Recording in progress.

Thanks.

Good afternoon, everyone.

My name is Charles Allen, the Ward Six Council Member and Chair of the Council's Committee on Transportation and the Environment.

Today is Thursday, July 2nd.

We're meeting in room 500 at the historic John A.

Wilson building as well as on the Zoom virtual platform.

The time is now 117 p.m.

and I'm calling back to order this public hearing of the committee.

I want to note that we are reconvening a public hearing that was recessed on Monday so that we'd have time to listen and hear and get feedback from our government witnesses.

So during today's portion, we're going to be hearing from government witnesses on Bill 26-596, the Utility Rates and Rate Making Amendment Act of 2026, as well as additional policy proposals to lower electric and gas rates.

Bill 26-596 was introduced on February 19, 2026 by Councilmembers White, Parker, Pinto, and Nadeau, and was referred to this committee on March 3rd.

The bill would require the Public Service Commission to approve multi-year rate plans only if the plans are based on historic test years and do not include reconciliation.

It would specify how excess return on equity would be refunded to customers and also requires Public Service Commission to approve gas infrastructure projects only if the company demonstrates customer benefit and analyzes cost-effective alternatives.

Just a couple of brief comments on the format for today's hearing.

Uh we already heard from about 40 public witnesses on these topics.

Today we're going to be hearing from government witnesses in three different panels.

First, the Department of Energy and Environment and the Office of the City Administrator will give testimony on our first panel.

Then we'll turn to a second panel with the Public Service Commission and Office of People's Counsel on our second panel.

And finally, the Office of the Attorney General will be joining us for our final our final panel.

Witnesses will have 10 minutes each for their opening statements, and then we will turn to questions on each respective panel.

For anyone who is interested in submitting testimony for the record, the committee will accept a written testimony through the council's hearing management system at Limbs.dccouncil.gov backslash hearings until July 13th, 2026.

Please make sure you navigate the webpage for the first portion of the hearing held on Monday, June 29th.

Again, thanks to everybody who's going to help us with this discussion and testimony today.

We're going to now turn to our government witnesses for our opening statements, and then we'll proceed to questions.

Uh the committee does require for our government witnesses that we do a quick oath.

So I'll do that, and I'm going to turn it over.

I think you tell me if the order, if I have this wrong, I was going to do Kevin Donahue or City Administrator first.

No.

Yes.

Just say what we want to do.

You want, okay.

So you're going to go first.

Alright, so City Administrator Donahue's going to speak first.

And then Ms.

Reed.

Nope.

Then you're going to okay.

Then Director Jackson.

Uh, Director Richard Jackson of the Department of Energy and Environment.

Who you want to go third?

Or there is no third.

You're just available for questions.

We're going to hear from all.

So two testimonies, four people.

Got it.

All right.

Then just at least for the record, I'm going to read out all four people, and then we're going to hear from two of those people.

So we have the city administrator, Kevin Donahue.

We have the director of the Department of Energy and Environment, Richard Jackson.

We also have Peter Damrosh, who's the Energy Policy Advisor with the Department of Energy and Environment, and Jenny Reid, the budget and performance director with the Office of City Administrator.

All right.

Let's swear you in real fast.

And then Mr.

City Administrator, I'll turn it over to you for your testimony.

So if you'll please raise your right hand.

Do you swear or affirm a penalty of perjury?

The testimony you're about to give to the Committee on Transportation and the Environment is the truth, the whole truth, nothing but the truth.

Thank you very much.

Alright, Mr.

City Administrator, let me turn it over to you.

Okay, thank you.

Good morning, Councilmember Allen, members and staff of the Committee on Transportation and the Environment.

I'm Kevin Donahue, and I have the honor of serving as the Mayor Bowser City Administrator.

I am joined by Jenny Reed, Deputy City Administrator, Richard Jackson, Director of the Department of Energy and Environment, and Peter Damrosh, policy advisor at DOEE.

I also want to recognize many people's thoughts and ideas and work went into both the testimony and the presentation that we're about to give.

Our testimony today will be divided into two parts.

First, Director Jackson will discuss Bill 26596, the Utility Rates and Rate Making Amendment Act of 2026.

Then Director Jackson, Peter Jenny, and I will provide context on what drives energy price increases and how Mayor Bowser's proposals on energy affordability can help bend the curve on skyrocketing consumer costs.

We've spent the past several months digging into the problem.

We know addressing the root causes will require a comprehensive package of both legislation and policy tools being deployed.

We look forward to discussing our proposals today and working collaboratively to maintain energy reliability, especially in high energy demand times like we have this week, and to drive down costs.

I'll now turn over to Director Jackson to provide testimony on the specific bill in question for this hearing.

Good afternoon.

I am Richard Jackson, Director of the Department of Energy and Environment.

I'd like to begin by conveying our appreciation to the public witnesses whose testified at Monday's hearing.

I'm continually impressed by the depth of engagement and understanding of complex energy issues that DC residents, community organizations, and businesses bring to these conversations.

And Monday's hearing was no exception.

Many of the suggestions raise important questions around the design of future energy programs and policies, and we at DOE stand ready to work with interested residents and businesses to further develop these ideas.

Please do reach out if you are interested in continuing to work with these issues with us.

The bill before you today is a worthy piece of legislation given the current affordability challenges.

Some initial background is helpful to understand our agency's perspective on the bill.

Traditionally, the public service commission sets utility rates using historical information concerning the utility's actual investment and operations.

In recent years, the PSC has piloted a different approach for setting rates known as multi-year rate plans.

Under a multi-year rate plan, the PSC approves a series of rates increases rate increases for several several future years based on the utility's projections of its future costs and revenue needs.

The PSC has approved two multi-year rate plans on an extended pilot basis, although the most recent approval was vacated earlier this year by the DC Court of Appeals and remanded to the PSC for additional proceedings.

Multi-year rate plans provide utilities with greater revenue certainty and increase the rate of return that utilities can expect to earn.

In exchange for increased financial benefit to the utility, it is important that such rate making structures include appropriate controls and mechanisms to ensure ratepayers are protected and public interests are safeguarded.

We're now in a period where energy costs are rising sharply.

Against that backdrop, it is important for the district to balance the various equities involved in piloting novel approaches to rate making with protections for ratepayers from rising costs.

In general, we expect that using historical costs to set utility rates rather than utility projections of future costs will help keep costs lower for consumers.

Historical costs are known and certain while future costs are uncertain and unpredictable.

Traditional utility rate making leverages the value of known historical costs as the basis for reviewing the utility's revenue needs based on real data.

By cost by contrast, multi-year rate plans that you employ utility projections of future costs are subject to much greater uncertainty and a much harder for the PSC and other public agencies and organizations to review.

Multi-year rate plans also have the practical effect of making rate increases take effect sooner because the utility has received pre-approval to increase rates for several years into the future.

This in turn can reduce incentives for the utility find operational efficiencies and cost savings relative to the traditional methods for set setting rates.

Local experience and natural research have shown that if multi-year plans are to continue, it is important to include safeguards to make sure that future costs are appropriately contained and that utility ratepayers receive a good deal.

For example, in 2025, Maryland enacted legislation prohibiting utilities which use multi-year rate plans from seeking to increase rates again at the end of their multi-year rate plan if their actual costs were higher than utility had originally projected.

Most recently in 2026, Maryland enacted a moratorium on new multi-year rate plans through the Utility Relief Act.

Bill 26596 includes several safeguards on how utility rates are set going forward.

For example, we expect that a return to using actual known historical costs rather than future projections of costs will improve affordability for the consumers.

Likewise, the bill's prohibition on utilities filing to increase costs at the end of a multi-year plan is good practice and consistent with the recent Maryland legislation.

Meaningful costs benefit analysis are also needed both to evaluate whether multi-year rate structures as a whole provide meaningful public benefits and to compare specific investments to alternatives that could be more cost-effective for consumers.

One area not mentioned in the bill that we want to highlight is performance incentive mechanisms.

Performance incentive mechanisms tie a portion of utility revenues to meeting specific benchmarks for performance in key areas.

Performance incentive mechanisms are frequently a component of multi-year rate plans as they provide accountability through financial incentives and penalties for the utility.

To meet key goals over the extended period of a multi-year rate plan.

Although they have been discussed in PSC working groups for a number of years, so far the district has not implemented any meaningful performance incentive mechanism for utilities.

This is a deficiency of the current multi-year rate plan structure.

Bill 26596 could be amended to clarify the needs for performance incentive mechanisms.

We recommend identifying two specific performing incentive mechanisms in the legislation related to increasing the speed connecting to the grid and reducing peak demand on the grid, both of which can result in substantial savings for consumers.

We anticipate having some smaller suggestions around changes to the bill, and we will provide our comments on those items after the hearing.

Before I turn it back over to the city administrator, I want to provide a short overview of the drivers for rising energy costs and why holistic approaches response is needed.

Many of these energy cost drivers are regional in nature.

The district participates in a regional grid operated by PJM, which administers electricity markets and undertakes transmission planning on behalf of 13 states in the district.

PGM is regulated by the Federal Energy Regulatory Commission, FERC, and therefore they are undertaking unprecedented level of work to redesign PGM's market planning and governance structure to address data center demand, improve decision making, and speed up the pace for getting new generation, new generation online.

Now is a pivotal moment for the district to join forces with other states to advance solutions to these regional and national challenges.

District has a robust toolkit which we can utilize to both manage regional costs and address the cost drivers that are more directly under our control.

Energy efficiency is rightfully called the first fuel because every kilowatt of electricity a resident or business doesn't need is one they don't have to pay for.

Continuing to invest in energy efficiency and other demand side strategies is critical.

New technologies, including batteries and electrical electric vehicles, have strong potential to be cost-saving assets.

DOE, for example, recently completed a study with the Pacific Northwest National Laboratory on the financial benefits of displaying energy storage with a focus on protected protecting the district from raising rising wholesale electricity prices.

Finally, strengthening energy affordability requires identifying the most cost-effective ways to meet our energy goals.

I will now turn it back over to the city administrator.

Thank you, Director.

Over the past few months, DOEE, their staff, as well as individuals in my office have really worked on analysis to be able to tackle the higher energy costs and to create proposals that may be able to help bend the cost curve.

I appreciate the patience of the committee in that we're going to walk through a presentation.

We'll do it succinctly, but I think it's important to be able to shape and frame both the ideas and proposals we put forward and for the public to have a sense of the root cost analysis done to understand what is driving the affordability questions.

And I just want to ask if the slide is presentation is up and ready.

Okay, thank you.

And I'll just sort of say just say next slide as we proceed on.

Okay.

Thank you.

So we're gonna tell sort of this in two parts, and you can stay on the slide.

One part is sort of we'll analyze a root cause of why people are seeing and experiencing higher electric prices.

And the second part will focus on what ideas and proposals may be able to bend the cost curve.

So this slide shows a picture of blue sky with nice clouds.

That's because 15 years ago, our problem was not affordability, it was energy reliability.

In 2006, for example, in the neighborhood of Crestwood, they experienced 13 interruptions per customer per year.

That's compared to a North American or US average of about one day per year of an outage.

In 2010, the Washington Post ran a story, a front page story, the headline of which, why can't PEPCO keep the lights on?

The answer was not storms, it wasn't trees, it wasn't weather and extreme weather associated with climate change, it was equipment failure on ordinary days.

Thus the phrase blue sky outages.

DC residents were averaging averaging at the time double digit outages a year, while the rest of the country averaged about one.

What this meant for residents is that the blue sky outages was the problem that we had to tackle 15 years ago.

That's different than the problem that we have to tackle today, but we've made great progress on this.

If you go to the next slide, uh this slide shows a chart on the right that effectively shows the improved reliability that we've had in DC in terms of the number of outages per year.

So we've made tremendous investments with ratepayer dollars to fix the grid, and they worked.

Since 2012, average outages are down 74%, and the length of time of those average out of those outages is also down about 70%.

DC went from among the worst jurisdictions in the country for reliability to among the 15 percentile of being the best.

This is a success story, one that we cannot take for granted.

However, what's on the mind of DC residents has changed over the past 15 years.

If you go to the next slide, that question today really focuses on one of energy affordability.

So today the lights do stay on.

The problem is what the costs are to keep the lights on, and that's what this presentation really focuses on.

If you go to the next slide forward, you'll see a graph that shows the increasing average annual bill, not monthly, but annual bill for a residential ratepayer.

So you're looking at what goes back to 2015, 2022, 2025, and then what if we do nothing and change nothing and consumption stays the same, what we believe energy rates will be for the average residential consumer in the future.

And it tells two different stories.

In the seven years from 2015 to 2022, electric rates grew by 8%.

So that's barely more than 1% a year.

Then in just three years between 2022 and 2025, these post-COVID years, they grew by 56%.

So think of that seven years, 8% cost growth, three years, 56% cost growth.

Something changed and it changed pretty fast.

And this trajectory doesn't stop in 2025, it continues into the future, with the projection being the average household, if nothing changes, paying more than $3,000 per year for their electric bill.

If you go to the next slide, uh it sort of frames why we have to have this conversation, I'm glad you're holding this hearing.

We want to work collaboratively with the council, with the committee, to be able to do analysis on understanding why these are happening and in a very open, transparent way, have a discussion that is open to DC ratepayers, DC residents about what the questions are that we have to tackle to be able to bend the cost curve on the growth we've seen in electric prices.

And the final slide before I turn it over to Peter to give sort of the analysis is that it's actually drawing from an example in water, so not the same utility.

But if you think about years ago, we also saw this problem before with water, which is that we had very stable water bills.

They went up, but they went up with a very specific purpose, one that we were all very transparent about.

That was to clean DC's rivers.

So we saw a 141% increase in the average ratepayer bill for DC water over nine years.

It's a bigger increase than we face in electricity, bigger than we've seen over the past three years for electric bills.

But there was no comparable public outcry, and I would say the reason why is that we took time to educate residents that we had a goal we wanted to pursue, the goal was gonna cost money, we were very transparent about that trade-off.

And so when residents saw their water bills rising, they have an understanding of what the policy objective was, and there was a level of buy-in.

So that openness as to why we're having experiencing the increase is vital.

And this doesn't diminish, the increase does not diminish the value of the Clean Rivers project.

It's actually a testament that when DC residents are confronted with an open, transparent trade-off, they sometimes support paying more for that trade-off.

And I believe that we can run the risk right now with the energy prices associated with electric bills of creating a narrative around our energy goals in which we can achieve them at no cost, in which that trade-off dilemma that was presented for water, needs to be presented with all of our climate goals as well.

So the DC water, while not an imperfect example from a governance and regional standpoint, is meant to convey the notion that we had, we chose to pay more for water for a goal we all embraced as a city.

And that's one that made people understanding the context of those bills, be able to place it in the context of something that they buy into, they bought into, and they understood before they saw their bills go up.

So with that as context, I want to transfer the presentation over to Peter, who will really walk through item by item what is driving up some of the energy costs we've seen.

Thank you so much.

So we can move to the next slide.

So the background, just to make sure you know it's helpful that we're all on the same page, is just to talk a little bit about what is our grid and what is our power system.

So what we have here is just sort of the basic building blocks for how we think about things.

You start with there's generation, which is electricity is produced by power plants, wind farms, uh solar systems.

That actual production of electricity happens both somewhat locally.

We produce about four to five percent of our power locally, but we import 95% of it from the regional grid operated by a nonprofit entity called PJM.

That power that's produced primarily outside the district gets carried along high voltage transmission lines, and then into the district where it gets stepped down to lower voltages of electricity and distributed and delivered locally here in DC, and that's the distribution system that Pepco operates and maintains.

So we think it's helpful just to understand those kind of big buckets, because then they map on to okay.

Well, why are our costs going up and what's happening?

To the next slide.

So this is a breakdown, just a sort of high-level schematic of you know, for every dollar we're spending on electricity, you know, which but which of those buckets is sort of you know attributable to.

And um, generation is the largest, as we'll talk about in a couple slides.

You know, those costs have really been going up.

A lot of that is being driven by these regional supply and demand dynamics because we participated in a regional market and we were quite susceptible to changes there.

Um, that transmission cost, the cost of paying for the big wires that move electricity interstate, that's a smaller piece, it's about 8%, but it's also been going up.

We just did a study on that at DOE, which we'll talk about on what are our transmission costs and why are they going up.

