Maryland Public Service Commission Denies Over Half of Pepco’s Rate Increase Request

August 28, 2026

(BALTIMORE, MD) – The Maryland Public Service Commission has today authorized a revenue increase of approximately $50.9 million for Potomac Electric Power Company (Pepco). This constitutes less than half of the increase requested by Pepco. The difference between Pepco’s requested revenue increase and what the Commission authorized is summarized below, including associated residential bill impacts for average users.

The Commission’s decision reflects an adjusted rate base of $2.994 billion and an approved overall rate of return of 7.22% based on a return on equity (“ROE”) of 9.40%, which has been reduced from Potomac Electric Power Company’s current ROE of 9.50% and which is significantly below the Company’s requested 10.5% ROE. For the average residential customer, the estimated monthly bill impacts that will result from the Commission’s authorized revenue adjustment do not exceed the current annual US inflation rate of 3.4%.

The new rates go into effect today.

Kumar Barve, the Commission Chair, shared that, “the order is the culmination of an extensive and open examination of financial data and witness testimony, submitted by Pepco, Commission Staff, the Office of People’s Counsel and other stakeholders.” He emphasized,” The Commission thoughtfully balanced the necessity for secure and dependable power delivery with the critical mandate of ensuring that rate adjustments remain fair for Pepco customers.”

Key Outcomes of the Commission Order:

• Infrastructure Costs: The Commission agreed with stakeholders Office of People’s Counsel, Maryland Energy Administration and Apartment and Office Building Association’s assertions that Pepco’s capital expenses for the construction of the White Flint infrastructure projects were not prudent.  Costs associated with these projects are disallowed at this time.  This equates to a savings of approximately $164.9 million in capital costs for ratepayers.

• Post-test year Cost and Expenses:  The Commission denied Pepco’s request to include increased costs based on projected expectations of inflation, labor, and capital spend.

• PHASE II Proceeding: The Commission is initiating a Phase II proceeding to consider removal of certain costs from rates as identified in recently enacted legislation HB 1532 Utility RELIEF (Reducing Energy Load Inflation for Everyday Families) Act.

The Commission conducted a transparent and thorough review through public comment hearings and evidentiary proceedings held during the spring and summer of 2026. In reaching its decision, the Commission reaffirmed its commitment to protecting consumers while supporting the utility’s financial ability to continue providing safe and reliable electric service to approximately 610,000 customers in parts of Prince George’s and Montgomery counties.

The full order, including detailed findings on capital structure, cost of service, and rate design, is available through the Maryland Public Service Commission’s official docket.

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Media contact: Tony Ruffin, Communications Director | tony.ruffin@maryland.gov

About the Public Service Commission:

The Maryland Public Service Commission regulates electric and gas utilities and suppliers, telephone companies (land lines), private water and sewer companies, passenger motor vehicle carriers for hire, taxicab companies in some jurisdictions and bay pilot rates. The Commission implements the State’s energy policy and also regulates the siting of energy generating facilities and high-voltage transmission lines.

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