Rep. Kowalko on Delmarva Power rate case

[Note:  Rep. Kowalko submitted this to The News Journal on October 22, 2012]

In recent years I have voluntarily applied as an intervener in several cases involving DP&L rate increase requests filed before the Public Service Commission. The process itself is cumbersome and complex and requires resources and time that is not always available to me. Unfortunately the reality is that the public, the ratepayers’, and my constituents’ interests have been inadequately represented in many of these proceedings and my obligation and responsibility as an elected public servant is to ensure some semblance of fairness in the discussions and decisions rendered.

The most recent filing in which I have intervener status is identified as PSC Docket # 11-528 and involves a multi-pronged request for rate increases which includes but is not exclusive to recovery of depreciation values by Delmarva for obsolete meters that have been replaced with “smart-meters” for Delmarva residential customers. I have continuously and strongly objected to any ratepayer funding for new technology costs such as advanced metering purchase and installation since the provable economic benefit from these devices rests solely with the utility. I have specifically and adamantly opposed any recovery of “lost” depreciation for the obsolete equipment that is removed from service especially since there has been no verifiable breakdown of economic loss to the utility and no justification for the ratepayers to subsidize any such loss. I would advise that you read the excellent News Journal article in the business section of Sunday’s (Oct. 21st) paper for some startling exposure.

This request by the utility has caused me to take a long and arduous path to defend the ratepayers in a system that has major flaws that can obstruct due process. One identifiable flaw is that there has been a palpable lack of enthusiasm from the entities tasked with representing the consumer which leaves the average ratepayer at a huge disadvantage.

During the course of the evidentiary hearing I was allowed to cross examine the witnesses from DP&L, PSC staff and the Public Advocates office in an effort to determine how the $25 million figure allegedly representing lost depreciation value was calculated. I asked very specifically how the value was determined in light of the fact that the average age of the discarded meters was 22 years with a total life-expectancy of only 30 years. This amounts to over 73% of the life-expectancy being consumed and should be prorated into any calculation. I also asked for the original equipment costs 22 years ago.

Objections to my cross-examination were raised by both the attorneys’ for DP&L and the Public Advocates office. They wrongly asserted that it was already in evidence admitted. Although my queries were made in a legitimate attempt to ascertain vital information, the objections were sustained by the Hearing Officer. I also asked for the amount of recovered equipment costs garnered from ratepayers over that 22 year span and the amount recovered during that time-span from “depreciation” tax credit recovery and I was rebuffed with the same objections.

To date there have been no valid, statistical accumulation of numbers justifying a $25 million recovery of lost depreciation revenue owed to DP&L by its ratepayers who have paid many times over for the service of those meters in the prior 22 years. The rate increase approval process has many flaws that must be addressed and my colleagues in Dover and I will be working to assure corrective action moving forward.

The harm in allowing Delmarva to recover unproven and unsubstantiated expenses from the ratepayers is a matter of immediate concern and should be denied by the PSC Commissioners. Any action short of total relief from this asking amounts to an abdication of the government’s obligation to ensure fairness for its citizens.

John Kowalko

14 Kells Ave.

Newark, De. 19711

302 737 2396

302 547 9351

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