Uh the distribution portion of the bill is what helps fund our local distribution grid.

This is what the public service commission primarily oversees.

It's about 25% of the bill, helps maintain our, you know, local poles and wires.

And then our environmental goals that are supported through a renewable portfolio standard, are about 15% of you know that total bill.

Uh, and the final is sort of surcharges and taxes, and these are collections of smaller items that we'll talk about in a little bit.

So, high levels, those are the categories and the general breakdown of costs for you know, kind of an average resident.

If you go to the next slide.

So let's dive a little deeper.

Um, on the first one for what's driving generation costs.

Well, what I mentioned a second ago, we import 95% of our power in these regional electricity markets, and PJAM, the regional grid operator, has been seeing a real supply-demand imbalance.

Uh, there's huge demand from data centers, both actual demand that's materialized and forecasted demand from very large power-hungry electricity users.

Uh at the same time, there's been restricted supply.

Um, if you go back a few years ago, the crisis in PGM was actually we thought we had too much power plants and too much supply, and then the data centers came.

And now the concerns have been is there enough uh power to supply the region, and particularly at affordable prices.

Uh and then also just how everyone pays for these things, what we in the field call how are costs allocated.

Um, a lot of the rules were not set up to have a few big customers like data centers really paying their fair share.

And so, under these kind of legacy rules for who's responsible for what costs, we're really paying a lot currently.

And that's something we're working very closely on with other states and with PGM to try and fix.

But I wanted to show this graph on the right, which is really critical.

You hear a lot about rising electricity demand.

That is not in DC.

So the graph on the right is our peak demand here in DC, which peaked in 2011 and has been steadily going down ever since.

And what's remarkable about this is that's happened even as we've had a significant amount of additional buildings turn to electricity as their primary fuel, electric vehicles are really growing in the district.

So we've been electrifying our end uses, but our peak demand is going down.

Uh, and that's a testament to DC has a long history of investing in sort of demand side strategies, trying to reduce our peak demand, which has major cost savings here in the district.

So those regional dynamics that are driving electricity prices up, so those really are not DC's fault or responsibility.

And something we need to work with PGM on fixing.

So that's the first bucket.

If you want to go to the next slide.

I mentioned a second ago our transmission costs, so about eight to nine percent of the bill.

And these support very valuable services.

We need a high capacity interstate transmission system.

And those costs have also been going up for basically two main reasons.

We've been investing in the local parts of our transmission system to increase grid resiliency and reliability.

So adding new transmission infrastructure that serves the district.

But also what I mentioned a second ago about those power hungry data centers.

PJM, which does transmission planning for the region has been approving larger and larger packages of regional transmission investments, primarily to serve data centers.

They're the ones driving the need for those transmission investments.

But as I mentioned a second ago, we're kind of all on the hook for paying part of those investment needs based on how sort of costs for transmission are divvied up across the region.

Go to the next slide.

That third category on the distribution costs is to pay for our local distribution system.

As the city administrator mentioned, we really invested heavily in our grid with remarkable results.

Reliability in the district has improved substantially.

We went from being a place where outages were just frequent and common to being one of the best performing jurisdictions in the country.

And that's a testament to the investments we've made, but those investments have costs that we have to pay for.

And the graph here shows the sort of trends in declining outages that we've seen.

And the payoff there.

So we mentioned as the fourth category, our renewable energy costs, which take a couple forms, but the primary one is through what's known as our renewable portfolio standard.

This is a policy that supports clean energy both regionally and locally here through local solar.

And our renewable portfolio standard costs have also been going up.

DC has very high targets for the amount of renewable energy that electricity suppliers need to purchase.

And it's sort of broken into two parts.

They have to purchase what are called renewable energy credits from anywhere in the greater PGM region.

And the subset of those have to come from qualifying facilities here in DC.

And both portions of those costs have been going up.

The sort of regional costs used to have these regional credits trade at very low prices.

They're about $2 a credit, then they crept up to $7 a credit.

Now they're like $5 to $30 a credit.

So that, you know, eight times increase in prices combined with higher targets, leads to a higher cost to be supporting our sort of general clean energy goals.

And then similar on our local solar goals, you know, we have ambitious targets that we have been meeting year after year, but those come with costs.

And one of the things we want to discuss is ways we may be able to advance a robust local solar economy at ways would reduce reduce some of those costs.

Next slide.

The final one is the wonky stuff of little surcharges on your bill.

If anyone here's ever read their electricity bill, there's just a whole bunch of little items on it, and the collection of them are sort of taxes and surcharges, and these fund, you know, important initiatives that supply revenue to the DC government.

They also support programs that we run, like utility assistance programs and energy efficiency programs, and a lot of the benefits from those programs get put right back into the system by investing energy efficiency.

We help you know lower costs for everybody.

But collectively, that set of tax and surcharges about 7% of the bill.

Great.

That's my portion.

I'll pass things back.

Okay, thank you, Peter.

So as Peter just walked through, there's no really one reason why our energy bills are rising, you know, so significantly.

And so if we are gonna make meaningful change to this affordability problem for our residents, we really need to explore solutions that will tackle every element of your bill, as Peter walked through.

If we jump to the next slide, so our first proposed solution, as Director Jackson alluded to earlier and Peter, is joining forces with other states to really tackle the generation costs being driven through the restricted supply and the high demand and the outdated market rules that PJM has.

So we've already joined the PJM governors collaborative working with other states in the PGM region to make sure that we can put pressure on PGM to make those modifications that Peter talked about that will help lower our costs.

We will also be DOEE will be working with their mid-Atlantic counterparts in the region to really scrutinize data center development and develop new rates to ensure that data centers are paying their fair share.

This should help us save money in the long run.

It won't be an immediate relief factor, but it will help to really bend the cost curve.

We jump to the next slide.

Is around balancing our infrastructure investments and affordability.

You've heard us talk about how we've made great strides on reliability.

We're now in the top 15th percentile nationwide.

And as we continue to make investments in our infrastructure, we need to also consider the impact on costs and discuss potential trade-offs as we make those investments.

We can also work to streamline utility projects with faster project timelines that should provide more predictable costs and help us avoid costs rising over time as projects take longer.

I'll turn it over to the CA for a couple more solutions.

On the next slide, you see the visual on your right, you don't look at the details, look at the broad visualization, which is that we have a small number of hours, typically in the afternoon in the summer, that drive costs for the entire year because the whole system is really built in price to meet peak demand.

So where you see that light up red and yellow and orange is meant to signify how concentrated peak demand is that ultimately ripples throughout the entire year.

So there's a number of solutions that are proposed on the slide.

One is the simple, which is redesigning bills.

There's been some work done to redesign bills, but more can be done to make it more intuitive so residents really have an understanding as to what constructs and drives their energy bills.

Also to expand energy efficiency programs so we're making the most to allow for Pepco customers to be able to make use of driving down their usage.

Third, it gets more complicated, which is being able to allow for optional opt-ins to what we call a time of use rate.

So residents can shift usage for cheaper hours when they can to get rewarded for it.

So currently, even though our costs are differentiated by the time of year and the day time of day, shifting one's own energy usage does not translate a ripple into one's bill.

And finally, and this would be something that has great potential and requires uh an amount of time to be able to deploy, is being able to make the full use of batteries to effectively be able to bank peak off-peak power so we're able to then effectively reduce the amount of power we use during peak time.

So imagine this is saving energy and storing it when it's less expensive to generate, and being able to lower our collective peak usage to bring down rates for everyone.

And the this is the broadest part of this plan, and it will tackle both generation, transmission, and distribution.

If you go to the next slide, is sort of just this title says what it means, which is speed up local solar deployment.

It takes too long for someone to be able to connect with the grid, someone to be able to install solar on their home.

And so, what we identify here is focusing on making sure we simplify the grid connection process.

We give incentives, particularly financial incentives to PEPCO to be able to allow for faster generation.

So there's a collective incentive to be able to move in this direction.

And then we look at all of our own permitting requirements, whether it's DOBs or another agencies, to be able to be able to make sure we simplify our own permitting system so that if we want if people want local solar, we make it easier and cheaper to build, not just more expensive to be able to do.

If you go to the next slide, we'll identify solution five of seven.

Thank you.

So for solution five, we want to tackle the increase that we're seeing in the renewable portfolio standard costs.

And so we want to focus on delivering clean energy and continuing to meet our goals, but in a way that is more affordable for residents.

If you look at the slide, you can see in 2022, renewable portfolio standards cost the average resident about a hundred dollars a year.

By 2025, it's about 250 dollars a year.

And if we do nothing, it would grow to almost 500 a year by 2035.

So we think this is one area where we can actually provide immediate relief to residents.

A lot of the solutions we've been talking about will take time to implement, and they're still important to get going on.

But this is a way we could deliver relief to residents almost immediately.

So what we are considering is we want to make sure first of all that we are preserving the solar investments that we've made, and then thinking about sort of responsible, forward looking reforms.

We want to reset the RPS to align with the district's climate laws so they move at the same pace towards a 2045 goal, and then reinstate the pre-target for solar for 2023 of 10% and freeze and extend the timelines to meet that, which will lower the price ceiling for the SREX.

If you look at the chart on the right, the blue bar show you what the incurred costs are per year for RPS standards.

If we make the proposed changes that we are talking about, we are projecting that the RPS costs would now drop to that red line.

So you can save about $15 by making these changes and provide some immediate relief.

It's important, though, that DOEE will need some time to think sort of long term how we do this on an ongoing basis.

We've seen other states move away from the credit market to different types of markets that still support clean energy, but this is a way we could provide immediate relief while also giving time for DOEE to work with its stakeholders and the council and others to think about how we might want to adjust our market as well.

And if we jump to the next slide, before I turn it back over to the CA, this is actually a solution that we've already introduced.

Uh, and it is in the budget support act that the council will take a final vote on on Tuesday.

And this is really about reining in predatory energy companies.

We have unfortunately some bad actors in the marketplace that are taking advantage of households by offering them teaser rates or gift cards, and they end up signing up for energy prices that are much more expensive than they would have otherwise paid if they had stayed with PEPCO's standard service offer.

So we uh have proposed BSA language that would allow the public service commission to do more oversight and regulation on these companies, and we hope that the council will include that in the BSA that it votes on on Tuesday.

And the final um item that we want to put forward is around something that we've done for many years that we just have to keep working to maximize, which is the city owns land or we have oversight over land, whether it's rooftops, whether it's the ground, whether it's major developments, and we ought to make sure we are always making full use of this land to be able to lower our energy bills and those of our residents.

The visual you see on the slide is of the stadium, our largest uh development from an acreage standpoint, which does hold the promise and possibility of being able to utilize for battery deployment to have a significant impact on our ability to generate uh energy within the district.

Uh, and just sort of to wrap up with one final slide.

We we I again I appreciate the patience of allowing us to walk through this presentation.

Uh, it's a complicated issue that's easy to simplify and oversimplify.

Uh, and so the team at DUE, the team in my office wanted to make sure uh we took the time to walk through the different discrete drivers of cost and to be able to walk through a number of ideas that uh in working with the council we hope to put in either policy, legislation, or direction to be able to lower bills.

And they really focus on the question of subsidies, the question of regional policy, and the question of infrastructure.

And these energy choices that we have ahead do require us to be transparent with residents about the costs and benefits.

Ultimately, all the things we're trying to do can endure the test of time when affordability is not, when people are not asked to choose between affordability and pursuing some of the goals that we have.

All right.

Thank you very much.

This is not an easy topic or a quick uh three minute testimony, so absolutely want to make sure you gave you plenty of time to be able to walk through that.

So thank you very much for doing that.

Um, but the public doesn't get to talk.

We had a public hearing uh and public public witnesses, yes, we did, ma'am.

Uh huh.

Okay.

So uh thank you again for the testimony here.

So part of what I wanted to go through is this.

I know in May we were planning to have a conversation uh on a very similar topic, and I know had to be rescheduled, but I'm not sure if it's actually been rescheduled.

Much of this feels like perhaps what you and the executive branch was wanting to present.

Should I am I hearing it that way?

Yes, that's correct.

Okay, all right.

Um, excellent.

So one of the things that we also wanted to ask about is at that point we've been talking about legislation being initiated from the executive branch to be able to come forward.

Is that the executive's goals to put this package into a bill that you're looking forward to presenting or introducing to the council?

Help me understand a little bit what what do you see as some of the next steps on some of the recommendations and ideas you have?

Um, so the short answers I do envision um putting forward legislation that would reflect those items that were presented in the slide deck that inherently require legislation to do.

Um part of it though is we wanted to, and the way in which we even structure the presentation and sort of this long form discussion is trying to also put forward different ideas because each of those seven ideas actually had three or four distinct bullets that actually were separate ideas within them.

So together, there's probably 15 to 20 ideas put forward.

Uh we do want to get the reaction from the council and your committee uh in seeing what the path is for the different ideas put forward in this.

Some of it can be done by policy, some of it is just straight legislation, other parts a little bit more indirect, where the legislation that we would put forward would actually direct some of the regulatory bodies to um a way to prioritize certain policy goals and what we do.

So the legislation itself would not be a direct effect but would have an indirect effect on how we govern and oversee um utility rates.

Got it.

Okay.

Not sure if a bill is going to be able to get introduced in time that we would be able to do all of this hard work necessary.

Doesn't necessarily mean that we are limited to one package, but we can be working on discrete elements of it at the same time.

Is that well?

You and I have worked on some complicated policy issues in your prior committee life and my prior work.

Um, it is something that maybe a single bill and maybe a mixture of bills and policy or rule adjustments that we do.

Um, the recess is often in the past has been a time when some of the more complicated policy issues were able to work out to really clarify where the legislation needed and which is a path for it, where are there changes to rules or policies that DOE would do once we come out of the summer?

So is to make full use of that time to be able to clarify what the path is for a set of changes that we think would address the root causes that Peter laid out.

Okay, got it.

Um look forward to working with you on that.

But let's kind of dig in on a few of these elements though while we're here, which can help inform the work ahead.

Um I guess let's start on the policy questions around our RPS and our SRECs.

Um this has come up in some of our other public testimony that we heard the other day during that portion of the hearing, and has come up in the last few months as well.

So as we look at in the presentation, your diagram from the recent public service commission report states that the RPS cost about 15 cents on the dollar for ratepayers in general.

As a portion of ratepayer bills, has that 15 cents on the dollar been you're showing between now and 2035 a pretty steep increase in the data.

But for the last five to 10 years, it's a more gradual increase.

It's static.

It in the on the slide five that we presented, it has the renewable portfolio standards as being about $35 out of $975 of annual bill.

So translation that is probably about three or four percent of the bill.

It has been an area that's growing not just in sort of the the absolute amount that people see on their bills, but also as a share of the bill between 2015 and today.

It's only moderated by what we're seeing on the generation side.

Right.

And I guess that's what I'm I want to try to help translate from a public perspective is the rate that it's been going up is at a relatively similar rate to that that we have seen our electric rates in total going up.

So as a share of that, but you're projecting that it will take up a larger portion of that share in the next decade.

And that's if I'm reading your slide 21 correctly, that's part of what you believe you're flagging.

Is to say we believe we need to tackle this, be willing to talk about any type of reforms because of what you see as projections over the next decade.

Is that fair?

I um I do think that is fair.

I would also add to that, uh, and I would invite Peter Director Jackson to jump in, but we've we also have been seeing states move away from this credit market because it has had some of these unintended consequences, and so there are ways that DOEE is exploring that we can still produce and invest in local solar, but it could come at a cheaper cost to everyone.

Peter, I don't know if you're buying that anything.

Yeah, I could respond to your first question.

So in terms of the historic costs for the RPS as a whole, the PSC has an annual report that lays out the sort of total costs.

They've been growing about 20 to 30% a year, which is faster than the average for the bill as a whole, with the exception of this past year when sort of the whole bill went up.

Um, and I mentioned a second ago, a lot of that is the regional RPS in nature.

So the regional renewable energy credit prices were just very low for a while, and they've gone up in just a few years about three and a half times as much in price.

So going forward, there's a lot of uncertainty with what those regional rec prices will be.

So I would say, you know, the projections were taking historic trend lines for the last eight years continuing some of that forward.

There's uncertainty.

If you know a lot of renewable energy comes online, you could see those rec prices come back down.

I think a lot of people think with the current, you know, sort of power hungry data center market, many of which also want to buy those renewable energy credits because the Amazons of the world like to sort of claim clean clean power.

