Undergrounding Project Appeal with Update

The Electric Company Infrastructure Improvement Financing Act of 2014 (the “Act”) authorizes Pepco and the District of Columbia Department of Transportation to design and implement a program to remove designated overhead power lines and place them and related facilities underground. The Apartment and Office Building Association of Metropolitan Washington (“AOBA”), represented by Mark Policy of GDL, appealed to the District of Columbia Court of Appeals from Orders issued by the Public Service Commission of the District of Columbia in proceedings under the Act. These overhead power lines are primarily in residential areas.  The estimated cost of the undergrounding project over its anticipated 7 to 10 year time span is approximately $1 Billion, which is to be paid by customers of Pepco through two surcharges (referred to as the Underground Project Charge and the DDOT Charge) on their electric bills, in amounts for each Pepco customer class (except the Residential Aid Discount class) determined by the Commission.  In its Orders, the Commission allocated 11.15% of the costs of the first three year phase of the undergrounding project to Pepco’s Residential customer classes and allocated 88.85% of those costs to Pepco’s other commercial and non-residential customer classes.  On appeal to the Court of Appeals, AOBA (represented by Mr. Policy) argued that these allocations were the result of the Commission misconstruing the Act and its legislative history, and the Commission’s failure to follow the directives of the Act as to the manner in which the costs of the undergrounding project are to be allocated among Pepco’s customer classes.
Apparently recognizing the problems with the Commission’s decisions, the Council amended the Act. The Court affirmed based on the amendments. In a turn of events, GSA (Pepco’s largest customer) has refused to pay the charges imposed by the Commission. Stay tuned.

Greenstein DeLorme & Luchs, P.C.