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Maryland Electric Rate Increase

Customers Have Option to Phase-in New Rates

Pepco announced on April 1, 2006, that due to dramatic increases in the cost of fuel for generating electricity, rates for its Maryland residential customers would go up an average of about 39 percent or about $39 per month for the typical customer beginning June 1, 2006. Given the magnitude of the electric rate increase, the Maryland Public Service Commission approved a Pepco proposal that gave residential customers the option to phase in the new rates over a one-year period. Approximately 9,200 of Pepco's residential customers are enrolled in the Rate Deferral Plan.

For those customers, the third and final step of the phase-in plan takes effect June 1, 2007. That is when the full amount of the rate increase becomes effective. In addition, this is when the payback period begins for those customers who chose the deferral plan. For these customers, starting June 1, 2007 their bills will increase an average 21.3 percent (6.9 percent is the 2007 supply rate increase that all customers are paying; 14.4 percent is the result of deferring 2006's supply rate increase).

The Phase-In Option

  • Customers who chose the Phase-In Option paid less earlier than customers who did not phase in, but they will pay more while they are paying back the deferral.
  • Under the Phase-In Option, customers pay the June 1, 2006, rate increase in three steps:
    • Residential Service
      • an increase of 15 percent that began June 1, 2006, or in the bill following their decision to phase-in;
      • an increase of an additional 15.7 percent that began March 1, 2007;
      • the full 39 percent increase – plus the first monthly payment of the deferral payback – beginning June 1, 2007, and running through November 30, 2008.
    • Residential Time Metered Service
      • an increase of 15 percent that began June 1, 2006;
      • an increase of an additional 15.7 percent that began March 1, 2007;
      • the full 41 percent increase – plus the first monthly payment of the deferral payback – beginning June 1, 2007 and running through November 30, 2008.
  • Keep in mind customers' rates may change again (increase or decrease) starting June 1 of each year when Pepco purchases additional electricity in the wholesale generation market on behalf of our customers.
  • There is an 18 month payback period beginning June 1, 2007, and running through November 30, 2008. During the payback period, the amount you pay will vary each month depending on how much electricity you actually use during the month.
  • Those customers who enrolled in the phase-in option and discontinue service prior to November 30, 2008, will be required to pay back the total balance of the amount deferred. Any balance remaining for the deferred amount owed will appear on the customer's final bill.                                             
  • For customers on the Budget Billing Plan who chose the phase-in option, the budget payment amount was recalculated and adjusted to reflect the decision on the phase-in option.     
                            
  • Customers can choose an alternative electricity supplier at any time regardless of their decision on the phase-in option. If a customer on the phase-in option switches to an alternative electricity supplier, they will continue to participate in the phase-in. This means they received credits through May 31, 2007, and will participate in the recovery of the amounts deferred from June 1, 2007, through November 30, 2008.

Softening the Impact of Higher Rates 

  • To help customers who are eligible for financial assistance, funding is available through various State-administered Energy Assistance Programs. As well, the income eligibility limits from Maryland 's Office of Energy Programs have been increased. For more information on these programs, customers statewide can call the Office of Home Energy Programs at 1-800-352-1446. In Montgomery County , you can call the Department of Health and Human Services at (240) 777-4450; in Prince George 's County, you can call the Department of Social Services at (301) 909-6300.
  • The most effective way to help offset the increase in rates is to conserve energy and use it wisely. Pepco's Energy Know How Solutions is an outstanding web-based tool that offers customers personalized energy savings information. Energy Know How Solutions is available to Pepco customers free of charge at www.pepco.com . Additionally, please visit our “ 85 Ways to Save Money and Energy ” Pepco's energy saving brochure to learn more. The brochure can be printed directly from the Web site.