On Thursday, Maryland Public Service Commission Administrative Law Judge Dennis H. Sober fined Potomac Edison $25,000 for its 2011-2012 failure to read electric meters according to its tariff.
It's been a long time since Potomac Edison's outrageous billing failure caused its customers to receive astronomical bills resulting from the company's neglect of its duty to read meters in a timely fashion. The West Virginia PSC investigation and subsequent hearing into the same problem resulted in a requirement that the company switch to monthly meter readings back in 2014.
The judge's Proposed Order in Maryland also requires Potomac Edison to increase its meter reading frequency to monthly in that state.
The judge found:
It's been a long time since Potomac Edison's outrageous billing failure caused its customers to receive astronomical bills resulting from the company's neglect of its duty to read meters in a timely fashion. The West Virginia PSC investigation and subsequent hearing into the same problem resulted in a requirement that the company switch to monthly meter readings back in 2014.
The judge's Proposed Order in Maryland also requires Potomac Edison to increase its meter reading frequency to monthly in that state.
The judge found:
that PE’s initial acknowledgment of the substandard meter reading history was an appropriate and an accurate reply to the Commission's correspondence. Its later reversal on the issue of accepting some responsibility for the substandard performance is troubling and counterproductive for the proper resolution of these issues.
And
It is not a legitimate excuse to blame the weather (which PE can’t control) or the staffing issues it faced (which it can control), as neither of these factors is unique to PE as an electrical utility, nor are they unusual or unknown factors.
PE is obligated to make its decisions as to how to manage and staff its Meter Reading Division in a manner and to a level of industry standards, and I find that PE failed to do so during the time period under review.
I find that the facts demonstrate that the meter reading rate of Potomac fell below an acceptable level of reading for the years 2011-2012, and that was in violation of its tariff and of good engineering practices as required of a utility. I conclude that the failings were due to an inadequate level of staffing and of a failure to have adequate contingency plans in place when PE faced unusual weather events.
The Maryland PSC staff recommended a penalty of $300,000, based on PE's cost of missed meter readings. Why should the company collect from ratepayers for services it never performed? While this makes perfect sense to me (and probably to you as well), the judge found that "the basis for the formulation of the financial penalty Staff would impose is not valid and has no basis upon which to rely." Therefore, the judge pulled a number out of nowhere to impose a much lower, arbitrary penalty of $25,000. Even a $300,000 penalty is nothing more than a minor annoyance to a company with annual revenue in the neighborhood of $15B. A penalty of $25,000 is an insult to ratepayers who were harmed by Potomac Edison's failure to abide by its tariff. But, hey, it's more than the WV PSC fined the company for the same practices, which was a big fat goose egg. Instead, the WV PSC ordered monthly meter reading at an additional cost to ratepayers of more than $7M annually. It remains to be seen if Potomac Edison will file a new base rate case in Maryland in order to collect the additional costs it faces for increasing its meter reading to a monthly basis. Potomac Edison currently enjoys an 11.9% return on equity in Maryland, a rate much higher than that allowed in neighboring states. A new base rate filing will most likely result in a new, much lower ROE. In fact, PE would probably lose money in such a deal as the lower ROE would cost them more than they could make collecting a higher cost for monthly meter reading. But, never fear, Marylanders, FirstEnegy will probably do something like apply for a supplemental rate rider to cover the cost of additional meter reading without having to file a base rate case. This ain't over until FirstEnergy takes even more money out of your pocket...
And speaking of... the judge's Proposed Order isn't final until June 7, and only then if no party files an appeal. Do you think Potomac Edison will appeal the Proposed Order, since all its costs to do so come out of ratepayer pockets?
Justice sure is funny in a regulated environment, isn't it?
And speaking of... the judge's Proposed Order isn't final until June 7, and only then if no party files an appeal. Do you think Potomac Edison will appeal the Proposed Order, since all its costs to do so come out of ratepayer pockets?
Justice sure is funny in a regulated environment, isn't it?
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