Um we're not likely to return to the low prices that we saw before, but again, there's a lot of sort of uncertainty when you do the projecting forward.

Okay.

Does the when we think about the 15 cents on the dollar that we're seeing right now, does that account for lower energy costs provided to ratepayers because Pepco is now purchasing less power at PJM auction?

It's just the costs, and there are a lot of benefits.

One is what you said about not having to purchase as much energy, and also when you look at um, you know, we have the slide on the declining peak demand for DC as a whole, right?

That represents real savings for new infrastructure we don't have to build.

So it's it's the cost side.

It's um you know, we mentioned there are public benefits, uh, but to go back to um something that was mentioned a second ago, there's also a question of can we be achieving those benefits at a lower cost?

Um, is sort of the question we want to be digging into.

Yeah, I I think the conversation around our um our RPS and SREC needs to make sure we're looking at both our costs and savings.

I feel like the conversation predominantly is talking about here's what the cost is.

Would it also be fair to say that our RPS standards also, though, help drive locally local economic development?

It helps create jobs.

Um we have local businesses rooted here in the district because of the market that we've helped create, those would all be benefits that we would argue, correct?

Yeah, so the the question that we grappled with as we took the time to construct this is uh in sort of a conceptual world, you sort of you want to be able to identify the dollar amount needed to produce the benefit.

Um and then price the subsidy at exactly that or one dollar above it.

And so we were looking at like are we effectively achieving a benefit that we can continue to grow and achieve just as at a lower cost?

Yeah.

And again, we shouldn't duck the conversation.

Uh it's in my mind, we've got to make sure that we're seeing both our costs and our benefits in that totality.

So from the PSC's most recent report, um, we're currently serving over 5% of the district's load with our local solar, uh, with almost no alternative compliance fee that's being paid.

If we reduce our local solar carve out, one of the concerns we hear is you're gonna see your SREC marketplace start to crash out, and then that can have an impact on our local businesses, on their job creation.

Have you, in formulating these recommendations, have you vetted this concept with some of our local solar companies and what type of feedback have you gotten from them?

Yeah, I think we've only had initial conversations, and part of what we wanted to put in there was the time for us to work with you know the industry and local um stakeholders because these are incredibly important questions.

Um, what you've seen in some other states that have transitioned from the sort of free floating SREC credit market is very thoughtful attention to things like grandfathering in existing systems that you know people installed with certain expectations and then translating to some of these, for example, a fixed price over a longer period that can provide more certainty and value at a lower cost.

But you know, part of what we put in here is having that time to work with everyone, you know, solar companies and and others to work through you know the right policy framework as a long-term vision is you know key.

Okay.

Um and I was just gonna add, um, because you know, we are looking at obviously each element of the bill.

Most of the um solutions we've put forward, it will take some time for residents to see relief and to bend the curve just because these are larger infrastructure or larger, like political questions.

Um, this is one where we could provide relief almost immediately to residents and seeing lower costs um in their next bills.

So that's part of the reason why we wanted to try to do something that could provide some immediate relief while DOEE does take the time, as you mentioned, to work with uh stakeholders to develop what would be the long-term solution.

This would just sort of be putting up a pause on things while we think through what the right long-term solution is.

Okay, but we haven't actually proposed anything yet.

This is just putting it out here.

Okay.

Um, and when you say relief, if I'm if I'm reading page 21 correctly, your projection is RPS costs are maybe dip a little bit, but are relatively static for the next 10, 12, 14 years.

So it's not really from the standpoint of a lower bill.

It's you believe that it would hedge against projected increases.

Would that be accurate way to say it?

It would actually go down from this fiscal wealth, depending on when it was implemented.

It would bring bills down by um the following year, uh, and I think it's about $15 a year, we think that folks can save.

Though I'd add, um, part of the way our renewable portfolio standards work is that it's increasing targets every year.

So also a large portion of the savings is both, you know, if you take the regional RPS, which is currently set to go to 100% by 2032, which is the fastest in the country, and if you extend that out in time to sort of align with our other um climate goals, which predominantly fall around the 2045 time frame, you're also saving that large chunk of the bar that's about the kind of out years that otherwise we'll be paying for under the current you know framework.

Okay, all right.

Alright.

I do think it'd be helpful to hear from obviously many of our the solar industry itself to see what this looks like.

And when you compound that with the rollbacks that we have seen at the federal level, I think understandably there's gonna be anxiety within the industry of a clawback and reduction of federal investment, and if at the same time we lower RPS expectations and standards, then what does that have the overall impact within the industry?

So I again not afraid to wrestle with it and have the conversations, but I think that I'm hearing a lot of anxiety from many within that industry saying at a time when we're seeing the federal investments pull back significantly.

If the district were to do this, we create a lot of damage to the overall industry.

And at the same time, as we said, some of this report is talking about only the cost.

It's not including the savings and the benefits.

So I don't think we're really painting a full picture if we're not going to be willing to have a conversation around the savings that are generated as well.

I would agree that that discussion needs to happen.

I'll just highlight is that the uh it all ratepayers in DC pay for the subsidy.

And it is not the benefit at some level is if is produced to everyone, but at but really it's not because not everyone has solar.

Um so the industry is going to have an institutional interest in maximizing their return to shareholders, their shareholder return.

And so the discussion very much is on the benefit side.

But it's like what is the price point at which we produce the benefit as a public body we have an interest in.

Um and I don't think as big a city as DC is, um, it would be careful we have to be careful to not subsidize any financial losses that these companies might be seeing nationally or regionally and have that be what we ask ratepayers to do.

So does we have to identify there is a benefit we agree upon, what's the price that we acquire the benefit without overpaying for it and having just a broader financial subsidy to an industry.

Okay.

Um just in interest of time, I'm gonna keep moving through it because we have it's a long presentation.

Again, very good, but I want to make sure I kind of move through some other pieces.

Um, all right.

So when we look at the comments about demand side solutions, I mean some people are gonna have a programmable thermostat that I hope when they left this morning, they'd already preset it to not be chilling their house when no one's there.

Um I know when I left, I made sure it was turned back up, and I'll turn it back down when I get later.

But that I think we've had a lot of conversations over the last um couple of hearings.

If we can shave even small percentages on peak demand, you can create very significant savings and um and improve costs for everybody.

Um so as we think about that, what are what are some of the ways in which not just in the future but right now, we can be thinking about battery storage, the virtual power plants.

Um I noted the the picture you had um was of a RFK stadium in 2030.

Um I know there's a lot of ongoing conversations around what can take place there with battery storage.

Um if we are gonna be true to the deal from a year ago, we're gonna be uh building and operating this to a lead platinum, and we're gonna be making sure that that energy and battery storage is a significant part of that.

In the public witnesses, we heard a lot about during this hearing, a conversation around more and more of our solar installation, isn't just the solar on the roof, but the battery storage on site.

Don't necessarily need legislation, although we can look at legislation to create incentives.

We could look at the SEU to think about ways that they create um incentives.

What are some of the steps that you feel like we're taking right now, whether it's on a large scale with a RFK stadium site or on your household to move towards more battery storage?

Yeah, I can see.

I'm excited to jump in on that one.

Yeah, thank you.

You could tell.

I don't have a poker face on the wonderful worlds that we're getting into.

So on the DOE side, we've done our own side of battery and solar projects through the SEU and produce good data, sort of initial suite of um, you know, pilot programs to understand the usage.

Uh we just did a study on the financial benefits of larger scale energy storage deployment for DC, really quantifying some of the financial gains, looking at different models.

Uh, and to your point about um, you know, is legislation valuable, it can help make sure we all pull in the same direction because you need, you know, a series of regulatory changes, incentives, a bunch of work in place, and I think it you know can be a point to have a legislative framework that helps you understand what are we're trying to achieve.

But you just outlined the high points.

Um there's a lot of potential for using um batteries to reduce our overall costs, help individual households, help, you know, university campuses and RFK.

Yeah, something we're very excited to work on.

All right.

But we just say we're really want to take action now.

So what are some of the things we're doing now?

So we have still only a pretty nascent battery storage market in DC.

And we've had some impressive projects, Galludet built a microgrid and a battery storage facility.

What's really missing is sort of durable compensation for battery owners who are providing services to the grid, and that kind of incentive for your providing value, you get paid, is what doesn't exist right now in DC.

So we've done grants around batteries, you know, various businesses and homes have been incrementally adopting them, but you do need to sort of value and provide payment for grid services.

Uh, and so that's I think the key piece that's missing, and where I think you know, legislative angle could make sense on that one.

Okay.

When the PEPCO Excelon merger took place, there was funding put in place for virtual power plant.

I've been frustrated that it is uh not moved very quickly, although lately it feels like we're starting to see some movement there, but it's been years.

Um, where has DOEE or the executive been able to help push in moving towards our virtual power plant pilots with these programs to get them moving?

Yeah, so um DOE chaired the pilot projects governance board, which was you know a group of community business and stakeholders that scoped what those pilot projects should be using the 20 million dollars from the Pepco Exilon merger.

So we've been strong um advocates and believers in moving the virtual power plant and the other um pilot projects forward.

Uh, and I think really now, as you say, they've gotten farther along.

So the the RFPs um have been released for those projects by the public service commission.

Um so they've really moved to the next stage, but going from having a general request for proposal to contracts to building projects does take time.

I think this is something we've been working with and appreciate continuing to work with the public service commission on sort of moving that process forward because we're very excited to get those kind of early stage pilots together.

Um let me talk a little bit about some of the performance-based metrics you talked about.

Um Director Jackson, you mentioned this in your testimony around multi-year plans, and I think one of your recommendations in your testimony was creating a stronger performance-based metric.

Um, we have through the grid act and other other efforts been trying to outline different ways that we can try to figure out different ways to incentivize and require the type of interconnection uh timelines that we need to have, not just for the residential person uh in their household, but for all of our interconnections, it continues to be the type of thing that we get a lot of constituents that call in, being unpredictability of costs, timelines, to the point that it makes moving forward with a project unsustainable.

What are some of the specific performance-based metrics that you would want to see built into?

Let's borrow, let's build off your testimony on the builds in front of us, into a multi-year rate plan or a requirement before being able to approve one.

Great.

Um, so the Hawaii model is excellent.

Um, in Hawaii, they adopted a performance incentive mechanism around interconnection.

It has financial rewards when the utility beats certain benchmarks, financial penalties, when they fall below a certain standard.

And um, we actually did a whole project talking with the Hawaii Public Utility Commission about how they set that up, what data they looked at.

The short version is you define a baseline for current performance, and then you know, goals you want to reach, standards you don't want to fall below, uh, and you track that by either size of project or kind of project.

And then when the utility beats their benchmarks, you know, they get a modest financial reward.

When they fall below, they get a modest financial penalty.

So the Hawaii model is one example.

It's known, it works.

Um, and it's certainly a version of how we could kind of capitalize on providing those financial incentives to streamline interconnection.

How would you answer, though?

I mean, we already create a financial incentive.

They have essentially a guaranteed rate of return.

Um, why is that not enough to say these are the requirements, this is what you gotta do.

Um, why would we need to put an additional financial incentive for a company that has a guaranteed financial plan?

So you to answer your question, you know what the second version we were saying is the historic model.

So we pay utilities primarily around the capital investments we make, and then we direct by regulatory fiat anything we need them to do that's not really aligned with that incentive.

And that has a lot of merit to it, but it is hard to motivate the utility as a whole, individual divisions within it.

And for a long time, the district and us included have been interest in targeted financial incentives to see about, you know, when the utility is making the decisions, who do we hire, do we pay this really sharp, you know, staff person extra, those kinds of decisions, that there's a little bit of an incentive alignment between the utility as a whole and the outcomes we want to achieve.

And interconnection is one of those where it's not really, you know, a money maker for the utility currently, and so they do, you know, try to do a good job.

They have a good team that they've recently been trying to reinvest in, but it's one where if you're a believer as we are, and trying some of these targeted financial incentives, it's a great area to do it because there are these noted models from Hawaii.

It really matters for our priorities.

You know, we think it's a good entry point into that world.

Okay.

Um, should I take from the executive's testimony on the bill that's in front of us, not our other policy ideas, that you are my words here, so you tell me how you want to phrase it, qualified support for the bill.

That I think you outlined a couple of recommendations you would have to add to the bill, but would that be an appropriate way for me to hear that?

I don't know if you specifically said you support the bill or not.

So the way I heard it at least was kind of a qualified support with a couple of recommendations.

I think that's awkward way to describe it.

You know, we support the bill, but we do have some recommendations that we'd like to add to it.

Okay, all right.

Um, and then I hear you say you're gonna follow up after the hearing as well with some of those specifics of what could go through.

Okay, that'd be helpful.

Um, I think the further you can build on that with whether it's borrowing uh recommendations or examples you've seen in Hawaii and others on the solar interconnection, that can be helpful as well.

Uh, because this bill could also end up being a vehicle for many other changes that can move forward.

Um I want to spend a second talking about, and you mentioned one of the proposals that's in front of the council right now.

The mayor had introduced budget support act language related to third-party energy retailers.

The feedback we heard during the public portion of the hearing was focused on specific to this BSA subtitle was that the there may be bad actors that exist that we want to, that's who we want to go after, but the way the BSA is in front of us, it caps all third-party energy retailers.

And the experience seen in Maryland drove them out of the marketplace.

Is the intent of the BSA subtitle to target just the bad actors, or is it all third-party retailers?

Yeah, um, if I can provide a little context.

So we spent the last about two and a half, three years in a multi-agency research project into this area.

We produced three separate reports and studies.

It's really one that we dug as deeply as we've ever done, including one of the reports is on reforms from other jurisdictions, what they've done.

And I just wanted to give a couple highlights from that.

So, what one of our studies found was the average resident who uses a retail supplier is paying 70% more for their electricity than if they were on the PEPCO default service.

And low-income residents are paying 80% more, which is not just a huge amount, it is um the concerningly wrong direction.

Low and moderate income households that usually count every dollar that are trying to find savings, are paying even more for their supply of electricity on average.

So, to ask answer a question about just a few bad actors, there's two problems.

One is there are people who are doing predatory individual door-to-door marketing, signing up people against their will, but there's also just the market as a whole is not meeting expectations.

The average costs are just so much higher than what you would have on the default service, which led to some of our other studies.

So, one of our very smart PhD analysts did a randomized controlled trial on if we give residents more information about better supply offerers.

Like will they change their behavior?

And the answer is not really.

Because there are some real broken parts to people's understanding of the market, the sort of teaser prices that people get offered that go up.

So this is really an industry-wide problem.

And our study mirrors findings from Pennsylvania, Connecticut, Maryland, Massachusetts, and we talked to all of them.

It's been pretty universal that the promise of retail competition, as it's called, hasn't lived up to its stakes.

So, not just a few bad actors.

And then to your second point on the Maryland front, we saw that.

Maryland passed legislation in 2024 called SB1 that instituted blanket price caps, and they did see a lot of market exit.

We designed our legislation with that in mind.

So the default price caps that we proposed allow you to go 10% above the utility's default price.

So it builds in, you know, a premium, and it gives the Public Service Commission a lot of discretion to grant exemptions, higher price caps for anything that's in the public interest.

It does ask the industry, you have to be willing to go to a regulatory body and put your money where your mouth is, show that your products are actually either providing innovative services or lower costs.

And we think that's where we need to be at this moment, you know, in terms of the balance of consumer protection and regulatory oversight.

Okay.

So you think your subtitle takes the lessons learned from Maryland that would, that the district would not see the same fate in terms of, I mean, essentially there are no third-party market, it's gone in Maryland.

Right.

Yeah.

What Maryland's Utility Relief Act, which is the more recent legislation has done is propose to take those flat price caps and bring them up to five or 10% above the premium.

I think somebody maybe read our legislation, because that was where we had our propose.

So we did design it to not have the same level of impact, including through the exemptions that our public service commission can grant.

I will say, you know, we may see a lot of market exit.

Um it's not entirely clear that that's a bad thing.

If consumers are paying 70 or 80% more for what's often essentially a commodity, and we looked into because we heard the public testimony, but our reports go into it's it's not explainable by higher clean power purchasing.

It's not explainable by more innovative services.

Like we went through all of them.

If people are paying 70% or 80% more, it's not clear we want those suppliers in the market, at least if they're not willing to go in front of the public service commission and sort of prove their case.

