BEFORE THE PUBLIC SERVICE COMMISSION

OF THE STATE OF DELAWARE

IN THE MATTER OF THE APPLICATION OF )

DELMARVA POWER & LIGHT COMPANY FOR )
AN INCREASE IN ELECTRIC BASE RATES AND ) PSC Docket No. 17-0977
MISCELLANEOUS TARIFF CHANGES )
(FILED AUGUST 17, 2017) )

JOINT MOTION OF COMMISSION STAFF AND THE DIVISION OF THE

PUBLIC ADVOCATE TO DISMISS DELMARVA POWER & LIGHT
COMPANYS APPLICATION TO INCREASE ELECTRIC BASE RATES

Under 26 Del. C. 304(a) and (b), 305, and 307(b) and 26 Del. Admin. C. 1002-1.3,1

the Delaware Public Service Commissions Staff (Staff) and the Delaware Division of Public

Advocate (DPA) hereby move to dismiss the pending application filed by Delmarva Power &

Light Company (Delmarva or the Company) requesting an increase in electric base rates,

and in support thereof state as follows:

1. On August 17, 2017, Delmarva filed an application requesting an increase in its

electric base rates of $24,425,436, an increase of 10.1% in distribution revenues.

2. On October 13, 2017, pursuant to Commission Order No. 9108,2 Delmarva filed

to implement interim rates on and after October 16, 2017, subject to refund with interest.3

3. Immediately thereafter, on October 18, 2017, Delmarva filed the Supplemental

Testimony of Witnesses Ziminsky and McEvoy with Update to Actuals. Mr. Ziminskys

hundred-page supplemental testimony contained new schedules that effectively change

1
26 Del. Admin. C. 1001-1.3 provides, in pertinent part, as follows: "Modifications in test period data occasioned
by reasonably known and measurable changes in current or future rate base items, expenses (i.e., labor costs, tax
expenses, insurance, etc.) or revenues may be offered in evidence by the utility at any time prior to its filing of
rebuttal evidence; provided, however, that if any party makes timely objection to the proffered modifications, such
objections shall be promptly presented to the Commission, the Presiding Officer or Hearing Examiner for a
decision on due consideration of the parties' respective positions." (Emphasis added).
2
Dated August 22, 2017.
3
See 26 Del. C. 306(c).

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Delmarvas rates as originally set forth in its August 2017 application and as recently

implemented last week via the interim rates.

4. Because Delmarva did not through a motion or petition seek prior permission of

the Commission to change the rates filed in its August application, Staff and the DPA maintain

that the supplemental testimony filing -- with almost 80 revised schedules, all of which contain

new numbers -- violates two key sections of Delaware law that govern the ratemaking process.

Accordingly, Delmarvas original application should be withdrawn and a new application filed.

5. Mr. Ziminskys stated in his original testimony: The Company's removal of

excess synergies from the CTA Regulatory asset [sic] results in an increase of $352,144 to

operating income and a decrease of $1,584,647 to rate base. (Schedule (JCZ)-15). Ziminsky, p.

21, L. 10-12. He also stated: "Adjustment No. 27 increases rate base by $895,177 and decreases

operating income by $1,410,769. (Schedule (JCZ)-16)." Id. at L. 22-23.

6. However, Mr. Ziminskys supplemental testimony states that earnings should be

decreased by $3.7 million and rate base increased by $823,658. This results, in part, in a new

revenue request that is 28% higher than the original August request. Such a request requires the

filing of a new application.

Argument

7. When Delmarva filed supplemental testimony substantially changing the rates it

had originally requested in its August rate increase application, it violated Delaware law by not

providing to the Commission the statutorily-required prior written notice. Section 304(a) of Title

26 prohibits a public utility from making any change in any existing rate without providing at

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least 60 days' prior notice to the Commission.4 This allows the Commission to give ratepayers

notice of any proposed rate changes in advance of such changes and triggers the timing

requirements for when interim and temporary rates may go into effect.5 The law also gives the

Commission, Staff, the DPA and other intervenors time to review the proposed rates and

supporting evidence, to hire any consultants needed to assist the Commission and the parties in

their review, and to adequately prepare for a fully-noticed hearing regarding whether the rates

are just and reasonable. Here, if the Commission does not grant this Joint Motion to Dismiss,

the ratepayers will receive the full impact of Delmarvas requested increase in electric rates

one that has gone from a 10% increase in distribution revenue to a 13% increase in distribution

revenue based on the new revised schedules. The Commission should not allow a public utility

to reduce by two months a seven-month review period that is already too short for a full review.

