Delawareans will get rebate on power bills – but not nearly enough, say some officials

Note: This story has been updated to include additional figures from Delmarva Power .

Your electric bills are about to go down in Delaware, but not by as much as some state officials think is fair.

A settlement agreement with utility company Delmarva Power — approved last week after an often-contentious, hourslong meeting — will offer a small rebate to Delawareans who’ve been paying higher rates on electricity since July of last year. Ratepayers will also pay slightly lower rates going forward.

The settlement was approved this month after more than a year of legal wrangling among Delmarva Power and a disparate gallery of players who challenged the utility’s rate increase plan.

These included Walmart, a Weldin Farms homeowners group, a group representing large commercial users, an electrical workers’ union and multiple state agencies that didn’t necessarily agree with each other.

The Delaware Public Advocate ’s office, charged with representing the interests of Delaware residents and small businesses in utility rate disputes, signed on to the settlement agreement alongside almost every other player on the field.

But the staff of the state Public Service Commission , which oversees utilities, vociferously opposed the deal. Their lawyers argued that small businesses were poorly represented and will suffer for it, that the state has disrupted precedent in damaging ways, and that, as a result, we’re all overpaying by about $6 million.

So what happened? Here’s the rundown.

More: Delmarva Power is requesting one of its largest rate increases for electric customers

More: Why Delmarva Power believes its electricity price hike is necessary

What will happen to Delmarva Power electric rates after this agreement?

The settlement agreement , approved April 18, allows a $42 million increase to Delmarva Power’s revenues from electricity distribution. The majority of this increase would be paid by residential customers.

Interestingly, this means residential rates will go down soon. Delaware ratepayers will also get some money back as a rebate.

Why? Because Delmarva Power already raised your rates in July while the legal fight raged on, saying they’d rebate your money if they had to. Now, they’ll have to.

Delmarva hasn’t yet released the refund plan and timeline, which they'll have to file with the state within a month of the approved settlement agreement. But on Thursday morning they sent estimates of what an average residential customer might expect.

On July 15, in accordance with state law, the company raised rates by an amount that would have increased its revenues by $55 million. This amounted to about $7 extra for the average homeowner each month.

Because the settlement agreement raises revenues by about $13 million less than the interim rates already in effect, customers are owed both lower rates and a refund.

With the settlement agreement in effect, a residential customer using an average of 811 kWh per month would see a bill decrease of $2.62, or 1.85 percent, from $141.72 to $139.10, according to figures from Delmarva Power. Delmarva will also offer a one-time refund for any overpayment beginning on July 15.

Is the Delmarva Power settlement agreement a good deal for Delawareans?

Delmarva Power says so. And so does the Delaware Public Advocate, on behalf of Delaware ratepayers.

Delmarva Power spokesperson Zach Chizar said the company is “pleased” that the Public Service Commission voted to approve the deal, saying it will help them recover costs from storms and inflation, improve reliability and make ongoing investments to make the power grid more resilient.

The Delaware Public Advocate’s office says that like all agreements, this one isn’t perfect, but that the “settlement as a whole is in the public interest.”

The deal is the result of long negotiations among various parties. Delmarva Power had initially asked for a revenue increase of $72 million in December 2022, a sum that then-Public Advocate Andrew Slater called one of the "largest requests we've ever seen."

Delmarva gradually lowered this ask to $53.7 million, as new data poured in. The Public Advocate countered with a much lower figure: just a $27 million increase.

The final figure in the settlement agreement, $42 million, amounts to a middle position between the two amounts — a compromise designed to “avoid the substantial cost of contested evidentiary hearings,” according to state documents.

Almost all of the other intervening parties, from large industrial users to Walmart to a Weldin Farms homeowners group, signed on to the settlement agreement. The agreement also provided for surge protection upgrades, on behalf of the homeowners group.

But not everyone calls it a good deal. When the Delaware Public Service Commission’s members voted to approve the agreement on April 18, they did so over the objections of its own staff members.

What are Delaware Public Commission staff’s objections to the settlement?

DPC staff argued that the "black-boxed" figure of $42 million was too high and against commission precedent, and that calculating the appropriate rate increase was a matter of previously established procedure and simple math.

“The proposed revenue requirement in the Settlement Agreement represents 79% of what the Company was seeking in rates ($53.7 million),” wrote DPC staff in a firmly worded rebuttal to the settlement agreement. “When compared to other recent settlements before this Commission, as well as litigated decisions involving this utility, the settlement amount presented is abnormally high with no justification or basis in fact.”

The figure should instead be $36 million, according to DPC staff, about $6 million less than the settlement agreement. DPC staff also argued that small business owners were ill-represented by the Delaware Public Advocate, and received rates that are too high under the agreement.

“The Settlement Agreement would have Small General Service customers pay over twice the required return needed for the service they receive, effectively subsidizing the larger commercial and industrial customers," wrote DPC staff. "Simply put, that is not fair.”

DPC staff also expressed worries that in disrupting precedent, future negotiations would be damaged.

The Delaware Public Advocate’s office was not in agreement with this version of events, saying that the revenue compromise was in line with past negotiations.

“Most rate case settlements are black boxes, meaning that a revenue requirement is agreed to without the underlying issues being specifically addressed by the Commission,” the DPA office wrote in response to inquiries by Delaware Online/The News Journal.

“Also, the Commission is not bound by its precedent and may change its policy at any time as long as it explains why it is doing so,” the DPA continued. “The DPA has been on the losing end of those changes in policy several times over the years.”

In the end, the Delaware Public Commission overruled its staff’s concerns and approved the settlement agreement, locking in the $42 million rate increase.

The last electric base rate increase the Public Service Commission approved was $16.7 million in 2021.  Delmarva Power has requested a rate increase four times since being acquired by Exelon Corp in 2015.

Matthew Korfhage is business and development reporter in the Delaware region covering all things related to land and money: openings and closings, construction, and the many corporations that call the First State home. Send tips and insults to mkorfhage@gannett.com .

This article originally appeared on Delaware News Journal: Delawareans will get rebate on power bills – but not nearly enough, say some officials