Okay.

And a cynical uh perspective, as well as like to do our devil's advocate, is gonna be this is great for Pepco.

Uh, we're going to starve off third-party retailers, and we're gonna push more people back into PEPCO.

Is that true?

No.

I mean, not from the you're not gonna answer from the cynicism standpoint.

I mean, is from the practical effect is that you will have people who move away from or lose a third-party retailer choice, and they're moving back to your SOS.

Yeah, so some background.

The SOS already supplies 90% of the residential market, and it's never it got as high as 17% maybe five or 10 years ago, but it went back down because the market already isn't working for most folks.

The SOS just does consistently provide one of the lowest prices.

To answer your cynicism, um, Pepco does not make money off of administering the standard offer service.

Those are pass-through costs.

So this is not um the area where the utility sort of profit making is.

Uh it is an area where it's you know important to make sure that consumers are getting a good good price, and the default service has provided a good price for a while.

We do think it's quite valuable if anyone wants to come in and propose more innovative service or you know, a service where they think there's long-term odds of providing lower prices that they do so, they just now have to come in and you know put their cards forward and get permission from the public service commission rather than sort of unregulated space we have at the moment.

Okay, all right.

Um, I'm gonna move back to a couple other proposals that you had within here.

Um, one was on the I think you titled it solution two.

So that was the balance of a structure and affordability one.

Um you talk about infrastructure projects.

Should they be budget constrained modeling, or it like expand a little bit more when you say balance affordability when choosing which infrastructure projects to do consider rising costs?

I'm thinking about this more from the perspective of um an entirely different space.

But when we as a region, for example, think through transportation, I'm thinking about the transportation planning board.

Uh, we have to go through a process of a budget constrained model versus the I'd love to build all these things.

Is your recommendation that they should be following or at least have to evaluate an alternative as a budget constrained model, or is it that just tell us what the infrastructure projects are, what the costs are?

Can you expand on that?

Um I think it's a little bit of both.

So I think it is, you know, obviously we need to have clear information about what the infrastructure needs are and what they cost.

I also think that we need to have options for what it could look like if the additional resources weren't there, right?

So you could have different levels like a tier one, two, three, depending on the investments that are going to be made.

And it should be clear what the trade-offs are for doing tier one, two, and three, including its impact on affordability.

So we're saying, yes, provide options, provide information, and then um let you know the uh stakeholders decide based on that what should be the right path forward.

So we want that affordability to be considered as one of the criteria as you're thinking about what investments to make.

Yeah.

Like how far would we extend that, for example?

Um we have requirements for um undergrounding power.

Um we talked about the reliability increases, which are significant, and I think for most residents that have been here for a while, they would agree that reliability has gone up significantly.

How should we consider, should we consider requirements we have around uh DC plug and undergrounding and what the costs are compared to the trade-offs of reliability if we're seeing these significant reliability gains, which is a good thing.

And in what way does that impact our costs when that's what's required to be built?

Yeah, I think I don't so much want to speak to the the particular programs, just honestly, because I don't know the details as well, but I could give a slightly more general answer.

Um there have been a number of utilities, and actually Pepco in Maryland is now doing this that identify separately identify reliability projects that are meant to sustain current levels of reliability and those that are meant to expand or enhance reliability.

But when it comes to those enhancements and expansions, we get much more targeted about are these specific areas really in need of them.

You know, do we need the district-wide reliability enhancement projects that in the past we have funded, or can we do more geographically targeted ones?

So without knowing the details of the specific programs as well, I would say that.

Division between maintaining and enhancing, I think is a really important one to understand and keep maintaining, it's extremely important, but look for more targeted investments on the enhancing side.

Yeah.

Well, I guess I'm thinking about it this way, it's a little bit of building off something you had said, Mr.

Administrator.

Um, when we think about our overall goals and what we pay for meeting renewable uh RPS standards, whether I have a uh a system on my roof or not, every ratepayer is paying for it.

Similarly, for infrastructure investments to underground wires uh in a different part of the city, I live in a neighborhood where my power is underground.

Um, but I pay just like everybody else.

I don't have a problem with that because I feel like that's something that I want to see um every resident have that equity in terms of the reliability.

And so I think that we can kind of argue the case around who's carrying what different costs.

There's some choices that we make that every ratepayer broadly we're saying this is a community good, a community goal, and we want to, this is what we want to achieve.

And I would argue that's part of what the government's um concepts around RPS and what those purchasing requirements are is for a community good that gets created in the same way some may argue undergrounding increases reliability, and everyone has a stake in paying for that.

So that's part of what we do.

I think you what I'm hearing your point is let's not duck the conversation, and so I just think all the all the conversation should be there.

So we're trying to think about what are the trade-offs and choices we make.

Um, much like uh you I thought the I thought your DC water example is a good one.

Um, we have a vested interest in making sure we're not having our sewers run directly into the Anacosta River.

It's expensive to do that.

Um, and so we've made choices around knowing I can drink this water, or on a rainy day, we're not polluting the river.

So those are choices we're making, but we want to be candid and open about the trade-offs that we have in those decision making processes.

And you're right, at a high level, it's this notion of like there are in those trade-offs.

What is the point at which there's going to be a diminishing return on the investment compared to the other side of it?

So the DC water example is this the public broadly supported significant investments paid for by themselves to be able to clean up our rivers.

You get to a point where you've achieved enough of your goal, you want to maintain it.

You want to have some level of improvement, but the trade-off on affordability is you hit a level of reliability in which the balance is not what it was, say, when we had the blue sky outtages 15 years ago, whether it was clear failures of equipment not caused by weather.

So there's a default strategic assumption of significant capital investment to be able to allow for us to have more reliability.

When people are looking at their bills and looking at the annual rate increases, sort of those questions become more important about the point at which not sustaining but improving reliability from an already good place, what's that cost going to be to the average ratepayer?

And so this slide's meant to highlight the fact that we are at a different point in what our residents care about.

They want reliability, we don't want to go backwards.

But what's the cost of one additional percentage point of uh performance and the reliability standpoint?

Uh, and to make sure that affordability is weighted appropriately given what people are living through right now, uh, just as 15 years ago the weight was clearly on we have to fix our equipment and be able to have more um consistent reliable power throughout the city.

Yeah.

Well, I guess the reason why I brought the budget constraint, I I thought when you presented this, I don't think anyone's gonna disagree with a bullet point that says balance affordability when choosing infrastructure projects to do considering rising costs.

Um I thought you would go a little more of um being directive of saying you must present a budget-constrained model, or you must do that tiered approach you were talking about to be able to do that.

It's not dissimilar from what New York is looking at right now, where Governor Hockel has laid out that every application for a major change in rates must include a separate budget constrained proposal based on past operating expenses, capital expenditures, and programmatic or policy expenditures.

And that then helps both direct a public service commission to say these are the things we want you to be considering, and I think helps frankly arm a PSC to feel both what is it the government's asking them to do, and then as they look at their evaluation.

Um in the New York proposal, each application shall not increase the applicant's aggregate revenue by more than the annual consumer price index over the prior years, and requires gas and electric CEO compensation tied directly to the affordability of energy.

Um are you going as far as looking at the New York proposal and saying that's something DC should be exploring, or a little more, I don't mean this in negative way, but just the statements a little bit more vague.

You just want to say we need to be balancing these things.

Oh, sorry.

Yeah, I think there are a number of different tools you could use to sort of advance the goals we laid out around rebalancing, you know, affordability and reliability.

So that's one you mentioned that Governor Holkel suggested.

Yeah, I had heard that in Puerto Rico they have a similar setup, and that in the most recent case, the Puerto Rican regulator chose the budget constrained option.

So we've done a little bit of understanding that model, but there are pros and cons.

Um, you know, one is you now have said the budget constraint has to be at inflation.

Okay, so you you might not be able to go lower.

Um, and it's also a complex decision-making process to figure out which investments really do need to be made.

So that's one strategy and policy tool.

There are others, including requiring utilities to really rank and prioritize um the projects that they want to build so that then when the regulator is making the kind of judgment call on where does affordability versus reliability lie, it's more clear where to fall.

So there are other tools, and I think this one hasn't committed to any one specific of them, but I think that's the conversation that we very much want to have.

Yeah, I would just add to what Peter said.

I mean, I think the the goal is that there will be action, of course, um, as a result of the recommendation.

So there probably will need to be something.

But as Peter said, we're looking at the different tools, want to have discussions with stakeholders about, you know, what would we not?

I think want to lock anyone in to anything in particular.

We want people to provide options that regulators can weigh clearly.

Okay.

The other part that I think can hit within this is creating requirements for the public service commission to evaluate alternative approaches.

Is that something that you're recommending again?

Again, these bullet points.

Some of your other slides, I feel like have greater level of specificity.

This one feels just a little bit more open-ended.

And so is that a recommendation of saying you you believe that the PSE should be directed to be evaluating alternatives for each rate case?

I think that I wouldn't necessarily say alternatives for each rate case, but um maybe we're saying the same thing, that there should be options that do take affordability into account to be able to consider and how exactly the um PSC would be instructed to do that is what I think we need to have a discussion on to think about what is the best way to put that in place.

Okay.

I'm kind of taking from that this we're recognizing it's a thorny, tough issue, and so you're you're wanting to start the conversation, but more to have.

Okay.

Um I know that we've got the PSC and OPC coming up, so I wanted to be cognizant of their time as well and move to them just a little bit.

Um, just trying to make sure if I had any other questions on the presentation.

It's a lot that you put in here.

Okay.

Um, one more thing on the PJM.

Ma'am, please stop interrupting the hearing.

Um, when we come to the PJM.

When we come to the PJM, you talked about applying political pressure on PGM to cut consumer costs.

You mentioned being a part of the governor's collaborative.

What are some of the actions that you've, how long you've been a part of the collaborative, and what are some of the actions taken with that?

Uh the I'll I'll start and I'll turn it to my colleagues.

So the idea of the collaborative, we recognize as DC, we're not a producer of energy, um, we are an importer of energy.

And so it's very important to be able to work with governors who honestly have quite a bit of leverage based on the fact that their states are very large ones that produce energy, uh, whose residents are saying the same things that our residents are saying about the impact they're seeing on their bills from data centers.

So part of the discussion is data centers, but it's not limited to that, and the and the essential like framework is to be able to recognize that we need PGM to shift their modeling and their pricing from one based on sort of like basically socializing demand across all rate payers, even though the vast majority of the increase in demand is coming from a particular sector of the economy that's concentrated in Northern Virginia around data centers.

So the idea of being able to make sure people pay their fair share or corporations paid their fair share for their um impact it's having on the grid.

So the mayor joining with other governors is a way to be able to amplify the voice of DC residents to let to take advantage of the leverage that those governors have in being able to push for form at PJM.

Exactly.

And then just to build on that with your questions.

The collaborative, the governor's collaborative is pretty new.

It was only started um last fall.

We joined in the winter.

Since then, we've signed on to at least two or three sort of multi-state letters trying to put the political weight of the executives of the entire region on PGM.

And we've also um sent individual letters to PJM and filed filings with the Federal Energy Regulatory Commission, for example, supporting a price cap on uh PGM's capacity market prices.

We filed representing DC saying this is really important, and we supported that as part of the multi-state PGM governors collaborative.

So I think it's been a very effective vehicle for sort of mobilizing the political leaders at the highest level in the states so far.

Okay.

I know I think it's important that the executive is a part of that.

Um, from a legislative standpoint, there's a similar PJM legislators conference between Pennsylvania, Maryland, DC, same PJM area.

Um, and we've been engaged speaking to the PJM Board of Directors and pushing on that.

I think it's really important that the executive is joining in those efforts as well.

So I'm glad you're doing that.

Um, we probably have some space where we could probably get better aligned as well in terms of how we each are pushing on those collaborative organizations with our colleagues, so that when they're hearing from DC, they're hearing hopefully very similar uh messaging that's coming both from the legislative and executive branch.

But I think that we have limited ways that we can exert our power, and so these are some of the ways that we need to be able to do that and uh and put more pressure on PJM overall.

So I appreciate it.

I know we have uh the Public Service Commission and also People's Council.

Uh this was uh a meaty presentation, so thank you very much.

Look forward to working with you and digging in on this, uh, not just on the bill that we have in front of us and appreciate your feedback on that.

And Director Jackson, you said you're gonna follow up with some specifics on uh perhaps some changes you would recommend to the bill, but the overall and larger issue.

I look forward to being a partner and working with you on that.

So thank you very much.

All right, next, we're gonna move to the Public Service Commission Office of People's Council.

So I'm gonna call Emil C.

Thompson, who is the Chairman of the Public Service Commission, and Ankhush Niyar, who's the Assistant People's Counsel with the Office of People's Council.

And Chairman Thompson and Mr.

NR, I you may have folks that are coming with you.

So please feel free if you need to bring an additional person with you.

And Mr.

Damrosh from DOEE, did you want to stay on this panel or just call you up as needed if we need to?

Got the seat, we're good to go.

Okay.

All right.

Then uh Chairman Thompson, why don't we begin with you?

Um, and then Mr.

Niara will turn to you after that.

We're was it just one person from OPC testifying, and then just two people available to help answer questions.

Okay, all right.

There we go.

All right, Chairman Thompson, then uh good afternoon.

I'll turn it over to you.

Good afternoon, thank you.

Uh good afternoon, Chairperson Allen and other members of the committee on transportation and environment.

I'm Emil C.

Thompson, Chairman of the DC Public Service Commission.

I am here today to testify, testify on behalf of myself in regard to Bill 26-0596, the utility rates and rate-making amendment act of 2026 and policy solutions to improve utility affordability.

The commission is in the middle of two proceedings that could be directly impacted by this bill, FC 70116, commonly referred to as the PEPCO multi-year rate case, and FC 1179, WGL's district safe plan.

As such, my testimony on this bill and other topics will be limited.

The commission sits in a quasi-judicial posture, and it would be inappropriate for me to discuss items that are part of a pending case.

A similar analogy would be to ask a superior court judge to testify on matters that are pending before them.

Please review previous commission orders to see my philosophy on rate making.

Before I offer my general comments on topics I can discuss, I would like to share a few thoughts on the current environment we find ourselves in.

Everyone dislikes it when utility costs rise, including myself.

When they rise faster than expected, it creates a very personal and visceral reaction.

That personal and visceral reaction stems from a concern over the ability to pay, commonly referred to as affordability.

This feeling is compounded by customers not understanding or knowing that cause of that increase.

And we all witnessed and felt this frustration with the electricity bills over the past six months.

During that time, the public service commission has worked hard to continue to inform customers about who regulates which parts of the bill and the source of the biggest increases on the bill.

For the record, the commission regulates 27% of the bill.

I think DOE's graphics show 25%.

We'll take that instead.

And that's the distribution portion of the bill.

The remaining 73% of the bill is regulated by the commission.

The largest portion of the electric bill, which again the commission does not regulate, is the generation supply portion of the bill, which totals 57%.

In 2020, the generation supply portion of the average monthly electric bill was about $35 dollars.

It is now $80 dollars.

The next logical question is what has caused this increase?

The answer is increasingly, isn't it?

The answer is increasing capacity costs and the cost of compliance with the district's renewable portfolio standard program.

Capacity cross have increased from $29 a megawatt day in 2024 to $330 a megawatt day at the most recent capacity auction.

As for the RPS, the yearly cost of the district's RPS program, which is borne by all rate payers, has increased from $65 million in 2020 to $272.6 million in 2025.

By contrast, the entirety, the entirety of the PEPCO multi-year rate increase, which was spread out over multiple years, was $123.4 million.

This is half of what was paid in 2025 to meet our RPS goals.

According to Lawrence Berkeley Laboratory in 2024, RPS costs made up 15.4% of the average electric bill.

In fact, during the public hearing on the local Solar Expansion Amendment Act of 2022, many organizations, including the Sierra Club and DC Environmental and Network, cautioned against the expansion of the RPS program because of the high cost that will be passed on the ratepayers.

I say this not to advocate for the changes of the RPS program because clearly RPS is a legislative prerogative, but the spirit of transparency requires me to point out where the greatest increases on an electric bill are coming from.

Also, I encourage stakeholders not to shy away from previous positions on what's driving costs.

If we are to truly discuss affordability, we have to be honest about all aspects of the bill.

