Duquesne Light customers may see their bills increase next year if regulators approve an 8% hike in residential rates that the utility says it needs to pay for infrastructure work.
After a year like no other, leaders at the Downtown-based electric utility said they were balancing the hardships of those impacted by the pandemic with the need to prepare its electric grid for a recovery.
If approved by the Pennsylvania Public Utility Commission — a process that usually takes about nine months — the average residential monthly bill would increase by $7.73, or just under 8%. The average commercial bill would go up by $54.85, or about 6%, while industrial customers would see the average bill climb by $700.26, or 4%, per month.
The filing comes days after the Pittsburgh Water & Sewer Authority announced it wants to raise rates by 17% over the next two years, and about a week after Columbia Gas of Pennsylvania asked the PUC for another rate hike. Both cited the need to upgrade aging infrastructure.
Duquesne Light’s case is, in some ways, similar to Columbia’s. Both utilities say that they need to raise revenue for system improvements and that their investors should be allowed more than 10% rate of return. Both say that without the requested rate hikes, their investors would only recover slightly more than 5% and might be driven away. They’ve both retained the same consultant to make that case for them.
But, perhaps drawing on the contentious and extensive battle that played out during Columbia Gas’s last rate case last year, Duquesne has anticipated some of the opposition and is proposing several COVID-19 relief programs as part of its rate case.
One such program is tailored to residential customers that fall between 151% and 300% of the federal poverty line.
For a few months after the new rates go in effect, the utility will allow those customers who were current on their bills before COVID-19 hit, but had since fallen behind, to pay off their balance in a lump sum with Duquesne Light matching up to $300 of that payment. If there’s a balance remaining after that, those residents could be put on a payment plan for up to three years.
Low-income customers that fall under 150% of federal poverty guidelines already qualify for assistance.
Hoping for recovery
Duquesne Light has increased rates three times over the past 10 years. As is typical for Pennsylvania utilities, those rate cases involved settlements that landed at a smaller rate hike than what the electric utility had originally requested.
And while this rate case begins in the shadow of a still raging pandemic, David Fisfis, vice president and general counsel for Duquesne Light, says that current conditions may actually underscore the importance of the public service that utilities provide.
“There’s probably a little greater sensitivity today to the value of an electric utility,” Mr. Fisfis said. “You’ve got to keep the vaccines nice and cold for distribution purposes, making sure hospitals are running for all those COVID patients.”
He said that while the utility didn’t consider postponing its rate request or the infrastructure work it will pay for, Duquesne Light was balancing this year’s problems with next year’s — fingers crossed — recovery.
Mr. Fisfis noted that the higher rates, if approved, would go into effect in January 2022, when many more people will be vaccinated and after state and federal stimulus programs will have had the chance to leave their mark.
Duquesne Light’s contribution to restoring the economy is to offer discounted rates for new commercial and industrial customers — new small businesses moving into vacant properties in economically disadvantaged areas or large industrial clients that either start service or substantially expand their operations anywhere in Duquesne Light’s territory.
“We’re seeing that particularly restaurants are really struggling this past year,” Mr. Fisfis said, “but other small businesses — dry cleaners, floral shops, shoe repair businesses” — are in the same boat.
The costs of these discount programs will be recovered from the rates of other commercial and industrial businesses, not from residential consumers.
Jamie Davis, Duquesne’s director of rates and tariff services, said these efforts are modeled after similar programs offered by utilities in other parts of the state and country.
And while they may not be the determining factor for a business to locate here, Mr. Fisfis said that after discussions with the Allegheny Conference on Community Development, he believes they could be part of an incentive package that makes the region more attractive.
Still, these COVID-19 relief programs and spending slated for the advancement of electric vehicle infrastructure only amount to about $8 million of the additional $85.8 million that the utility is looking to add annually through this rate request. The rest will go toward more traditional spending on things like poles, wires and transformers.
Anya Litvak: alitvak@post-gazette.com.
First Published: April 16, 2021, 1:05 p.m.