Public Hearing on Utility Rates and Rate Making Amendment Act of 2026 and Related Proposals - July 2, 2026

Councilmember Charles Allen (Ward 6) reconvened the public hearing of the Committee on Transportation and the Environment on Thursday, July 2, 2026, at 1:17 PM in Room 500 of the John A. Wilson Building and via Zoom. The hearing had been recessed on Monday, June 29, after hearing from approximately 40 public witnesses. This session focused on government witness testimony regarding Bill 26-596 – the Utility Rates and Rate Making Amendment Act of 2026 – and additional executive branch proposals to lower electric and gas rates. The bill would require the Public Service Commission (PSC) to base multi-year rate plans on historic test years without reconciliation, specify refund mechanisms for excess return on equity, and require cost-benefit analysis for gas infrastructure projects. The hearing featured three panels: (1) the Department of Energy and Environment (DOEE) and the Office of the City Administrator; (2) the Public Service Commission and the Office of the People's Counsel (OPC); and (3) the Office of the Attorney General (OAG). The written record remains open until July 13, 2026.

Public Comments & Testimony

• The first portion of the hearing on June 29 included approximately 40 public witnesses whose suggestions raised important questions about future energy program design. DOEE Director Richard Jackson expressed appreciation for the depth of engagement from residents, community organizations, and businesses.
• The Chair noted that the public comment period for this hearing is closed, but written testimony will be accepted through July 13, 2026.

Discussion Items

Panel 1: DOEE and City Administrator

• City Administrator Kevin Donahue and Director Jackson, joined by DOEE Energy Policy Advisor Peter Damrosh and Deputy City Administrator Jenny Reed, presented a comprehensive analysis of rising energy costs and a seven-part solution set. They highlighted that average annual residential electric bills grew only 8% from 2015 to 2022 but surged 56% from 2022 to 2025. Without changes, the average annual bill could exceed $3,000. They attributed the increase to regional generation costs (driven by data center demand and PJM market rules), transmission costs, distribution investments, renewable portfolio standard (RPS) costs, and surcharges. The RPS cost grew from $65 million in 2020 to $272.6 million in 2025, far exceeding the $123.4 million total multi-year rate increase approved for Pepco.
• The executive branch offered qualified support for Bill 26-596, recommending amendments to include performance incentive mechanisms (PIMs) for grid interconnection speed and peak demand reduction, and promised to provide additional technical suggestions after the hearing.
• Proposed solutions included: (1) collaborating with other states to pressure PJM for market reforms; (2) balancing infrastructure investments with affordability, possibly using budget-constrained models; (3) expanding demand-side measures such as time-of-use rates, battery storage, and energy efficiency; (4) streamlining local solar deployment; (5) resetting the RPS to align with the district’s 2045 climate goals and freezing the solar carve-out at 10%, which could save residents approximately $15 per year; (6) strengthening oversight of third-party energy retailers through a Budget Support Act subtitle; and (7) maximizing use of district-owned land for energy projects.
• The Chair questioned the executive on the RPS proposal, noting that benefits such as reduced energy purchases and local economic development were not fully captured in the cost-only analysis. DOEE acknowledged the need for further stakeholder engagement. The executive also discussed the BSA subtitle on retail suppliers, stating that the average residential retail customer pays 70% more than Pepco’s standard offer service, and low-income customers pay 80% more. They argued the proposal, which caps prices 10% above default service and allows PSC exemptions, is more balanced than Maryland’s approach.

Panel 2: Public Service Commission and Office of the People’s Counsel

• PSC Chairman Emil C. Thompson provided context on the bill, noting that the commission regulates only 27% of the electric bill (distribution), while 57% is generation supply costs (not regulated by PSC). He reported that generation supply rose from $35/month (2020) to $80/month (2025), largely due to capacity costs increasing from $29/MW-day to $330/MW-day and RPS costs. He cautioned against hasty legislation, emphasizing that rate-making is a complex, evidence-based process and urged the committee to consult independent experts. He noted that DC’s residential rate (25.41¢/kWh) is lower than other high-clean-energy jurisdictions (e.g., Connecticut 32.24¢, California 35.25¢). On multi-year plans, he stated the commission has no preference between traditional and multi-year, but stressed the importance of upfront planning and stakeholder processes. He opposed rigid legislative caps, citing potential unintended consequences. He supported the BSA subtitle on third-party suppliers as a necessary consumer protection.
• OPC Senior Assistant People’s Counsel Ankur Nayar expressed support for Bill 26-596, arguing that multi-year rate plans have shifted risk to ratepayers without commensurate benefits. He noted that Pepco’s first pilot saw $150 million in unapproved expenditures. He recommended clarifying that reconciliations should only be allowed when they result in customer credits (not upward charges), requiring MRPs to include PIMs, and mandating a traditional test-year filing alongside any MRP application. He also called for a pause on future MRPs until safeguards are developed. On the BSA subtitle, OPC supported the crackdown on bad actors but warned of administrative burdens for good actors.
• Chairman Thompson also highlighted the need for transparent trade-offs, using DC Water’s clean rivers project as an example of public buy-in despite a 141% rate increase. He noted that solar customers bypass many surcharges, shifting costs to other ratepayers.

Panel 3: Office of the Attorney General

• Special Assistant Attorney General Shilpa Sadas Avam testified that OAG supports the bill and offered three specific recommendations: (1) define “rate-effective period” to cover all years of an MRP to prevent arbitrary increases; (2) require that any adjustments to “known and measurable changes” be tied to an objective external index (e.g., inflation); and (3) require utilities to disclose all informational inputs underlying cost-benefit analyses. She stated that electricity bills rose 93% from 2021 to 2026, and 20,000 more households are behind on bills compared to 2020. OAG also supported the BSA subtitle on third-party suppliers, citing deceptive practices and a consumer alert already issued.
• OAG noted that Pepco’s current MRP overemphasized capital investment with insufficient guardrails, leading to a nearly $100 million increase over historical averages.

Key Outcomes

• No votes were taken; the hearing was informational and will inform potential amendments to Bill 26-596 and other legislative proposals.
• DOEE and the City Administrator will provide a written list of technical amendments to the bill after the hearing.
• The executive branch indicated it plans to introduce a comprehensive legislative package in the future, possibly in multiple bills, after summer discussions.
• The BSA subtitle on third-party energy suppliers is set for a council vote on Tuesday, July 7. Several panelists supported it but noted potential implementation challenges.
• The written record remains open until July 13, 2026, and may include additional testimony from interested parties.
• The committee’s next scheduled meeting is July 8 for a markup of other legislation.