costs sooner.
Delmarva Power filed a legal appeal in a Delaware court on Friday afternoon, seeking to overturn regulators’ cuts to its interim rate hike – a move that, if successful, could raise customers’ bills faster than expected.
The appeal was reportedly filed in Delaware Superior Court, the company said. It came just hours before the court closed for the Labor Day holiday weekend, despite the Public Service Commission (PSC) approving the interim rate schedule on Aug. 5.
The legal basis for the company’s appeal was not readily available with the courts now closed until Tuesday morning.
Delmarva Power Region President Marcus Beal told the Daily State News on Friday, however, that the utility sought to exclude a temporary price hike known as a Distribution System Improvement Charge from the PSC’s calculations. He was unavailable to speak to Spotlight Delaware on Friday evening.
The PSC, a five-member appointed body that oversees Delaware’s regulated utilities and rules on their expansions and investment returns, further cut interim rate hikes for Delmarva Power after the company voluntarily reduced its initial request by about a third.
In a Friday statement, the electric utility, which serves about 300,000 customers across all of New Castle County and parts of Kent and Sussex counties, said that the PSC’s decision “departed from Delaware statute by arbitrarily reducing the company’s interim rate further.”
The utility and its rate case – the third rate hike sought in five years by Delmarva to recoup the costs of its infrastructure investments in recent years – have become a bipartisan target for criticism as energy costs have skyrocketed in the last two years.
Dozens of customers decried the rate hike request during a two-hour public comment hearing two weeks ago that was marred by technical difficulties. A second hearing has been scheduled for Sept. 23.
“We understand that higher energy bills are a concern for our customers, and we do not take any increase lightly. That is why we continue to work with policymakers and other stakeholders on efforts to address rising costs, including energy supply prices. We also remain committed to balancing affordability with our responsibility to provide the safe and reliable service our customers depend on every day,” said Matt Ford, a spokesman for Delmarva Power, in a statement.
Where does the rate case stand?
Regulated utilities like Delmarva Power make money by recouping the costs of infrastructure upgrades — plus up to 10% profit — through electric rate increases.
In January, Delmarva Power filed its third rate hike request in five years because of recent infrastructure upgrades.
The utility has argued those upgrades, which range from substation improvements to line maintenance, are necessary to keep customers powered through issues, such as recent thunderstorms that left thousands powerless in the Wilmington area.
The debate over whether to approve that request is still ongoing. But while it happens, utilities can temporarily increase consumer costs to make sure the company can pay for those upgrades without borrowing too much money.
If the PSC ultimately decides the infrastructure upgrades were not necessary, customers would be refunded for that temporary rate increase.
Delmarva Power initially asked for $44.6 million in new revenue from base rates, as well as 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.
That request, totaling $68.6 million, would have raised the electric bill of an average user by $6.42 per month, or 4.13%, according to Delmarva.
But after political pressure, the utility voluntarily lowered the total interim request in July to $45.9 million, with escalation factors that would kick in at seven and 12 months following their approval in conjunction with recent state legislation that aimed to lower the temporary costs for consumers.
Instead, the PSC rejected that plan and approved an interim rate that would start at $34.3 million – or half of the utility’s original request.
At debate is whether Delmarva Power’s movement of the Distribution System Improvement Charge should be factored into the calculations – regulators and the Delaware Public Advocate, who represents the collective interests of consumers, argue yes, while the utility says no.
Throughout their July negotiations, Delmarva Power lawyers warned that they felt the regulators were overstepping their authority to drive down interim rates.
Commissioner Regina Iorii, who was recently appointed to the PSC by Gov. Matt Meyer, told the utility, “If you don’t like it, appeal it.”
On Friday, it did.
And to make matters more dramatic for consumers, the utility filed an update to its request earlier this week that increases its total request to $75.6 million, or about 10%. It would be the largest single rate case increase in state history, if ultimately approved.
This came by way of a statutory filing known as a “12+0 filing,” which draws on true fiscal year-end costs as of July 1 rather than projections.
If that total requests hold in the rate case, the average Delmarva Power customer monthly bill would rise about $8, or 5%, before the cost of power is accounted for.
“At a time when energy affordability is a real concern for Delaware families, the Public Advocate believes this larger request warrants serious scrutiny. Delawareans should not be asked to pay more on their electric bills to increase the profits of a billion-dollar corporate holding company and its shareholders. The Public Advocate will rigorously review this case and oppose any amounts that are unjust, unreasonable, or imprudent,” Public Advocate Jameson Tweedie wrote on Facebook after the filing update.
Appeal raises the stakes
As Delmarva Power has increasingly entered the crosshairs of the Meyer administration, it has sought to shift the conversation to energy generation, which makes up the vast majority of a consumer’s energy bill.
Beal, Delmarva’s region president, called into Gov. Matt Meyer’s monthly radio show on Aug. 27 to confront him live on air about the issue, asking whether the governor would support reforms to state regulations that prohibit the utility’s ability to own its own power generation.
Beal noted that the average Delmarva Power customer’s bill has risen about $28 since January 2024, and 90% of that cost was tied to energy market prices that have been rising nationwide due to rising demand, spurred in part by data centers, and falling supply.
If the company could invest in its own generation, it could help spur greater supply and potentially lower supply costs to consumers, but historically regulators have been wary of giving to much power over its market to a single monopoly company.
Meyer said that his team was reviewing the proposal, but countered that transmission costs, which are requested by Delmarva Power and approved by regulators, have also outpaced inflation for the last five years. The governor asked Beal live on air to drop their looming rate hike request before he’d entertain conversations about power generation.
Beal demurred.
When asked whether a compromise could be brokered, Meyer rejected it.
“I don’t know what middle ground there is … They came to the Public Service Commission asking that they get profits on this rate case of 10.5%. No-risk profit. You tell me anyone who can do anything getting 10.5% profit, no risk,” he said. “I’m not going to do that for Delaware.”
When reached late Friday afternoon by Spotlight Delaware, Meyer reiterated his frustrations with Delaware’s largest electric distributor.
“While Delmarva keeps telling us affordability matters, they push every day for higher rates for Delaware families. We cannot continue to pay outrageous bills to keep our lights on. Delmarva wants to make this an issue about reliability, but it is really only about increasing their multimillion-dollar profits,” he said in a statement.
