Testimony of Mark Rodeffer
Sierra Club DC Chapter
DC Council Committee on Business and Economic Development
DC Public Service Commission Performance Oversight Hearing
February 5, 2025
Good morning, Councilmember McDuffie. My name is Mark Rodeffer and I am testifying today on behalf of the Sierra Club, the nation’s largest and most influential environmental advocacy group. We are a grassroots organization with thousands of members and supporters in DC. Thank you for the opportunity to testify today at the Public Service Commission performance oversight hearing. The Sierra Club believes the performance of the Commission has been poor because it has stymied DC’s climate commitments while allowing unreasonable utility rate increases that hurt DC families.
DC has committed to eliminate all climate pollution over the next 20 years, which will require a transition off fossil fuels. This means DC’s buildings, which are responsible for about three-fourths of our climate pollution, will need to transition off fossil fuels like methane gas for heat and instead use efficient electric appliances like heat pumps. Building electrification is DC’s official climate policy, but the Public Service Commission does not seem to have gotten the memo.
‘Regulatory Trainwreck’ Allowing a Massive Pepco Rate Increase (Formal Case 1176)
Despite the District’s building electrification commitments, a majority on the Commission is making this transition harder by allowing massive increases in electricity rates that burden DC families, especially our most vulnerable residents. Last year, the Commission voted 2-1 to allow Pepco to profiteer off the backs of DC residents, with an unprecedented $123 million rate increase that will cost the average DC resident almost $150.
The Commission approved this gigantic electric rate increase without requiring Pepco to detail exactly how this huge amount of ratepayer money would be spent and without ensuring the money is spent in a prudent manner ensuring ratepayers are not overcharged. The Commission abandoned the traditional regulatory practice of allowing rate increases that are prudent, and instead gave Pepco blanket approval to charge more money to customers for reasons that are not specified in detail. This would be akin to the DC Council awarding a $123 million contract to build a school, but with few details on how the money would be spent, allowing the contractor to potentially waste taxpayer dollars with no oversight. It’s essentially a $123 million giveaway that puts Pepco shareholder interests ahead of the public interest.
The dissent in the case said the majority’s rationale for allowing the rate hike “could be summarized as ‘because Pepco said so.’” The dissenting opinion called the majority decision a “backwards approach to ratemaking” and “a regulatory trainwreck that unreasonably promotes Pepco’s interest at the expense of ratepayers.”
The dissenting commissioner is no radical. He was a career Public Service Commission official who served as the Commission’s general counsel starting in 1997 and was appointed as a commissioner in 2016 by Mayor Bowser. Sadly, because he has not fallen victim to severe regulatory capture and instead believes the electric utility should not be allowed to fleece ratepayers, he is outside the mainstream in today’s Public Service Commission.
Wasteful Spending on Soon-to-be-Obsolete Fossil Fuel Infrastructure (Formal Case 1179)
After years of allowing Washington Gas to waste hundreds of millions of DC ratepayers’ dollars on fossil fuel infrastructure even though our climate commitments require fossil gas to be phased out over the next 20 years, the Commission last year finally acknowledged the problem posed by this Washington Gas money grab by temporarily rejecting the next phase of gas pipeline replacement.
We appreciate the Commission’s acknowledgment that continuing to spend hundreds of millions of dollars on new gas infrastructure is inconsistent with DC climate law. Disapproving the Washington Gas spending proposal was a good first step in recognizing that every ratepayer dollar that is spent on new gas pipelines is antithetical to DC law. There is no law requiring the Commission to approve gas pipeline extensions, and by no means should the Commission approve pipeline replacements in advance. If Washington Gas needs to replace particularly leaky pipes, it can do so on a reasonable case-by-case basis, not through a formal accelerated pipeline replacement program like Project Pipes.
But instead of rejecting Project Pipes outright, the Commission asked Washington Gas to return with a modified version. Washington Gas proposed a slightly lower budget, but essentially the same accelerated pipeline replacement program, which the company has rebranded as “District Safe,” because the public was catching on to the ripoff previously known as “Project Pipes.”
Asking the gas utility to be in the driver’s seat is not the “proactive leadership” Chairman Thompson promised in his confirmation hearing. The Commission should fulfill its mandate to enforce DC laws, including the Climate Commitment Act, by curtailing gas pipeline spending and directing Washington Gas to consider less costly alternatives for ratepayers. For example, DOEE conducted an analysis that found simply repairing leaky pipes would be one-tenth to one-hundredth the cost of replacing those pipes. The Commission should also direct Washington Gas to engage in comprehensive long-term planning and to evaluate non-pipeline alternatives such as targeted electrification and geothermal heating networks.
Further Attempts to Lock in Dirty Energy Infrastructure in Gas Rate Case (Formal Case 1180)
Washington Gas is seeking an unprecedented amount of pipeline replacement spending to be paid for by ratepayers. As usual, the company exhibits zero interest in planning for the future, and expects the Commission to continue bankrolling its business-as-usual approach which only benefits its parent company AltaGas and its shareholders. We hope the Commission does not continue business as usual.
Leaving Climate Planning to Investor-owned Monopoly Utilities (Formal Case 1167)
Similar to the fossil fuel infrastructure proceeding, the Commission opened a climate proceeding but again left the utilities in charge, exercising none of the proactive leadership that Chairman Thompson promised at his confirmation hearing.
In this proceeding, the utilities are free to suggest ideas on climate matters, and they are free not to. Despite the name of the docket, it does not require utilities to conduct advance planning aligned with DC climate law, or to reconcile their future operations with DC climate laws. Other states, including Maryland, New York, and Massachusetts, have begun requiring gas utilities to engage in more informed and proactive planning, and DC’s utility regulators should follow those states’ leads.
Fossil Fuel Subsidies Under the Guise of Energy Efficiency? (Formal Case 1160)
The Commission is considering additional proposals from Washington Gas that are inconsistent with DC law, including attempts to provide customers with incentives for buying new gas equipment. This comes nearly five years after the DC Sustainable Energy Utility ended subsidies for new gas equipment because those subsidies are inconsistent with DC’s climate commitments. The Commission should not entertain Washington Gas proposals to reverse that policy in an attempt to keep DC residents hooked on its dangerous and expensive product.
DC Council Needs to Provide Meaningful Oversight
Councilmember McDuffie, this committee needs to improve its oversight of the Public Service Commission. You hold an annual performance hearing and an annual budget hearing. There’s no other oversight that is visible to the public. It’s time for this committee to start providing oversight. Without it, the Commission has cast DC’s climate commitments aside and allowed the for-profit monopoly utilities to use DC ratepayers as a corporate piggy bank.
It is regrettable, Councilmember McDuffie, that the Council has in recent years held separate hearings for public and government witnesses and packed as many agencies as possible into one hearing for public witnesses. I understand this makes things easier for Councilmembers and staff, but it limits government accountability. We need more, not less, accountability from the Public Service Commission
Commision Desperately Needs Proactive Leadership
The Sierra Club would like to see Chairman Thompson deliver on his promise of proactive leadership. During his four years on the Commission, he has not.
Proactive leadership from the Commission would benefit all our residents, but particularly the most vulnerable; would strengthen our resilience to sudden storms, heat waves, and arctic blasts; and would provide a steady course to the District’s energy policy during these uncertain times. We are confident that Chairman Thompson can and will rise to the occasion.
Thank you again for the opportunity to testify.