Ratepayers deserve to understand and know where the greatest increases on their bill are coming from.

But back to that personal reaction to increased utility costs and resulting events.

This personal reaction has turned into a political firestorm, and perhaps rightfully so.

Politicians are often blamed for rising costs, whether or not they control them, and whether or not they can do much to rein them in.

However, utility rate making is not simply a political matter, it is a complex matter of economics, engineering, and accounting that has been expressly delegated to an independent body to render a decision.

When the Commission embarks upon a rate case, we enter into an adversarial process that often takes many months to conduct.

This process often involves no less than five well-resourced and equipped parties.

Typical parties include the utility proposing a rate increase, the Office of People's Council, DC government, the Apartment and Office Building Association AOBA, Sierra Club, and the United States government through the General Services Administration.

Informal case number 1180, our most gas rate case proceeding.

There were over 7,000 pages of testimony, 20 individual pre-filed witness testimonies, three public hearings, one evidentiary hearing, and 488 individual records filed in the Commission's electronic docket system.

I listened to the public witness testimony at Monday's hearing, and I appreciated the comments made by the parties who testified.

But what I felt was lacking was sufficient testimony from individuals who truly understood the rate making process.

Holding a public council hearing without expert testimony is problematic.

I recommend that the committee seek experts in the field, not sponsored by the utilities or other interested parties, but really to fully explore and understand fundamental rate making principles.

Also, as offered multiple times before but never accepted, the commission would welcome the opportunity to teach basic rate making principles to any council member or staff who has interest.

Without consulting experts in the field, this process has the potential of taking a personal reaction to a specific event and using it to make a political decision about how the commission should decide rate cases that will have permanent ramifications.

In turn, this distorts a highly scientific and complex process, one grounded in economics, accounting, engineering, and established legal and regulatory principles and risks, replacing evidence-based rate making with subjective preferences.

Decisions made hastily in a vacuum rather than from a fully developed evidentiary record may produce unintended consequences, undermine regulatory consistency and predictability, discourage prudent investment, and impair the commission's ability to fill its statutory obligation to establish rates that are fair and reasonable, while also maintaining safety, reliability, and supporting the district's clean energy commitments.

Moving on to some more general comments about the like about rate cases.

There are typically two types of rate cases.

Traditional rate plans, which involve expenses already incurred by the utility, or forward-year multi-year rate plans are based upon future projections.

The key difference between the two is how expenditures are approved.

Under a traditional plan, the utility spends the money and requests recovery after the fact.

At that point, the commission's role is to determine whether or not the expenditure was necessary after the money was already spent.

Conversely, under a forward multi-year plan, the interested parties get to see a proposed spending plan, comment on it, and had the ability to contest those investments before dollars are spent by the utility and is approved by the commission.

The utilities' actual spending or incurred costs are evaluated against those approved projections depending upon the structure of the MYP, preserving the Commission's authority, full authority to enforce continuous oversight.

The Commission takes no position and has no preference between traditional and multi-year rate plans.

Our decision-making authority is based on the facts of the case before us and our own statutory authority.

However, what undergirds any rate case is the utilities infrastructure planning process.

Over the past two years, the commission has initiated a proactive planning process that allows interested parties to become active participants in the utility infrastructure planning process.

Through these standalone proceedings, the commission plans to achieve additional transparency and stakeholder input relating to comprehensive long-term load forecasting, maximizing solar integration into the grid, long-term infrastructure investment planning, including an evaluation of non-viral alternatives.

On the gas side, the commission plans to achieve enhanced pipeline safety and systematic leak reduction while evaluating non-pipe alternatives to align gas infrastructure with the district's statutory greenhouse gas reduction mandates.

These standalone proceedings create a place, a separate place for all stakeholders to thoroughly evaluate the utilities planning process and planned infrastructure investments to ensure they align with the district's needs and goals.

We have consistently heard that a rate case is not the appropriate place to view these complex long-term infrastructure projects, and certainly not after they have been constructed and the utility is seeking recovery.

A little general information about electricity rates.

And that's true, they are.

Recently modified their RPS program by lowering the baseline percentage requirements for Tier 1 renewable sources in order to protect customers from spiking alternative compliance payments, which utilities pass directly onto ratepayers.

If you compare our electric rates to similar jurisdictions, in other words, small restructured jurisdictions with ambitious clean energy goals, a very different rate compared or class emerges.

According to the Energy Information Administration, April 2026, DC's per residential rate per residential user is 25.41 cents per kilowatt.

Compare that to Connecticut, 32.24, or Massachusetts 29.45.

I especially highlight those two states because they were mentioned Monday as model jurisdictions, even though their electricity prices are higher.

For additional context, California's rate is 35.25 cents a kilowatt, and New York is 29.45.

Again, all jurisdictions with rates higher than ours.

Hawaii was mentioned earlier in terms of their PIMS.

I believe they had the highest electricity rates in the nation at 42 cents a kilowatt hour.

Moving to engagement PJM.

When I first joined the Commission in 2021, it became clear that this district's engagement with our regional transmission organization, RTO, was critical.

While the Commission played an active role, no other entity in DC was heavily involved.

The district, as an almost exclusive importer of electricity, needed to have a strong presence at RTO level, and I'm proud to say I led their charge.

I held multiple leadership roles in the organization of PJM states, including the presidency from July 2024 to August 2025.

As a smallest jurisdiction in PGM with no generation and minimal transmission, this was a big accomplishment for the district.

During my tenure, OPSI was focused on issues such as long-term transmission planning, capacity market price, capacity pricing, and market rules.

As president of OPSI, I advocated for and supported a number of the reforms that we heard earlier, and the ones that Sierra Club provided in addendum number two of their written testimony for Monday's hearing.

I also made sure to keep the council abreast of issues that would affect the price electricity prices.

If you recall, I was the first to notify each customer at the each council member about the increase in capacity prices as a result of the July 2024 SOS auction in a letter I sent to each council member on April 30th, 2025.

I'm glad to see that the executive has joined the governor's collaborative now, and yet you guys have joined the legislators collaborative.

I would finally, on this topic, I would note that I've informed you and your staff on multiple occasions of ideas that could reduce transmission costs.

I encourage you to look into those options as they could provide savings to customers.

The last thing I want to touch on is timelines.

During Monday's hearing, I heard various comments from public witnesses, council members about commission working group processes.

In fact, I believe it was said that the Commission sends items to the working group to delay doing the thing.

The Commission has a long standing practice of consensus building and stakeholder engagement.

Yes, it is arduous.

Yes, it is law.

As chairman, I would welcome a faster process, but I recognize the values of allowing parties to engage and work through issues rather than rushing the process.

While efficiency is important, the existing process is structured to encourage thoughtful deliberation and consensus.

The council does not want the commission to use the working group process.

They should make that clear.

If the council is saying these working groups should have time limits, I agree wholeheartedly.

Since becoming chair, I've attempted to put time lines on working groups and asked for final work products.

However, parties, including external stakeholders, often request extensions to explore additional topics and to build consensus.

Beyond that, there can be delays in receiving work group reports that would then inform commission determinations.

Working groups are a tedious but necessary part of our work.

I welcoming new reforms to the working group process that the council wishes to offer.

In closing, I look forward to answering any questions you may have, so long as they do not compromise the cases that are pending before me at the commission.

Thank you.

Thank you very much, Mr.

Chairman.

Next, let me turn to Mr.

Nayar.

Did I pronounce that correct?

Yes, Nayer Neyer.

Good afternoon, Chairman Allen, members of the committee, staff, and public viewers.

My name is Anka Schneyer, senior assistant people's counsel with the Office of the People's Council.

Also appearing with me is Litigation Director Lawrence Daniels.

I appreciate the opportunity to appear before you and present the office's testimony on the Utility Rates and Rate Making Amendment Act of 2026.

OPC supports the proposed legislation, which introduces a targeted but important set of provisions with respect to multi-year rate plans or MRPs.

The adoption of MRPs have shifted risks onto ratepayers without providing commensurate benefits.

Bill 260596 helps to address some of these concerns.

OPC recommends adding language that would provide further clarity and also recommends including additional safeguards.

To provide context for our position, I will briefly explain the difference between traditional regulation versus the multi-year rate plans that have been adopted in the district.

It is important to remember that under both rate structures, utility revenues are still tied to earning a rate of return on capital expenditures.

Thus, the financial incentive for utilities to inflate their expenditures still exists.

However, under traditional rate regulation, a utility can only recover costs and earn a rate of return on investments that have been prudently incurred and can be shown to be used and useful in providing distribution service.

Under regulatory law, prudence refers to whether the utility exercised sound judgment, made cost effective decisions, and acted reasonably based on the information it knew or should have known at the time.

The used and useful requirement means that to earn a rate of return, the investments have to be utilized in providing distribution service.

The commission also evaluates whether the expenditures were necessary and consistent with the utility's infrastructure and service needs.

Additionally, regulatory lag, which is the period between when investments are made and when they are reflected in rates, help ensure that utilities bear some financial risks for their investment decisions.

The goal ultimately is that customers should pay only for those investments that have been demonstrated to provide value and benefits.

Multi-year rate plans are an alternative form of rate regulation.

Under the MRP model, costs are forecasted multiple years into the future.

Based on approved forecasts, the utility is provided a revenue increase.

This upends traditional consumer protections found under traditional rate regulation, such as the prudence review and the used and useful standard, shifting risks to ratepayers.

To help address these risks, MRPs have been designed with performance incentive mechanisms or PIMs.

PIMS are a regulatory tool that measures the performance of the MRP.

PIMS set targets for the company to achieve, which align with public policy goals.

They can incentivize performance through financial incentives or penalties.

Without PIMS and other safeguards, the utility is receiving an advance, a large paycheck without any guarantee it will do the job or any real need to show its work.

Thus far, the implementations of MRPs in the district have been deeply problematic.

This is due to issues related to forecasting, cost shifting, performance accountability, administrative burdens and litigation costs, and new risks posed by surging wholesale costs.

Let me turn to some of the risks associated with forecasting.

Revenue increases under the MRPs have been based on PEPCO's own forecast.

Warren Buffett once said forecasts may tell you a great deal about the forecaster.

They tell you nothing about the future.

Our data shows that capital expenditures are higher in jurisdictions with MRPs, and they have certainly resulted in ever increasing growth in capital expenditures and investments in the district.

With respect to formal case 1156, which was the first pilot, during the review of that pilot during in the next proceeding in 1176, we were able to find that 150 million dollars in expenditures were not made in accordance with what was approved under the plan in 1156.

Thus, we have a large sum of money and cost shifting that has gone from projects that were approved to projects and potential spending that was not approved.

To date, the commission has not done a prudence review of these unapproved expenditures.

These raise a few questions.

First of all, how should these investments which deviate be treated in calculating the rate base or the ROR or the utility's return on equity?

We believe that this legislation can provide some important protections and clarity on these issues.

MRPs are also justified often by the argument that they will promote investments in grid modernization and help in achieving clean energy goals.

But in 1176, the most recent MRP, we found that the funds and revenues that PEPCO were seeking were for investments that were businesses' usual expenses.

These were not transformative investments tied to any climate goals.

Again, this was over 90% of the investments in the MRP.

Finally, I want to shift back to the performance incentive mechanisms that I mentioned earlier.

The Commission once acknowledged that PIMs are, quote, integral to any MRP.

It has since seemingly departed from its own precedent, approving the last multi-year rate plan in Formal Case 1176 without any performance incentive mechanisms.

This was in Order 22328.

That order was subsequently overturned by the DC Court of Appeals.

Additionally, to our experience, MRPs have not resulted in reduced administrative or litigation burdens.

We have been litigating Formal Case 1176 for over three years now.

And without proper structures, regulatory uncertainty only stands to increase.

Then there are wholesale risks, which are a new uh affordability risk factor for the district.

Surging wholesale costs have really impacted uh DC businesses and also DC residents.

These increases are driven primarily by data centers, and they have led to record-setting bill impacts.

However, at the same time, district ratepayers have been locked into historic and consecutive increases in distribution rates through PEPCO's multi-year rate plan.

Because MRPs present fixed distribution rate increases year over year, MRPs lack the flexibility to address changing conditions in the wholesale market.

I want to just shift now to some of our recommendations.

It is important that the legislation that is proposed define what a multi-year rate plan is.

We believe a broad definition is best.

Any rate structure in which rate increases are awarded beyond a single year based on forecast should satisfy the definition of an MRP.

As far as the prohibition on reconciliations, language should be added to clarify that reconciliations should be prohibited where they permit the company to recover under earnings or result in additional charges to ratepayers.

Reconciliations serve as reviews and they are appropriate where they can result in credits or refunds to customers and can protect customers from when the utility is over earning.

Basically, forecasts are reconciled with the actuals.

Maryland passed this legislation this year.

Well, they passed initial legislation in I think 2025, but they've since clarified the language this year.

And so we believe that is appropriate.

A provision should also be added that the company be required to file a traditional test-year filing with an MRP application.

This will make it possible to identify alternatives under the cost-benefit analysis discussed in section A4.

It'll also support the uh section A1, which uh refers to having base rates be based on actual historic costs.

OPC strongly recommends that MRPs have performance incentive mechanisms, and that these performance incentive mechanisms can be can be and should be used in the cost-benefit analysis the bill discusses.

Tim should also provide quantitative and qualitative means of measuring benefits to ratepayers.

OPC supports the bill's requirements that MRPs provide quantitative cost benefits.

This is a provision that was consistent with what the commission prior stated earlier when considering MRPs.

However, in 1176, the last multi-year rate plan, PEPCO was awarded its plan without having to establish or show any quantitative benefits.

In conclusion, OPC supports the proposed legislation.

It provides certain protections, which were promised when the commission first began considering multi-year rate plans.

OPC's recommendations provide added consumer protections that are necessary for implementing MRPs, but are not necessarily exhaustive.

It may be necessary to pause future considerations of MRPs until additional regulations can be developed and the impact of wholesale conditions on district residents and the district can be properly examined.

Thank you.

Thank you very much.

And Chairman Thompson, I don't think we have a copy of your testimony, so just so we can make sure it's a part of the record for the hearing.

If you want to copy, I have a copy.

Yeah, we can work with you afterwards.

I just want to make sure we get a copy so it's a part of that.

Sorry about that.

No problem at all.

Um, thank you.

And um Chairman Thompson, you rightly pointed out, uh, because you have cases in front of you, I'm gonna work very hard to make sure that I'm not gonna ask anything specific to any cases that are there.

And try to talk about the legislation in general.

If I ask a question though that trips into a pending case, I'm gonna trust that you are gonna tell me you have a pending case about that, and you can't answer that.

Sounds good.

Um, so as I look at the legislation, um, it does not prohibit the use of multi-year plans, uh, but it does try to place conditions on their use.

So I'm gonna walk through some of the conditions that are in the proposed bill to flesh this out a bit.

One of those conditions is the rate proposal, quote, sets the proposed base rates on the basis of actual historic costs with allowance for adjustments to reflect known and measurable changes in costs for the rate effective period, end quote.

Is that something that is done currently, or would we consider that to be a new requirement when considering a multi-year plan?

Um I want to make sure I answer this without again um uh tripping on on on the case that's pending before us.

I mean, what I can say generally is um, typically, what the utility will propose is it'll look at what their spin plan is going to be for a forward you can plan and submit a set of projects that they want to construct over the lifetime of the MYP.

The commission, well, one, all the parties would then see this list, they get to say whether or not it's necessary, and then the commission would make an ultimate decision.

Presumably, this construction plan would be based upon what they've previously constructed.

So I guess I guess some of your historical uh costs, uh, but it would also again forecast what they think they need to build over the next two, three years, however long the plan is.

I'm not sure if that gets to your answer of your question.

Somewhat.

Um I guess I'll ask Mr.

Nayer the same thing.

Do you feel like that condition?

Would you deem that to be an entirely new condition for a multi-year plan, or do you believe that that condition is something that exists in the current consideration of a multi-year rate plan?

So in 1176, part of the multi-year rate plan included, or and certainly PEPCO's project uh revenue requests included some uh revenues that were uh kind of a holdover from the from the gap year between the first multi-year rate plan approval and their application.

So they did seek some historical costs.

Uh what I think this language is sort of ties to is something actually that OPC advocated in 1156, which was at the time we were creating a pilot, we were looking at a pilot, or at least it was approved as a pilot.

