Officials: Delmarva Power commercial customers may be overpaying

DOVER — Delaware officials are urging commercial customers of Delmarva Power to contact the utility and ask if they qualify for lower electric billing rates.

The move comes after an investigation by the Delaware Public Advocate and staff of the Delaware Public Service Commission found that more than 5,000 Delmarva Power business customers may be paying higher rates for electricity than their usage warrants.

The issue came to light after The Associated Press published an article in December about a complaint filed with the commission by a Sussex County businessman, officials said Wednesday.

“People started calling me,” said Richard Spinks, the Sussex day care owner whose complaint over Delmarva’s solar energy tariff brought to light the broader issue of customers remaining at the medium rate classification even though they are eligible for the small rate classification.

“The average consumer is not going to realize that. They’re just going to pay their electric bill,” Spinks said. “I don’t think the consumers have been notified properly.”

Under Delmarva’s tariff, a business customer with a “small general service” rate classification pays only for actual kilowatt usage plus a nominal monthly service fee. But a “small” customer is automatically moved by Delmarva to a more expensive “medium general service” classification if it consumes 3,500 kilowatt hours or more for two consecutive months.

The medium classification comes with a monthly “demand” charge that can amount to several hundred dollars or more based on a customer’s peak usage that month. A customer also must remain at the medium classification for 12 months, without exceeding the 3,500 kwh threshold, before being allowed to move back to the less expensive “small” classification.

The problem is that, while Delmarva Power automatically moves customers from small to medium service, it has not been notifying customers that they are eligible to be restored to the lower rate classification after a year has passed. Instead, a utility customer must proactively make that request.

“I see that as an inequity,” Public Advocate Drew Slater told the AP on Wednesday. “If it’s automatic one way, it should be automatic the other way.”

Since the AP article was published, commission staff and the Public Advocate, which represents consumer interests in utility cases, have been fielding complaints from many other businesses.

Officials said as many as 5,200 businesses served by Delmarva — more than a third of all the utility’s medium general service customers — may be eligible for lower rates.

Slater and Matt Hartigan, deputy director of the Public Service Commission, said officials have been talking with Delmarva Power to try to resolve the issue informally, but that they might need to take it to the commission if a resolution cannot be reached.

“They say that they’re following their tariff…. There’s no tariff violation technically,” Hartigan said of Delmarva’s response. “I think that’s kind of been their position so far.”

Jake Sneeden, a spokesman for Delmarva Power, said that in reviewing the current tariff in advance of seeking approval for a rate increase, the utility discovered that “customers are rarely taking advantage of making that request to us to transfer back to the small general service.”

Sneeden said Delmarva Power was putting together a plan to move all of the 5,000-odd business customers back to small general service, possibly without having to install new meters, as the utility’s billing system currently requires. He indicated that software changes would be needed to avoid having to send utility crews to each business address to swap out meters.

Sneeden said that based on a preliminary assessment, which assumes the ability to quickly modify the billing system, Delmarva anticipates proposing a plan to the commission in early April that would transfer customers to their new service classification in October.

Delmarva also is evaluating how to better communicate with customers to make sure they are aware of their options. “We understand from our analysis that our commercial customers rarely take advantage of the option to transfer service classifications and there is more we can do to help them understand their options,” Sneeden said.

At the same time, Sneeden said Delmarva has no plans to automatically move customers from medium service to small service, explaining that customers better understand their expected energy usage. Automatically moving them to the lower service, only to later have to move them back to medium service if they exceed the usage threshold, would not be efficient, he said.

Delmarva Power also has no plans to reimburse customers who have been paying the medium-service rate despite being eligible for the lower rate, Sneeden said. “There wouldn’t be any reimbursement because they’ve been billed appropriately based on the current tariff,” he said.