Power Company Seeks Rate Increase to Pay for Pension Losses

April 19, 2010 (PLANSPONSOR.com) - Delmarva Power of Delaware is asking state regulators to alter the way its rates are calculated so that customers rather than stockholders make up for pension fund investment losses.

The Delaware News Journal reports that the company wants Delaware electricity and natural-gas customers to make up for the losses by having pension fund contributions fully counted in the rate base, including any excessive gains and losses through investment.  

The request is part of Delmarva’s pending rate increase case now before the Public Service Commission, which would permanently raise the delivery portion of customers’ bills by 3.7% — or roughly $5.49 per average residential customer’s monthly bill, according to the news report.  

The rate increase would raise $26.2 million in additional annual revenue for the Delaware utility. About $8 million of the proposed revenue increase would be used to replenish the pension fund, and Delmarva is seeking to recover another $4 million from its natural-gas customers.  

The news report said Janis Dillard, deputy director of the Public Service Commission expressed some skepticism about the power company’s request, noting that when Delmarva’s pension investments did well, the earnings were not returned to ratepayers in the form of refunds.