But we were arguing that we don't really have a lot of transparency into PEPCO's long-range plan.

Some of the components of that plan were proprietary, and so that if we had the ability to set that plan based on historic costs and then sort of adjust for inflation, that would be better in um looking at and structuring a pilot or structuring this initial MRP.

Um it would be it would be difficult, I think, to look at just historical costs because first of all, what are you going to look at?

You're going to look at historical costs that have been now part of a multi-year rate plan.

So you're gonna look back.

So there could be some challenges, but that's why we pointed to the filing of a traditional test year application, because again, those are those are based on a single year, they're based almost entirely on uh investments that have already been made, and then there are sometimes occasional forecasts for two or three months to round out the end of the year.

So we don't believe it would necessarily be an entirely new requirement, but it would somewhat butt against the idea that you want a multi-year rate plan that's based on projections and based on forecasts moving forward.

I will add that if we don't have an integrated distribution plan, if we don't have a climate solutions plan, if we don't have a built-in path to get to some of these climate goals, then it may be preferable to base a multi-year rate plan on actual historic costs if you have to do that.

But that's something we have to really look at.

Yeah, okay, thank you.

So earlier this week, when we had the public testimony for this hearing, PEPCO compared multi-year plans, the process to the district's capital improvement plan budgeting process.

While that might be helpful in explaining just the general concept of multi-year planning ahead, um, it's not remotely an accurate comparison because in our capital improvement plan, we have to follow a budget-constrained model.

So we have to have a balanced fiscal plan for our capital budget for multiple years out.

Um if I didn't have a budget constrained model, I guess every resident's gonna be getting a new school, a new library, a new pool.

I guess I could do anything.

But the discipline of a budget-constrained model helps us both do our long-term planning, helps us wrestle with the decision points we have to make around what investments are we gonna make, what reliability and services are we gonna deliver, and then what costs are we expecting residents to pay.

Um I don't have an ex a rapidly rising uh tax rate because we have to live in a budget constrained world.

Um so I don't think that was a fair comparison of what the what a multi-year rate plan looks like.

Um, Mr.

Thompson, I was gonna ask you, because I know you've been here the whole time and you heard some of the discussion in the first panel, um, one of the recommendations that's not in this legislation, but we saw in what's in front of New York right now as other jurisdictions are trying to think about this was a requirement for essentially a budget-constrained alternative to be put forward.

Um wanted to ask your thoughts about um, and uh you may not have had a chance to look at the New York legislation, so I'm not gonna try to ask you to speak specifically about a legislative proposal not in front of this body, but is there anything compelling or or worth exploring around a required budget constrained model and the data and information that would that would come with that compared to what then a proposal coming in front of the PSC under existing conditions would look like?

Yeah, um a few thoughts.

I mean, I think um, you know, certainly when you talk about the council working out of a budget-constrained model, I think um you know that that's somewhat debatable.

Um but putting that to the side, I think I would say that um I'm not I have not read the New York legislation.

I think that um, you know, if you look at this and it's gonna kind of goes back to the city administrator's presentation and DOE's presentation.

When you look at uh the investments in the system that were happening late 2000s, early 2010s, um, was a very small incremental investment in the system.

Um system showed that.

And I think continuously the question is, how do you balance investment in the system to support reliability, to support economic growth, support electrification, um, while not putting too much on the back of residents?

When I look at DC, you know, I think of um 2012.

Council entered into DC plug with PEPCO.

It's a legislative mandate.

Um you then had the construction of the new substation.

Southwest that is supported all that investment down there.

Without that investment, you would not have uh park stadium and Audi field the entirety of the wharf.

Um I move forward to Capital Grid, which is a program that was approved by the commission before I got here, a one billion dollar infrastructure program that um called for a new substation at Mount Vernon that put a 230 KV transmission line through the heart of the city that rehabilitate rehabilitated and expanded capacity on two other substations that allowed for additional hosting capacity uh for DER.

These are all investments that have supported future policies.

Um and so I give all that as background because one of the things I I think we have to be mindful of is create, and I say this all the time about all the legislation is creating strictures that then handcuff uh the commission and would then now allow not allow us to use our independent authority to try and do what's best for the the provision of the utility service in the district.

Our our goal is our mandate is to provide safe, affordable, reliable services, and so by picking a number um and legislating it, it may work and maybe not.

I don't know, but um I think there's a reason why some of these things have not been legislated over time.

Yeah, I I think that if we were to only look and say um the example of the investments you you highlighted are good ones, um, would those investments have taken place if there was a pressure or mandate to say rates can never go up?

Well then we probably wouldn't be making some of those big investments, right?

Um you couldn't make any of them if we can.

So there so there are smart investments that have been made uh that I think ratepayers should be willing to pay for.

Um what I guess the way that I'm interpreting the discussion around should there be a um a budget constrained model is does that create any additional information, data points, decision points that then help arm the public service commission with even more information to then figure out what is the right level of just, prudent, affordable, safe, reliable to then move forward.

Um if you're talking about in terms of the proposal of projects, um I don't want to say I would I don't I don't want to talk necessarily about the filings in 1176, but I would encourage you to look at them because there are classifications of projects, uh different types of projects that are needed for different things.

Um there is the ability of the commission uh to reject deny projects.

There is a commit the ability of the commission, and actually all the parties to look at what's been proposed, file DRs to ask why this project is needed, what's it fixing, what's it replacing, um, and that's all part of our process.

Um by you creating a or the council creating the standard, I mean, of course we would abide by it.

Um would have the possibility of leaving out some potential investments, possibly I don't know.

Um I think a great example you talked about the council's budget.

This year there were there were things that you guys wanted to fund that there wasn't money for, right?

And you had to go to the reserves, because having that constrained budget presented problems for you.

But these were important things.

And so I think if there are important things that have to be done that could create problems going down the local time, being fresh on a budget uh we just went through, the but the benefit of as painful as it can be of going with that budget constrained model is that it forces us to say, all right, if we're gonna make a policy choice, we are gonna dip into reserves to make sure we do this.

We have to say these are going to be the things that we say, all right, we've got to get these investments done.

And then here's our policy choice that has to happen, and then there's ramifications to that policy choice.

So I think the budget constrained part of it, it's worth us exploring more.

Uh we obviously it's not actually in this bill, but looking at it, I think more can help us wrestle with where can it be helpful?

Could it be harmful?

Um, so I I to me it's a it's a it's ripe for the conversation within this.

Let me turn it back to something that is in this bill.

Um, and that is one of the requirements in the proposal um says that uh to use a multi-year plan in this legislation, it quote, as to ensure it does not allow for the public utility to file for reconciliation of cost or revenue variances of the approved revenue component used by the commission to establish just and reasonable rates.

What would be the practical impact of a provision like that um that it's a restriction on multi-year rate plans to not allow for public utility to file for reconciliation of cost or revenue variances?

So on that one, um I would encourage you to look at our now vacated order.

Um it speaks to that.

Um that is probably going to be a subject in the in the now pending case, so I I don't want to speak to that.

I think it's inappropriate for me to speak to that, but I encourage you to look at our vacated order.

Um I believe it speaks directly to that issue.

Okay.

Or do you feel like you can speak to just what are the practical impacts of not having reconciliation?

Yeah, I mean, I think um I guess the effect of it would be if the if the company under earns um they would not be able to recover what they didn't earn.

Um that's the practical effect, unless unless I'm hearing it wrong, and please.

Yeah, Mr.

Nader, do you want to jump on up from your perspective?

Yeah, well, actually, in the in the vacated order, order two, two, three, two, eight, um, one provision that I didn't mind, and I'll council to keep it at that.

Um, was that there were not reconciliations that were uh that would permit the company to recover lost revenues.

That was allowed in 1156.

The commission did not renew that policy in 1176.

Uh, with respect to your question regarding reconciliations, the practical effect might be that there would be some confusion because reconciliations are sort of a term of art, which again I spoke to in my opening statement.

They refer to reconciling actuals with forecasts.

So that's why it's important to clarify that we don't want reconciliations which allow the the utility to then um recover uh additional revenues that they didn't recover that they didn't uh receive or were not able to earn during the MRP.

Uh that then you're you have really no protection against uh over earning.

Um but if you have uh the opportunity for customers or ratepayers to um receive a rate credit or some kind of compensation because uh there was an opportunity uh to to have that kind of um uh credit earned because the utility was over earning, then then that's a protection for the consumer.

So yeah, I mean, because reconciliation can move both directions, and I think the intent behind this, although maybe not well defined, and that's what you're trying to point out, is that it could go both the reconciliation go both ways.

And if the argument is a multi-year rate plan is the right way to move forward, um, because it could uh create longer term savings for consumers or ratepayers down the road, you wouldn't want reconciliation to go both ways, if that's the bargain you made for a multi-year rate plan.

Yes, exact if if you're a if you're a utility and that's the bargain that you made and you receive this uh uh funding up front or this revenue increase up front, yeah, you should not have the right to then file for reconciliation and ask for more money.

If you want uh additional revenues, then later on down the road you can file for another uh traditional rate uh increase through traditional rate making or file for another multi-year rate plan.

The consumer has no other recourse to you know earn back a credit other than uh a reconciliation.

So the way the legislation is written, there could be some confusion because you have the term reconciliation of costs in section A2, but then you also talk about or the bill also discusses uh that there should be a clearly defined mechanism for returning and refunding or crediting any excess ROEs to the customer.

So this bill seems to contemplate the value of uh refunding or crediting uh excess earnings to the customers.

So the reconciliation without further clarity in section A2 could add some confusion.

Uh we anticipate my next question because that's the first is we have another section that does that.

So I'm gonna this is the third time that you've interrupted the hearing.

I'm gonna ask you to please stop, or I'm gonna have to ask you to leave the hearing room.

Please stop.

You didn't let me.

Signed up to testify, ma'am.

You're still able to submit your testimony, would welcome you to it, please.

Thank you.

Mr.

Nayar.

So what I believe the int I trying to interpret the intent.

Uh so I believe the intent is that the recognition that there could be a credit or a refund that's doing is in the legislation's trying to outline that, is you what I'm hearing you say is that those two sections need to be perhaps merged into one section so that the legislative intent would be clear if this moves forward.

Yeah, well, I'll I I have actually um uh legislation that that Maryland used, and we we want to you can point to that legislation.

Um, and what happened was again uh Maryland proposed a reconciliation, a prohibition on reconciliations, and then they went back and added language to sort of clarify what they meant.

And what I would say is that you can simply add language that says it does not allow the public utility to file for reconciliation of costs or revenue variances of the approved revenue component used by the commission to establish just and reasonable rates if it would result in additional customer charges.

Something as simple as that.

So that way we know that we're talking about prohibiting uh having a prohibition on that on the utility favoring reconciliation or upward reconciliation.

Got it.

Mr.

Damrush, you seem to be nodding along on there.

Did you?

Yeah, I was just gonna say Maryland in the second piece of legislation added the very good suggestion from Anka, just to clarify in a manner that increases cost for consumers.

That's not what it's allowed.

It's simple fix.

Okay, go along with it.

Got it all right.

That's helpful though.

Yeah, all right.

Um and obviously much of this legislation applies only to home service commission's uh regulation of electric rates, but the final requirement then also applies to gas and requires that rate making quote cost-benefit analysis shall include a summary of available alternatives and a description of why those alternatives were not pursued in order to aid the commission's prudency review.

Um, Chairman Thompson.

How often does the commission reject projects or require them to be revised based off of that uh an alternative to not be pursued?

So uh the Project Pipes one and two, as they were initially implemented, uh, did not require, did not have a requirement that they prove that uh they show something other than replacement.

It was a replacement only program, um and that was consistent with the thinking.

Uh Project Pipes one and Project Pipes II, the initial project Pipes two were both implemented prior to my time at the commission.

Since since being on the commission, I have extended pipes too as we try to move to a new paradigm, which is uh commonly referred to as district safe or pipe street, whatever, what have you.

Um, what I would say with respect, because that's now a pending case again as well, to please look at our order in that case.

Uh, or you can even refer to the testimony when we talked about it back in March of what we had hoped to do there.

Um, but at this point now we have evidentiary hearings again, and so the case is needs to be decided again.

Okay.

Um I'm gonna turn from the bill itself to just any of the uh testimony that we heard from the city administrator and others.

I guess let me first start with the budget support act um subtitle that they advocated for that's before the council right now, related to third-party energy suppliers, um, or the retailers.

Um, so the executive is arguing we've got bad actors.

This is a tool we need to be able to help rein that in, protect consumers.

Um, you're not gonna be surprised.

We've heard from third-party retailers who say you're gonna drive us out of the market.

Uh, look at what happened in Maryland, you're eliminating consumer choice if you do this.

Um we heard today from DOEE saying you've got customers though that are paying 70, 80 times 80% times uh what the standard service costs would be.

Um Chairman Thompson, I believe you've testified in support of this BSA subtitle.

I don't want to put words in your mouth.

Is that correct?

That's fair.

Okay.

Um, Austin People's Council.

Have you taken a look at this BSA subtitle?

And do you have any feedback for the council on this?

I think at a basic level, um, you know, government has has its primary obligation is to protect its consumers.

Um, and I think we do know we can all agree that there are bad actors.

I think even the retail supplier association will admit that they are bad actors.

Um I think the steps taken in this bill um address that.

Now, it may result in some um call them good actors to decide not to participate in the market.

That's a business decision.

But given the impact of what the bad actors are causing, um, I know DOE, they're their funds that that are available, generally a lot of them go to those who have been duped, as opposed to those who just you know perhaps cannot just keep up under standard offer service.

So I think the steps that are taken um are necessary, and it's it's gonna be a business decision on the particle retail as to whether or not they want to exist in that environment, and I believe they can.

Okay, and as drafted, at least from the executive standpoint, they believe it's responsive to some of the concerns outlined from Maryland's legislation that had an even uh an even smaller price cap essentially, and I don't believe allow the Maryland PSC to create any type of exemptions in this proposal.

It's uh what's it what is in effect, 10% greater cap, but it then does create pathways where a third party supplier could go to the PSC to ask for a higher rate cap or other type of exemptions.

So it is that the way you're reading it as well.

So do you believe it's responsive to what the market experience has been in Maryland?

Um yes, I think it it has some flexibility.

Um, and I think we're gonna have to, you know, it will as we go forward, we're gonna have to make adjustments to it.

But I think it's a step in the right direction.

Okay.

And the only other thing I just want to add, Councilmember Allen is I think um, you know, one of the tricky things I think with third party suppliers are a lot of their plans, um, and we've talked about this, um, it really requires an educated customer.

And I think that's why the commercial side uh that has the resources dedicated to really monitor some of the terms and conditions of third party suppliers.

Uh that's why they do so well with it.

You look at the usage and almost completely flipped from residential side.

Um, because there's things such as usage thresholds that cause escalating prices that you don't necessarily have on SOS.

Um typically they're one year products that use a proxy price for the capacity price.

So instead of having that leveling that SOS has of a gradualism of the capacity price affecting uh the wholesale electricity price, you don't have that on the third party supply.

And so I think uh to Mr.

Daniels' point, I think you certainly will have some good actors who will be faced with the business decision on how they structure these deals.

Um, and that's that's that is going to be tough.

And then even with the exception, there's certainly the administrative burden that they will then have to decide is this is the juice work to squeeze.

Um but overall, I certainly think that we have to make sure we are protecting customers and so.

Okay, thank you.

Um based on what you heard from the presentation from the city administrator and budget director and DOE, um, was there anything that we haven't touched on within their set of recommendations that you wanted to touch on?

I know uh Chairman Thompson, I think you touched on some of that in your testimony.

But anything else that you wanted to either speak up in support of or opposition of?

Yeah, I mean, I I think there were a lot of great um items in there.

Um, you know, they talked about the RPS.

Um I think we're gonna can I'm not sure if I agree, uh well, I'm not sure if I fully understood something, but let me say this.

I expect I would think that the RPS is going to continue to increase as the RPS requirement goes up.

Um and that's that's a real amount that's played that's paid for by all customers.

Um that money just goes into then a select customers' pockets.

What I would also note is that um when you have solar in your home or business, a lot of people don't realize this, or maybe people realize it, you bypass a lot of the charges on the bill.

So we talk about the SETF, REDF.

If you have solar on your home, it reduces your consumption by reducing your consumption, you pay less on the RDF and SETF.

