D.C.’s Utility Watchdog Keeps Failing Ratepayers

As electricity bills soar, the Public Service Commission continues to approve higher utility profits.

Credit: iStock/JHVEPhoto

By Pat Garofalo, Director of State and Local Policy

This past spring, two commissioners on the D.C. Public Service Commission, the district’s utilities regulator, secured a clear path to reappointment. Mayor Muriel Bowser chose to renominate them despite a track record of favoring the interests of Pepco, the investor-owned utility that services D.C.

But the renominations barely registered as news. Even though they should have. Since 2017 alone, the commission has approved roughly $245 million in added revenues for Pepco. These are staggering numbers that deserve scrutiny. Instead the renomination move underscored an unrelenting complacency when it comes to utilities — an acceptance of a status quo that prioritizes the interests of for-profit monopoly corporations over that of D.C. families and businesses.

It also offers a lesson. While D.C. has little recourse when it comes to larger supply costs tied to our regional grid, it does have direct oversight over Pepco’s distribution of that electricity within the district. D.C. residents can’t vote for public service commissioners, but they do have the power to choose the mayor who nominates commissioners, as well as the council members who have to confirm these appointments. And when considering who to vote for in two weeks, who will be the best steward when it comes to rising utility bills should be weighed heavily.

This year alone D.C. residents reported increases of hundreds or even thousands of dollars on their electricity bills. Between March 2021 and March 2026, distribution charges regulated by the Public Service Commission rose 49 percent, driven by a series of rate increases by Pepco, whose profits have nearly doubled since 2017, from $205 million to $401 million, while its parent company, Exelon, reported $2.8 billion in profits last year.

And the case for whether these rate hikes are even necessary is dubious at best. This isn’t about grid reliability or efficiency. This is about Wall Street and out-of-touch utility executives. Today, almost 12 cents of every dollar paid by Pepco customers goes to corporate profits. In its most recent rate case, Pepco requested a 10.5 percent return on equity, which is significantly higher than the 9.75 percent median authorized in all electric utility rate cases in the first quarter of 2025, and well-above the 6.7 percent long-term aggregate market return that Wall Street asset managers project.

Pepco and the PSC also earned a recent rebuke from the courts, which determined they skipped out on key evidence-gathering steps while approving a recent rate increase. Even so, the PSC is reportedly still considering allowing the rejected rates to stay in place until it completes the court-ordered steps this fall, despite justifiable calls for refunds, or at a minimum, lower rates in the interim.

Remedying this situation requires several steps. The first is not repeating the failures of the past. Going forward, the council should thoroughly vet PSC candidates, beginning with these two, to determine whether advancing them is consistent with the public interest.

Second, focusing attention and resources on recruiting qualified candidates and screening potential nominees should be a critical pillar of the city’s affordability strategy. Commissioners serve as independent decision-makers in a role that has been likened to the “U.S. Supreme Court justices of energy.” All PSC candidates should be pressed on their willingness to rigorously vet utility spending requests, challenge the status quo regarding who gets a seat at the table in energy policy decision-making, and champion utility affordability for customers ahead of corporate profits and exorbitant CEO pay.

There are other levers that the council can and should pull to advance an energy affordability agenda centered on D.C. families and businesses. For example, the council can enact legislation tackling the bloated profits accruing to utility shareholders by anchoring their return on equity to real-world market conditions. It can further ensure that any compensation for utility executives that is paid for through your bills is conditioned on achieving specific metrics defined by the government. It can make it easier for advocates to intervene in rate cases on behalf of the public in order to provide a counter to the utilities. Finally, it can also enact legislation that prohibits them from seeking to recover the money spent on political influence activities and corporate perks via the rates consumers pay. If Pepco’s corporate executives want to fly to D.C. from the utility giant’s Illinois headquarters, it should be on their dime — not yours.

The path forward cannot be the status quo. The next mayor and city council need to lay out their plans for prioritizing customers in the utility regulatory model, and not continue to allow Pepco and other utilities to abuse their monopolies. The sooner they get started, the better.