8. Although Delaware law does allow the Commission to waive the 60-day prior

notice requirement set forth in 26 Del. C. 304(a), there are important reasons here to apply the

60-day notice requirement. First, this is not a simple adjustment caused by a mathematical error.

Instead, the Company is changing its filed case from 3 months of actual data and 9 months of

forecasted data to 6 months of actual data and 6 months of forecasted data, but has not complied

with the Delaware Administrative Code. Specifically, any updates to a partially forecasted test

period have to be filed within 60 days of the close of the quarter. Thus, the update of the

forecasted data to six months of actuals should have been made in August not October.6

Second, the supplemental testimony is adding a request to create an additional regulatory asset.

4
26 Del. C. 304(a) provides, in pertinent part, that [u]nless the Commission otherwise orders, no public utility
shall make any change in any existing rate except after 60 days [sic] notice to the Commission, which notice shall
plainly state the changes proposed to be made in the rates then in force and the time when the changes will go into
effect. All proposed changes shall be shown by filing new schedules or shall be plainly indicated upon schedules
filed and in force at the time and kept open to public inspection.
5
The Staff, DPA and other interested parties have 7 months to review any requested rate increase before the full
amount is allowed to go into rates. See 26 Del. C. 306(b).
6
See 26 Del. Admin..C. 1002-1.2.3.1.

{01256918;v1 } 3
Third, this filing purportedly corrects mistakes made in prior cases, including the most recently

completed Delmarva electric rate case (Docket No. 16-0649) and the merger case (Docket No.

14-193). As indicated by the need to file close to 80 pages of new exhibits, causing a 28%

increase in its revenue request, this is not merely a supplement to previously filed testimony;

rather, it is a new case and should be treated as such.

9. Aside from creating a new rate case by significantly increasing the Companys

revenue request, changing its test period, adding a new regulatory asset, and changing data that

may have already been relied upon by the Commission in its former decision in Docket No. 16-

0649, the supplemental testimony and new schedules also do not pass muster based on a prior

Commission decision. In PSC Docket No. 13-115, during a rate case hearing, the Hearing

Examiner allowed Delmarva to enter into evidence a revised schedule with new numbers for the

Companys accumulated deferred income taxes (ADIT). The Company claimed that the

schedule had to be corrected because the numbers supporting the ADIT calculation were

erroneous. On an interlocutory appeal, the Commission decided, among other reasons, not to

allow Delmarva to modify the schedules for the ADIT numbers and not to allow Delmarva to

submit such revised schedule into evidence (regardless of the alleged erroneous numbers). It

reasoned that such decision was required to prevent substantial injustice and unfair prejudice

against Staff and the DPA given the magnitude of the proposed modifications and the lack of any

reasons why Delmarva had not discovered its error earlier in the proceedings. See Order No.

8537, 5 (April 15, 2014).

10. Similarly, Delmarva should not be permitted to file revised schedules with a

substantial change in its rates that cause substantial injustice and unfair prejudice to the other

parties in this case. As of the date of this filing, Staff, the DPA, and the other parties still have

{01256918;v1 } 4
not yet received the Companys backup documents for the supplemental testimony in native

format with formulas intact. The parties cannot review all of the numbers and all of the

corresponding issues in this case without these supporting documents. Because Staff, the DPA,

and the other parties have a deadline of November 1, 2017, to file their follow-up discovery

requests, they are -- and continue to be -- at a distinct disadvantage if the Commission allows

Delmarva to pursue its current rate case as supplemented. To prevent substantial injustice and

unfair prejudice, the Commission must dismiss the currently filed rate case and permit Delmarva

to file a new application for a rate increase so that the parties will have the full benefit of seven

months to review all of the evidence supporting the Companys increase in electric base rates.

11. If this Joint Motion to Dismiss is not granted, Staff, the DPA and the other parties

will not only lack adequate time to properly determine whether the revisions to the new

schedules are consistent with prior Commission orders and with ratemaking accounting

principles, but such a decision will also allow the Company, and all other regulated utilities, in

essence to be able to file a new application for a rate increase inside the statutory boundaries of

providing notice of an already-filed application for an increase in revenues and rates. This would

conflate the statutory review time period of 7 months before the entire rate request can be

implemented, and reduce it to 5 months or maybe fewer. Thus, rather than allowing a 10%

increase in distribution rates to go into effect in March of next year, the revenue increase on

distribution revenues would be almost 13% --- again, without time for sufficient review as

required by the applicable statute.7

12. Although a public utility may correct numbers that it finds to be erroneous after

filing its rate case application (and before it files rebuttal testimony),8 it may not change numbers

7
26 Del. C. 306(a)(1).
8
26 Del. Admin. C. 1002-1.3.