And so as we think about the surcharges we have, or uh whether it's those two or even RAD, right?

You are then shifting those costs to other customers.

And so I think we certainly need to be mindful about you know what it is we're incentivizing and how we're incentivizing it, making sure that we aren't squeezing the middle parts of our rate classes.

Um we talk about RPS, I think we talk about solar in D.C.

I think one of the things that's often missed, we think of it from an environmental point of view, but not necessarily from an energy point of view.

Um Peter and Peter please correct me.

When we say that there's five percent of the supply roughly from solar, that's if we're getting nameplay capacity.

Okay.

Okay.

But annualized or any given day?

Uh across the years, electric suppliers have to buy up to that amount that equates to 5% of the electricity sales they need.

Sorry, I was I'm referring really to what we generate in DC.

But I guess the point is when we talk about purchasing electricity from PJM, um, while the solar in DC does provide some relief because it's not supported by battery, um, the utility still has to ensure that there is sufficient electricity supply throughout the district.

We can't say um there's no power downtown because it's a cloudy day.

So while there is some savings that PEPCO can realize from the solar industrial, it's not as much as you think.

And I think we need to keep that in mind when we start talking about the cost and the benefit.

I think if we can figure out a way to incentivize battery, that really creates a resiliency that we talk about in terms of being able to generate and supply our own city.

So I think those were my notes.

Oh, you guys talked about PIMS, you know, PIMS were part of 1156.

Uh all the parties said we weren't ready for PIMS, put them to a work group, and the parties beat them to death and couldn't come to agreement in the work group, which is why I think well I'll leave it at that.

Um I purchased okay.

I think that's all I have.

Additional notes.

All right, that was in turn to OPC with the same question.

Um yeah, the uh presentation made by DC government and the city administrator was um uh very insightful.

I think the ideas that they put out um uh are great ideas, but I think I think we need to have a step back as a city and understand um how do we measure the effectiveness of all these things.

And I think what you you have to have first before you begin to even implement or spend any money on these programs is to understand what is the actual energy burden.

Um, and we you know we did a study back in 2020 that was citywide, and right now we're putting together a study that's going to be uh done by census tracking by Ward.

Once we have that data available, the ideas that were presented and others that can come along can be targeted to those areas that have the highest energy burdens.

Once we figure out you know why they have those burdens, then we can look at programs that can address specifically those.

Therefore, we're only spending money, we're spending money in a very cost-effective and targeted way, and also at the same time when we implement programs, we can find out just how effective these programs were to move the needle on on lowering the energy burden for those who are most impacted.

Um I think dynamic pricing was mentioned.

Uh, if we look back to thousand and eight, it's been a while.

Um we had a uh study here on dynamic pricing called Power Since DC, and it ran for a year, and it was part of the the merger, a merger condition actually from the first PEPCO connective um merger, and it was a two million two million dollar pilot program, and it ran for a year.

And uh one of the biggest results of that we found is that uh low-income consumers benefited the most, both in terms of reduction, reducing their energy, and also financially.

Uh they they receive the greatest benefit of all groups uh across the board.

And it it really combines the use of technology with thermostats, also devices in the home that would kind of give you an idea of how much you've spent you're spending day to day.

So you could be 12 days into the into the month, and you know, okay, I'm I've spent about $75.

I want to kind of pull back, have a conversation with PEPCO or other other providers to tell me how can I keep this from getting to $100.

Uh that kind of education and technology combination, I think can work can work well.

So I think the ideas are great, but I think we do need to have a measure, because you cannot measure which you can't manage, but you don't measure.

So once we have an effective measure that's a living document going forward, I think that's a good combination.

Okay, that's helpful.

Um, and then last question I wanted to ask that didn't come up in the uh executive's presentation.

Um, but there have been legislative, again, it's not part of the bills in front of us.

Um, and so if you want to get back with me on your thoughts, please feel free.

But there's also been a lot of legislative proposals in other states as we start to evaluate how other states are tackling different issues on the role of allowed return on equity, so the rate of profit on capital investments.

There was a recent Rocky Mountain Institute, a nonprofit nonpartisan think tank that said that ROE alone can account for 15-20% of a customer's bill.

Um, should part of the reforms that we need to be exploring be to look at what what is an allowable ROE.

Um, I don't know if you've got a chance to look at what other states might be considering in that regard, but would welcome any thoughts that you might have around how the district should either keep or reform how we look at an ROE.

Um I think you know, as I was just saying about energy burden, I think there needs to be a relationship or a balanced discussion about um the profitability of the utility and the status of the energy burden in the city, and make sure that there is it might not be a direct ratio, but there needs to be some relationship between the two.

Profits just can't keep escalating and the energy burden keep can't keep going up at the same time.

There has to be some reduction of the energy burden, and uh a reduction in the profitability can help lessen the burden that consumers pay.

Right.

But so we have some states that have said uh there should be a cap of um, I think some states their proposal these are legislative proposals, but uh no more than four percent of an ROE.

Um in some of our cases, we've looked at something that's closer to nine and ten percent of an ROE.

Um, I don't know what the right number is, and it would warrant a lot more conversation.

But is that a legislative proposal we should at least be exploring and wrestling with, or don't touch that.

I I'll say um, you know, I'm certainly aware of some of those proposals.

I'm thinking specifically of the one in Pennsylvania that came out not too long ago.

Um, I've actually had the opportunity to talk to some economists about this and not economists within the agency, but people who are thought of as smart in the field.

Um, and I think it goes back to kind of what my testimony was getting.

I think any type of legislative change that's going to get into a highly scientific process just needs to be thoroughly vetted.

There are questions about implementation on how these caps are going to work when you base it off of an index or this versus that.

What happens to um potential increased costs that the utility may have as a result of that, and because maybe harder for them to borrow money, increased borrowing costs.

Guess who ends up paying those increased costs?

The consumer, right?

And so I don't I don't have an answer.

I think my my if there's anything that you take away from today from me is please make sure that you are talking to very informed people, people who understand this, not people who have a vested interest in what's going on here in the district, but people like RMI.

I think RMI is an excellent organization.

Um, regulatory assistance project, excellent, excellent people, people who understand the issues, uh Brad or who can see it from both sides.

Um, but please just don't rely on, you know, quick fixes that are drafted and not thoroughly vetted.

Okay.

Um anything else from OPC.

Mr.

Nair?

Uh I just would say that typically ROE is based off of the risk that the company faces, and what they look at is uh certain companies that might have a similar risk profile, and based on that, the company would uh propose a potential uh ROE or return on equity.

Uh my argument to you would be right now we have, in fact, we don't be without a performance incentive mechanisms and certain safeguards.

We don't have a multi-year rate plan.

We have a multi-year rate, a multi-year rate increase on top of that.

Uh we haven't done uh and don't have a clear process to review some of these investments.

We don't know what targets uh we're trying to reach.

We don't have uh we have the the bill stabilization adjustment as well, which also helps add extra security to uh the utility.

So right now, I would argue as much as any utility one can think of, PEPCO is operating in a relatively risk-free environment compared to many other utilities and many other companies, but they're wanting repeatedly to try to have uh SP 500 type returns.

So I think that has to that has to be something that we have to take into consideration.

You have as much risk as as a US bond, but you're getting returns that are almost similar to that that you would receive um under uh the if you invested in the SP 500.

So that's just food for thought.

And to Sherman Thompson's point, um this is a very very technical issue, uh ROE, that is.

Um, and I do agree we have to have a stakeholder discussion.

It shouldn't just be the you know, the regulators, they're back people, but also on the consumer side.

I think all of them have to be in the room.

Um, and then they can come up with a set of questions uh that are important.

Those questions can lead to answers, those answers can lead to some policies that can be implemented.

Um I don't know what that looks like legislatively, how you say that legislatively, but I think that has to happen.

Um, you know, certainly we're getting ready to go to our uh uh National Association of State Utility Consumer Advocates, it's gonna be along with uh Nehru's advocacy.

Um, we do start to have those discussions formally on panels, but also informally, um, you know, in you know different rooms that we talk about issues like this, but I do think there needs to be that discussion between you know the ad what the impact of ROE is on consumers and the energy burden.

Yeah, it will and I think um you know there's kind of a thought on one of the other pieces that we heard from a lot of the public witnesses were focused on should rate payer should ratepayers be paying the salaries of lobbyists, executive, travel.

Um, other states have said no, uh ratepayer money doesn't go to that, that should come from your corporate uh profits and and your revenue there.

I don't know if that represents a massive share of your overall bill.

Um but at the same time, I have talked to plenty of ratepayers who've said, I don't think my I'm trying to pay, I want to buy my power.

I'm not trying to buy the lobbyist, the plane that takes them to where they gotta go, whatever it is like that's not what I want our ratepayer money to go to.

Um, and so I am intrigued as we look at the totality of this, the different places where we have different levers to pull and make change.

Mr.

Nayer, did you want to jump on that?

Yeah, I wanted to just add one thing, which is I mentioned prudency and prudence reviews.

It's important to note that when a company comes in with a rate application, and uh, and these applications, especially with multi-year rate plan plans have become even more massive.

But even under traditional regulation, it's not as if they have to prove that each one of these expenditures are prudent.

What happens is they file an application and then uh consumer advocates such as our office or other offices will look and say, okay, but hold on, we see an issue here, we see an issue there.

And so it's it's a painstaking process often.

When you have multi-year rate plans and these kinds of investments that are very forward-looking, we're all we're always playing catch up, and once you've already uh given the green light to have these kinds of revenue increases, then we have to come back after the fact and see where did things go wrong.

So, again, there's no regulatory lag.

So the incentive to have you know more extravagant offices or whatever.

I would just say that's probably something that you're gonna find more with a multi-year rate plan, potentially, where the expenditures are do not have to be proven to be prudent up front.

That's all I was gonna add.

I appreciate it.

German Thompson.

I'll just say that in 1180, uh, which was the most recent gas case, that very subject about lobbyist expenses was was highly contested.

And uh that was actually, I think I believe part of the evidentiary hearing that we had, and we discussed it in consistent with commission precedent.

We ensured that there were no costs recovered um for lobbying activities.

Okay, all right, thank you very much.

All right, I know with the uh attorney general's office uh that we also want to turn to.

Um, so I want to thank everybody for your testimony uh and look forward to following up with each of you on the proposals as well.

Right, thank you.

All right, so now we're gonna turn to the Office of Attorney General for the District of Columbia, and we have two folks that are testifying.

I have Shilpa Sadas Avam, Special Assistant Attorney General for Housing and Environmental Justice Section with OAG, and Michael Marr, assistant section chief with housing and environmental justice section with the Office of OAG.

And I might have mispronounced both of your last names, and I apologize.

I would ask you to please correct me.

I know I'm not allowed to speak because you already speak.

Miss Levinson, please stop.

Miss Levinson, I'm gonna have to ask you to leave at this point.

I've asked you repeatedly to stop.

Miss Levinson, please stop interrupting the other panelists.

We had the public portion, which you were signed up for.

50 people were here, Miss Levinson.

We welcome your testimony.

We did, and please would welcome to have you.

I don't know what that is, but we're gonna move on.

Please.

Thank you, Ms.

Ladinson.

Let's turn to the office attorney general now.

Good afternoon, Chairperson Allen and residents of the district.

My name is Shelpas Those of them, and I'm a special assistant attorney general in the housing and environmental justice section of the Office of the Attorney General for the District of Columbia.

I'll refer to it as OAG.

OEG represents the public interest in matters before the District of Columbia Public Service Commission, referred to as PSC.

OEG works to ensure that utility companies charge just and reasonable rates and operate in line with district climate law.

Alongside my colleagues, I handle OEG's work before the PSC.

We work in close coordination with the District of Columbia Department of Energy and the Environment, referred to as DOEE, and the District of Columbia Office of People's Council, referred to as OPC.

My testimony today concerns B26-0596, the Utility Rates and Rate Making Amendment Act of 2026.

I'll refer to it as Rate Making Act or Act.

OEG supports the rate making act and proposes recommendations to strengthen the bill's provisions so that it more fully protects district ratepayers from rising utility costs.

District residents are facing an unprecedented surge in the cost of their utility bills.

From 2021 to 2026, electricity bills rose by 93%.

In a single year alone, 2024 to 2025, the average monthly electricity bill rose by 31%.

That's $33 more a month or $396 more per year.

Alongside nationwide inflation and surge in gas prices, these increases are contributing to an affordability crisis.

This crisis is evident in the number of residents that have fallen behind on their bills.

Compared to 2020, there are 20,000 more district households behind on their electricity bills, and the average balance owed to Potomac Electric Power Company, PEPCO, has roughly doubled.

As of this May, one in four district households owe PEPCO money.

Low-income district residents are hit the hardest, with about 56% of low income district residents or low-income district households behind on their PEPCO bill.

As for gas, nearly 40% of low-income district residents were behind on their gas bill in 2025.

And since 2020, the average amount owed to Washington gas light company, Washington Gas has doubled.

With this affordability crisis in mind, OAG advocates for two interrelated goals.

First, affordability, particularly for low-income district residents.

And second, utility operation that is in alignment with district climate laws.

OAG advocates for both goals in PSC proceedings that set utility rates, analyze the cost effectiveness of utility investments, and ensure clean energy accessibility.

OAG works to combat rising generation costs, which make up about 59% of the average district's residential electricity bill.

To do this, OAG advocates for actions that both insulate district residents from rising regional supply prices and lower clean energy generation costs.

For example, OEG advocates for the greater use of long-term power purchase agreements to lock in cheaper renewable energy at fixed rates.

In addition, OEG advocates for faster, more efficient process to connect local and community solar to the grid.

This offsets generation costs for district residents and shrinks the district's carbon footprint in alignment with our climate laws.

OAG also litigates federal lawsuits to preserve funding and investment in solar and wind energy, helping to keep energy generation costs down.

OEG also works to control energy distribution costs, which make up about 25% of the average district's district residents' electricity bill.

OEG works to ensure that PEPCO and Washington Gas spend ratepayer dollars cost effectively and in line with the district's goals.

While part of the recent electricity bill increases stem from regional data center growth, and of course, part of this increase is from PEP.

Sorry.

While part of the recent electricity bill increases stem from regional data center growth, part of the increase is from PEPCO's current multi-year rate plan.

I'll refer to it as an MIRP.

In 2023, OAG intervened in PSC formal case 1176.

This is the case where PEPCO put forward the current MYRP and requested a hundred and ninety point seven million dollar revenue increase.

The case was recently remanded to the PSC by the District of Columbia Court of Appeals, and OAG will advocate at an evidentiary hearing on this plan in the fall.

Nearly two years ago, in formal case 1176, we warned that PEPCO's MYRP was likely to increase rates.

We argued that MYRPs, if approved, need well-designed guardrails.

To understand why requires knowledge of how utilities earn profit.

Public utilities like PEPCO and Washington Gas are constitutionally entitled to earn a fair profit on their capital investments, specifically on the physical infrastructure used to serve the district.

They do not profit on day-to-day operational costs.

So the more physical infrastructure that PEPCO and Washington Gas build, the more they earn for the lifetime of that infrastructure.

Put simply, PEPCO and Washington Gas financially benefit by building more infrastructure.

Returning to our concerns with the current MYRP, this plan overemphasized building physical infrastructure.

Traditionally, utility rates were based on actual past costs of providing service from a prior year.

The current MYRP broke that norm.

It allowed PEPCO to create its forecast of how much it would cost to serve the district for several years in advance.

This includes the cost of building new physical infrastructure.

That forecast in turn set how much ratepayers were charged and locked-in rate increases for the next several years.

The current MYRP was designed so that a higher forecast would produce higher utility revenue.

Once that forecast was approved, the plan was then structured to encourage PEPCO to spend up to the forecasted limit by building infrastructure.

This infrastructure would generate more revenue for PEPCO over decades, translating to higher electricity bills over decades.

Furthermore, the plan offered no incentive for PEPCO to spend below the forecasted limit because any leftover money would go back to district ratepayers.

While some infrastructure spending improves electricity reliability, the MYRP gave no weight to cheaper improvements that could achieve the same reliability, such as non-wire alternatives.

Because the MYRP did not classify cheaper alternatives as capital investments, the plan offered no incentive for PEPCO to adopt them and spend less.

Ultimately, the design of the current MYRP favored building costly infrastructure over pruned spending that would result in lower electricity bills.

