Pepco Submits Quarterly Rate of Return Report with Adjusted Results for 12 Months Ending March 31, 2025

Strategic Insights -

The Public Service Commission of the District of Columbia has received a quarterly rate of return report from Pepco, a utility company serving the District, for the 12 months ending March 31, 2025. The report, submitted in compliance with Order No. 22328, provides jurisdictional cost allocations and adjusted rate of return results. Key adjustments made in the report include changes to the normalization rules for ratemaking purposes, revised presentation of Accumulated Deferred Income Taxes, and a redesign of the jurisdictional cost of service (JCOS) study format.

Key Takeaways:

  • Pepco's actual earned rate of return for the 12 months ending March 31, 2025, is 6.53%, while the return on equity is 8.05%.
  • Adjusting the rate of return to be consistent with the ratemaking treatment approved in Order No. 22328 results in a rate of return of 6.41% and a return on equity of 7.81%.
  • The Company has experienced an increase in earned returns driven primarily by higher distribution revenues and investments in the distribution system.
  • Pepco submits a Ratemaking Adjustment to remove the impact of pauses in late payment charges on the Company's adjusted earnings.
  • The Company has modified the presentation of Accumulated Deferred Income Taxes associated with Prepaid Pension and Other Employment Benefits and Regulatory Assets.
  • The jurisdictional cost of service (JCOS) study format has been redesigned to improve transparency and traceability.

Statistics:

  • Actual earned rate of return: 6.53% (12 months ending March 31, 2025)
  • Return on equity: 8.05% (12 months ending March 31, 2025)
  • Adjusted rate of return: 6.41% (12 months ending March 31, 2025)
  • Return on equity (adjusted): 7.81% (12 months ending March 31, 2025)
  • Increase in earned returns: driven primarily by higher distribution revenues and investments in the distribution system

Sources:

  • Order No. 22328
  • Pepco Submits Quarterly Rate of Return Report (June 30, 2025)
  • Pepco Extends Enhanced Support Measures to Help Customers Manage Winter Energy Bills. February 25, 2025.

+ Available at: https://www.pepco.com/news/news-releases/pepco-expanding-support-measures-to-help-customers-manage-winter-energy-bills

+ Attachment A and B