{01256918;v1 } 5
in a schedule when such schedule state[s] a new rate. Section 305 of Title 26 provides that

when any public utility files any schedule stating a new rate, the Commission may, either upon

complaint or upon its own initiative, upon reasonable notice, enter upon a hearing concerning the

lawfulness of such rate. Pursuant to this provision in the statute, Staff and the DPA are

supporting this motion to request that the Commission hold a hearing on the lawfulness of the

new rate application that was initiated when the Company filed its essentially new application in

the guise of supplemental testimony and schedules.9

13. The provisions of 26 Del. C. 305 apply here because Delmarva did, in fact, file

new, revised schedules with new numbers that stat[e] a new rate. Here, Delmarva filed

supplemental testimony with, in particular, a revised schedule (JCZ-S 16) that increases the

Companys requested revenue requirement by 27.73%. This new schedule by itself

fundamentally alters the utilitys original August application for a rate increase. When a public

utility files a revised schedule with numbers that correspondingly increase its revenue request by

almost one-third, this must by definition constitute a schedule stating a new rate within the

purview of 26 Del. C. 305.

14. 26 Del. C. 304(a) further supports Staff and the DPAs argument that filing

revised schedules with new numbers state[s] a new rate. Although 26 Del. C. 304(a)

primarily deals with the statutorily-required prior notice, that section also refers to any change

in any existing rate and provides that [a]ll proposed changes shall be shown by filing new

schedules or shall be plainly indicated upon schedules filed and in force at the time .

(Emphasis added). Hence, filing new schedules (i.e., ones with revised numbers) can qualify as

9
Staff also notes that under 26 Del. Admin. C. 1002-1.3, if a party makes a timely objection to proffered
modifications in rate base items or revenues, such objection shall be promptly presented to the Commission (or
Hearing Examiner) for a decision on due consideration of the parties' respective positions. As required by this
Regulation, Staff and the DPA have timely filed this objection (in the form of a motion to dismiss) within five
business days of Delmarvas proffer of modifications.

{01256918;v1 } 6
schedules stating a new rate (i.e., schedules with proposed rate changes) that trigger the 60

days prior notice requirement under 26 Del. C. 304(a) and also trigger the Commissions

option to hold a hearing on the lawfulness of the new rates under 26 Del. C. 305.

15. Delmarvas supplemental testimony anticipates the arguments made here.

Delmarva opines that the supplemental testimony of Mr. Ziminsky does not propose any new

ratemaking adjustments; rather, the Company is seeking to correct an existing adjustment.10

Putting semantics aside, the result sought by the Company remains the same -- it seeks to

implement a new rate by filing 79 pages of new schedules. For example, JCZ-S-16 is a new

schedule because it contains revised numbers that were changed based on an alleged error in a

calculation of the costs to achieve (CTA) or in how the Company treated the CTA when it

booked the regulatory asset. Delmarva claims it incorrectly removed from (or credited to) its

operating expenses the CTA which had been deferred during the test period in order to establish

the CTA regulatory asset derived from PSC Docket No. 16-0649. (JCZ-S, p. 3, L. 13-18).

Delmarva also claims that it inadvertently added to cost of service its incremental CTA expenses.

(JCZ-S, p. 3, L. 19-22). In reality, no matter how it is worded, Delmarva has filed a new

schedule causing a significant increase in its requested revenue increase.

16. Staff and the DPA note that this Joint Motion to Dismiss requires important

decisions on policies that could apply to all rate cases filed by any Commission-regulated public

utility. In addition, the moving parties note that Delmarva has the burden of proof in justifying

to the Commission every accounting entry of record questioned by the Commission and that the

Commission may suspend any charge or credit pending submission of satisfactory and

10
Q4. Have you proposed any new ratemaking adjustments in this filing?
A4. No. This filing contains the same ratemaking adjustments that were in the Company's Direct Testimony filing.
Q5. Have you corrected any of the ratemaking adjustments in this filing?
A5. Yes, a correction to an existing adjustment was necessary. See JCZ-S, p. 2, L. 2, and p. 3, L. 1-4.

{01256918;v1 } 7
sufficient proof in support thereof by the public utility.11 Staff and the DPA maintain that the

Commission should hold a hearing to decide whether the recently-filed new schedules, which

impermissibly state a new rate, should be rejected. Upon rejection, the Commission should (i)

dismiss Delmarvas application and require the Company to refile its application, or (ii) require

Delmarva to withdraw its pending application, but allow it to refile a new application, in order to

comply with the proper legal requirements set forth in Delaware law.

