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Suzanne Merkelson

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Is Pepco Spending Your Tax Dollars Lobbying to Increase Rates for Its Shoddy Services?

Posted: 07/02/2012 12:12 pm

The Washington, D.C., area experienced incredibly severe storms on Friday night, the kind that, with an unprecedented number of downed trees, can only lead to extensive power disruptions -- 1.5 million were without power for at least part of the weekend. Yet three days later, 25 percent of households and businesses in the area still don't have power -- and some aren't expected to get it back until next Friday (or even later!), a full week after the storm. This is happening amid a record-setting heatwave that isn't just inconvenient and sticky. 100-plus degree days without access to air-conditioning can be deadly.

Pepco is the company that provides most electricity to the area; with what essentially amounts to a natural monopoly on power services to Washington and parts of Virginia and Maryland, consumers don't have a choice in who provides their power. This doesn't mean Pepco necessarily has great service (as most any DC area resident can attest). Yet for the past few years, Pepco has repeatedly lobbied to increase their fares, which DC public advocates dismiss as unfair, given the company's poor track record. Pepco ranks in the bottom 25 percent of  utility companies, based on day-to-day reliability.

One way to fix this problem would be to move power lines underground, an admittedly expensive endeavor that could cost anywhere from $3.5 million to $11 million per mile.

Local politicians, like customers, are fuming at the utility company. "Nobody will have their boot further up Pepco's backside than I will," said Maryland Governor Martin O'Malley (D).

Yet, Pepco, like so many other major corporations, is guilty of exchanging money for power for even more money. Pepco is a top donor to area politicians including Maryland Reps. Steny Hoyer and Donna Edwards, as well as D.C. Representative Eleanor Holmes Norton.

O'Malley himself has a complicated relationship with the power company, as Washington Examiner columnist Mark Newgent documented two years ago. Right after O'Malley called for investigations into another atrocious power outage in Maryland, the company and its executives, board members, and PACs donated nearly $20,000 to his campaign. Less than a month later, O'Malley approved a $21 million contract for Pepco to do work on BWI-Marshall Airport.

Meanwhile, Pepco is one of the "Dirty 30," one of 30 Fortune 500 corporations that pay less in federal income taxes than they do on federal lobbying efforts, according to a report from U.S. Public Interest Research Group and Citizens for Tax Justice. Pepco has an effective federal tax rate of negative 57.6 percent -- meaning the company gets more in refunds, rebates, and credits than it pays in taxes each year. Pepco makes $508 million each year from taxpayers, while spending $3.8 million annually on lobbying. The company has lobbied on tax issues in the past, including one filibustered bill that would have ended the requirement that government entities withhold three percent of payments to vendors.

Currently, Pepco is asking the D.C. and Maryland Public Service Commissions for permission to increase rates for customers by 4 to 5 percent. You have to wonder just how much of your tax dollars are going to fund Pepco's lobbying efforts to charge you even more for its terrible service.

 

Follow Suzanne Merkelson on Twitter: www.twitter.com/suzmerk

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