The MYRP's only safeguard was a review of PEPCO's money after the money had already been spent.

This review was ineffective because PEPCO did not provide sufficient information for others to verify whether any given investment was reasonably priced or truly needed.

The current MYRP had no functional check on whether ratepayer money was spent cost effectively.

Our predictions about the current MYRP came to pass.

PEPCO's forecasted costs grew sharply.

Its cost to serve the district in 2026 is nearly 100 million dollars above the actual average cost to serve the district over the past six years.

We warned that PEPCO's MYRP increases would come at the same time as a steep increase in regional electricity generation prices.

They have.

Today, district residents are squeezed from two directions at once by increasing generation prices and PEPCO's distribution cost increases.

The rate making act is a step forward in bringing this affordability crisis under control.

The rate making act here arrives at a critical moment.

It targets the incentive problems present in the current MYRP by adding much-needed guardrails.

These guardrails include basing rates on historic costs rather than projections and requiring a cost-benefit analysis for utility investments.

To further the Act's purpose, OAG offers three recommendations so that future MIRPs cannot be designed to subvert the act.

First, the rate making act should define the quote rate effective period, unquote, to cover each year of an MIRP.

The bill takes a strong step by requiring that rates are based on the district's actual historic costs and not forecasts.

This mirrors traditional rate making and prevents rates from being built on a utility's self-generated forecast.

But the bill, as currently written, does not define, quote, rate-effective period, unquote.

So it's unclear whether the historic cost requirement applies only to the first year or to all years of an MYRP.

Therefore, OAG recommends defining rate effective period to cover all years of an MIRP to prevent unreasonable cost increases throughout the duration of the plan.

Second, the rate making act should require that any adjustment that, quote, any adjustments to reflect known and measurable changes in costs, unquote, be tied to an objective external index, such as the published measure of inflation.

For example, PEPCO's first MYRP pilot plan anchored the first year of rates to actual historic costs and escalated the costs for each subsequent year by 2.17% according to the rate of inflation.

Tying adjustments to an objective external index would stop utilities from inflating rates via self-generated cost adjustments that serve their own profit interests.

Third, the rate making act should require utilities to disclose all informational inputs underlying their cost-benefit analyses.

In formal case 1179, we argued that Washington Gas's multi-billion dollar pipe replacement plan would raise gas rates with no guarantee that ratepayer money goes to cost effective replacement or urgent repairs.

This plan pending approval in formal case 1179 would collect 215 million dollars over three years from district residents via a surcharge on gas bills.

The rate making act's cost-benefit analysis requirement is a strong first step towards examining this type of future spending.

To strengthen this provision, a requirement that a requirement that utilities disclose all inputs underlying their analyses would allow OEG to thoroughly examine whether rate payer dollars are truly used to serve district residents and not just the utilities bottom line.

In sum, OEG is grateful to Chairperson Allen and this committee for confronting the district's rising utility bills and for advancing this important legislation.

In addition to our recommendations noted in this testimony, we stand ready to work with the committee to further enhance the bill's goal of protecting district ratepayers from unaffordable utility costs.

Thank you, and I welcome any questions.

Thank you very much.

And then Mr.

Maurer, are you here just to help answer questions, or did you have testimony yourself?

No, I'm here to assist.

Okay, excellent.

All right, thank you both very much.

Um we look at in your testimony you highlighted public utilities, PEPCO, Washington Gas, they're legally entitled to earn a fair profit for their capital investments, specifically on physical infrastructure used to serve the district.

Um utilities don't profit off operating the infrastructure, as you noted, but they do profit from building it.

So this means that tightly regulating this spending is vital, and that each plan builds upon itself very quickly.

What are some of the guardrails on either district safe or on multi-year rate plan process that you feel I guess do you feel like any guardrails there now?

Um, that you would highlight and say, well, you're advocating for the legislation and further guardrails.

Are there any guardrails that you see in place right now that you think are uh are worth preserving that you feel like have been effective?

So formal case 1179 and formal case 1176 are still subject to ongoing litigation, so I'll refrain from commenting too much on those plans.

I will note though that based on the testimonies set forth earlier, uh we did find very helpful the inclusion of a cost-benefit analysis, which helps in the practicality of assessing whether certain investments are prudently made and prudently incurred.

Um, so I would I would turn towards those analyses and uh the guardrails that are in place in the suggested legislation as uh some of the most important points of advancement.

Okay.

So would it be fair to say at least those actions?

OAG is satisfied with the public service commission's actions thus far, only in respect to those elements.

You're obviously advocating for more.

So OEG, given our ongoing litigation before the public service commission, uh, we've we've made arguments that are in publicly filed briefs, and uh that specifically refine certain points that I've made earlier on my testimony regarding uh district safe and um the MIRP proposed in 1176.

Uh we stand by those positions and uh continue to make the uh suggestions made here today with respect to uh the legislation on the rate making act.

Okay, got it.

I would just add, Mr.

Allen, that you know, we are uh as my colleague says advocating before the commission, so we can't really go much beyond uh saying what we have said uh in these formal cases.

Okay.

Um we'll try our best to keep the questions focused on the bill in front of us.

Um when you walk through the three different recommendations you have.

Um, one of which is defining the rate effective period, is it defining it differently or or just defining it at all?

It what where's your concern?

So we didn't find a definition for rate effective period within the legislation itself.

We think it is important to clarify any potential ambiguities with respect with respect to what that exactly means when we're addressing multi-year rate plans.

We're obviously covering several years, um, potentially up to three years.

So it's important to at least define uh what that period entails, if that's a part of the plan, is that all of a potential multi-year rate plan?

Um, so our suggestion would be to define that.

Got it.

Um, and I know you you were here during some of the discussion I had on the previous panel around OPC's concern that the provision related to reconciliation, and then the subsequent section focused on a credit, a refund, a rebate, that um those need to be tightened in a way to make it clear reconciliation can only go one way.

Is that do you did you agree with their assessment?

So we don't have specific language to uh assess that specific provision or offer as a suggestion, but we uh echo OPC's concerns regarding the reconciliation clarity, um, to ensure that it's a one-way reconciliation mechanism and that there is a clear path forward towards uh ratepayers getting uh credits on their bill.

Okay.

Um for your second recommendation, you talk about tying adjustments to an objective external index.

It would prevent utilities from inflating rates via self-generated cost adjustments.

Can you add a little more about what type of external indices you would recommend to be used?

Are there other states that you've seen an external index that's used that you would point to as a standard?

So we primarily looked at PEPCO's first MIRP pilot plan, which anchored the first year of rates to historic costs and then escalated based on an adjustment of 2.17%.

That was based on an inflation index uh two objective inflation indexes.

Obviously, they vary between indexes and location, and this ultimate 2.17 was averaged out between two different inflation indexes.

So we would we're not specifically tying or recommending a particular inflation index, but we just recommend that more broadly an objective external index is used.

Okay, but was this 2.17?

Am I hearing you correct?

It was an extra, it was two external indices averaged.

Yes, yes.

And so you're saying just pick one.

Uh we're not necessarily stating that one has to be required.

We just.

So to the extent that there are logistics in determining what is the best objective external index, whether that's multiple different indexes averaged together, or another form of calculation, we'll refrain from tying any hands on that.

But our main purpose is to ensure that there's an objective external uh index to compare from.

Yeah, I I would just add, uh council member Allen, we're we're not proposing a specific index.

I mean, we'd be happy to look at options that you know staff may propose and and give thoughts on that.

I think the the the key concern here is the ambiguity that there's, you know, um just saying measurable changes in costs doesn't, you know, without tethering it to something more specific, um, creates an opening that you know could cause mischief.

Got it.

Okay.

Um devil's advocate on this.

Um we have an incredibly volatile uh federal executive branch, um, has driven up inflation costs, one day decides to put tariffs on one place, next day decide something else.

Um, from a predictability of the expenditure for infrastructure investments can pose a challenge.

And so if we are capping and saying this is the index by which you cannot recover greater than, is the risk I run by getting a multi-year rate plan that these uh these volatile aspects could actually make that infrastructure investment I was going to make actually now significantly higher, or is your answer kind of to that potential risk, but you chose to go into a multi-year rate plan in the first place.

And so therefore you are you are entering into risk, and if there are additional costs, that's coming from your corporate revenue, it's not coming out of the ratepayers.

Is that kind of the answer?

Yes, I think we would agree with that.

And to add on, um, one thing that is often missed in these conversations is that utility naturally will take on risk when pursuing investments, and our goal isn't to ensure that the utility has absolutely no risk involved in making these investments.

So it's important for a multi-year rate plan to be tied to an objective external index, such as inflation, and to the extent that there are variabilities in the market, uh, that is something that uh the utility will have to at some point assume some amount of risk.

Yeah, okay.

Um, all right, and in your third recommendation, you said to strengthen this provision or requirement that utilities disclose all inputs underlying their analysis would allow a thorough examination of whether rate payer dollars are being used to serve district residents, not just utilities bottom line.

Can you say more about what does that look like for the public service commission, for example, in their evaluation?

So typically in uh rate cases or uh a case such as WGL's Washington or WGL's pipeline replacement case, um the utility will provide certain filings that are required.

And in those filings, oftentimes at proceedings, we'll have to engage in discovery to obtain the information that was used to uh substantiate those filings.

Now, one thing that would be really important and crucial for our assessment of any cost-benefit analyses are the informational inputs that underlie that analysis, so that um any utility that puts forward a filing that has a cost-benefit analysis, we have the information accessible to how they came to the final conclusions made in that analysis.

So essentially we want to make sure that we can double check the math, see what all what's going on behind uh some of these analyses, these analyses put forward.

Sorry.

And did you catch DOEE's testimony where they talked about uh one of their recommendations was um identifying performance incentive mechanisms?

Um I don't think you spoke specifically to that in your testimony, or I might have missed that.

Do you agree with DOE's recommendation that we should be exploring that as well?

So we don't have a specific position on performance enhanced or incentive mechanisms.

In formal case 1176, we have briefing on the matter uh that I would encourage you to refer to, uh, specific to nonwire alternatives and uh that option as a performance uh as a p as a PIM.

Um, but as of currently, we don't have a specific uh position with respect to DOE's broader uh argument with respect to PIMS that they mentioned earlier.

Okay, but we could look to uh your filing.

Yes.

Okay.

Um we also heard recommendations, for example, from um, we had kind of a longer conversation around budget constrained options as well.

I didn't know if you had any thoughts on whether further requirements around any proposal has to have budget-constrained options in front of it to help.

I thought Chairman Thompson was right, of course, that we do have to debate what investments we have to make and if uh sometimes that investment is what is a necessary investment and it will end up costing ratepayers, but that's because we're increasing reliability, increasing uh that service, but a budget constrained model can help really stress test those decision points.

Did you have any thoughts around that recommendation?

We don't have a developed position on a budget constrained model.

We haven't uh taken the time to really have internal discussions on that, uh, but we will continue to explore variable opportunities and options to address some of these rising costs.

Okay.

Um let me go back to the cost benefit analysis for a second.

So we had received testimony that criticized the cost-benefit analysis process as a whole and suggested that we tie this analysis directly to improving distributed energy resource planning or additional climate energy planning.

Um PSC is already required to include climate energy planning in its orders, but we don't see this emerge in the PSC decision making necessarily.

Is it OAG's opinion that DC's climate energy laws, including our clean energy DC Omnibus Amendment Act 2018, are not being carried out because they're not putting in climate energy planning into those orders.

Um could you specify the climate energy planning that you're referring you're referencing?

So specifically distributed energy resource planning.

Okay.

So OEG's position would be that it's it's important more broadly that uh district climate laws and making these investments in uh approving these rate plans, uh, district climate laws are kept in mind with respect to our targets, our pacing, etc.

Um, with respect to current PSC decisions and decision making.

Well, again, kind of refrain from uh taking a specific position considering that we have two ongoing cases.

Okay.

Yeah, I would just add, you know, uh obviously we can't comment on the range of PSC decisions and what the PSE considered or did not consider.

But as my colleagues said at the outset, we in OAG are focused on the you know the twin goals of affordability and the dis and achieving the district's climate goals, and those are not mutually exclusive.

Okay, got it.

Um when we look at the PSC docket formal case 1186.

Is that one that you can speak to?

Um that's an ongoing proceeding at the moment.

Right now, it's it is focused on gas planning and there are coalitions and uh discussions that we work closely with DOE on.

Um, but I I to the extent you have a broad general question, we can hopefully answer.

Part of the discussion has been an energy affordability metric.

Um discussing that in concept so far.

Didn't know if OAG had any specific thoughts that it was outlining around establishing that type of metric.

But again, if you are actively in a formal case, I don't want to put you in a position where you're speaking uh in a case that's pending.

Yeah, uh we would refrain from speaking on that, but at the moment we are having internal discussions uh and working closely with DOE on the matter.

So, all right.

Not gonna ask about another formal case.

Um we talked a good bit today actually about the um the budget support act subtitle related to the um third-party uh energy suppliers or uh retailers.

And we've gotten a lot of testimony uh around this, both uh as you would imagine, directly from our third-party retailers that are saying this is gonna drive them out of the market.

Um, I've asked kind of every panel here kind of what some of their thoughts are on this.

It I don't think that it's wrong that we would essentially have um we would have retailers leave the marketplace.

Don't know if we would mirror exactly what's happened in Maryland or not, but I do think it's a reality.

Um, I think we're trying to go after bad actors.

I think their argument is it's overly broad, and so you're gonna catch everybody in that.

Heard from DOE today say we have a large number of households that are paying 70, 80% more than what they should be.

OAG has been pretty strong on this, so trying to help protect consumers.

Are you in support of the BSA subtitle?

Are there any concerns you have around what we saw experience in Maryland and changes or uh amendments we should think about before taking action here in DC?

So to OEG's action specifically on third party energy suppliers, we have issued a consumer alert uh to district residents regarding some of the deceptive and potentially legal sales tactics that some of these third party supplier energy suppliers are engaging in.

Um so we we're definitely aware of the issue and believe that it needs to be addressed on a systemic level as to a lot of these, uh, a lot of these, a lot of customers who are put into plans where the rates increase very drastically over a large period of time, as Peter from DOE mentioned, quite a few of them experience rates that are 50 80% higher.

Um so to that end, we do uh we do support uh DOE's position on that bill and uh we we reflect kind of the consideration and thought process that has that Peter had put forward earlier on that issue.

And I would just add that you know, we would be delighted to examine any proposed legislation on that issue because obviously it is a big problem that folks have identified.

Yeah, okay.

Um, would welcome your thoughts if you want to look at what has been proposed in the BSA subtitle.

Um we have we're voting on it on Tuesday.

Um, so any ideas or recommendations would be helpful by then.

Uh the challenge I think also is how do we look at the experience in Maryland and evaluate did that was that good or bad?

Um, what's the impact on our ratepayers right now, and in particular where we have um low income, medium income households that are paying exorbitant rates, and then I do wrestle a little bit with if we have um scams, illegal actions.

Is that an enforcement issue or is that a legislative issue for all third party retailers?

And so those are some of the things we're trying to wrestle with over the next uh coming days uh to figure out whether that should be part of the BSA here.

And I think the other uh ask that we've gotten is should that be a legislative proposal, but not as part of the budget, that should be a standalone piece of legislation to to hold a dedicated hearing just on that to then decide how to move forward with it.

I don't think there's a disagreement about going after bad actors and protecting consumers.

I think uh it's a bit of a process question, maybe even, but exactly what we do, but would welcome your thoughts on it if you have time this weekend.

Yeah, thank you.

Thank you.

Um, all right.

Uh, because again, I don't want to ask you about formal cases you have you are weighing on in front of you.

So um I don't have any further questions uh at this time, but really appreciate your testimony.

Thank you.

Thank you very much.

Thank you all very much.

All right, this is gonna conclude the committee's public hearing on utility rates and rate making amendment act of 2026, as well as the related legislative proposals to lower gas and electric rates.

Want to thank everyone who provided testimony.

The record for today's hearing closes on July 13th, 2026, and you can continue to submit written testimony to the council's hearing management system at Limbs.dc Council.gov backslash hearings until then.

The next scheduled meeting of the committee will be July 8th, when the committee would be holding its next markup.

There being no further business before the committee, the time is now 4 16 p.m.

and this public hearing of the committee on transportation and the environment is now adjourned.

Thank you.