17. Finally, in accordance with the schedule adopted in this case, the public comment

sessions have been noticed in all three counties on a notice published in the local newspapers that

contains incorrect information as to the proposed rate increase for which the Company is now

asking to recover in new rates. Thus, at a minimum, new notices with the correct rates must be

published and additional public comments sessions must be held in the future as part of the

refilled rate application.12

18. Because the moving parties have raised important policy issues here that,

according to Delaware law, require the Commission to review by hearing,13 Staff and the DPA

urge the Hearing Examiner to request that the Commission directly review and decide the merits

of this Joint Motion to Dismiss.

WHEREFORE, for the reasons set forth herein, Staff and the DPA respectfully request

that the Commission hold a hearing on whether it should (i) dismiss, without prejudice,

11
See 26 Del. C. 307(b) which provides that the public utility shall have the burden of proof in justifying every
accounting entry of record questioned by the Commission which may suspend any charge or credit pending
submission of satisfactory and sufficient proof in support thereof by the public utility.
12
It is important to note that the proposed rates filed in support of Delmarvas August application were not updated
in its supplemental filing. See Marlene C. Santacecilias Testimony Sch. (MCS)-2. Ms. Santacecilia provided
testimony for the rate design and tariff revisions for the proposed increase in delivery rates and the rates and tariff
provisions for the interim rates increase in Delmarvas original filing. See Santacecilia Testimony, page 2. No
further update has been provided to either the rates or rate design in the Companys supplemental testimony.
13
See 26 Del. C. 305 which provides, in pertinent part, that whenever a public utility files with the Commission
any schedule stating a new rate, the Commission may enter upon a hearing concerning the lawfulness of such
rate.

{01256918;v1 } 8
Delmarvas application, as supplemented, requesting an increase in electric base rates; (ii)

require Delmarva to withdraw its pending application requesting an increase in electric base rates

because the Company has violated 26 Del. C. 304(a) and 305; (iii) order suspension of the

collection of interim rates pending resolution of the Joint Motion to Dismiss and the requested

order.

Dated: October 24, 2017 Respectfully submitted,

/s/ James McC. Geddes

James McC. Geddes (#690)
Ashby & Geddes
500 Delaware Avenue
P.O. Box 1150
Wilmington, DE 19899

-AND-

/s/ Thomas D. Walsh

Thomas D. Walsh (#3783)
Deputy Attorney General
Delaware Department of Justice
820 N. French Street, 6th Floor
Wilmington, DE 19801
(302) 577-8319
ThomasD.Walsh@state.de.us

Counsel for Staff of the Delaware Public

Service Commission

/s/ Regina A. Iorii

Regina A. Iorii (#2600)
Deputy Attorney General
Delaware Department of Justice
820 French Street 6th Floor
Wilmington DE 19801
(302) 577-8159
` regina.iorii@state.de.us

Counsel for the Delaware Division of

the Public Advocate

{01256918;v1 } 9
 BEFORE THE PUBLIC SERVICE COMMISSION
OF THE STATE OF DELAWARE

IN THE MATTER OF THE APPLICATION OF )

DELMARVA POWER & LIGHT COMPANY FOR )
AN INCREASE IN ELECTRIC BASE RATES AND ) PSC Docket No. 17-0977
MISCELLANEOUS TARIFF CHANGES )
(FILED AUGUST 17, 2017) )

CERTIFICATE OF SERVICE

I hereby certify that on October 24, 2017, I caused a copy of the attached Joint Motion of
Commission Staff and the Division of the Public Advocate to Dismiss Delmarva Power &
Light Companys Application to Increase Electric Base Rates to be filed with the Delaware
Public Service Commission using DelaFile and to be served on the following persons by
electronic mail:

Todd L. Goodman, Esquire todd.goodman@pepcoholdings.com

Clark Stalker, Esquire clark.stalker@exeloncorp.com
Michael Houghton, Esquire mhoughton@mnat.com
R. Judson Scaggs, Jr., Esquire rscaggs@mnat.com
Donna Culver, Esquire dculver@mnat.com
Regina A. Iorii, Esquire regina.iorii@state.de.us
Devera B. Scott, Esquire devera.scott@state.de.us
Rep. John Kowalko john.kowalko@state.de.us
Michael Quninan, Esquire mquinan@cblaw.com

/s/ James McC. Geddes

James McC. Geddes (#690)
Ashby & Geddes
500 Delaware Avenue
P.O. Box 1150
Wilmington, DE 19899
302-654-1888 ext. 230 (telephone)
302-438-9500 (cell phone)
jamesgeddes@mac.com

Dated: October 24, 2017 Counsel for Staff of the Delaware Public
Service Commission

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