Democrats consider tighter regulations on Delmarva Power in wake of bill outrage

In the wake of widespread complaints over electricity and gas bill increases, leading Democratic lawmakers are suggesting stricter regulations that could limit the amount of money for-profit utility companies, such as Delmarva Power, can generate in the state.

On Friday, Sen. Stephanie Hansen (D-Middletown) told Spotlight Delaware that she and her Democratic colleagues are considering “a package of energy legislation” that would include a provision that directs regulators to deny requests for power rate increases unless they deem them to be legally prudent. 

Such rate increases typically are requested to allow a utility company to recoup costs of building new energy infrastructure. Currently, regulators will examine whether those investments are good business judgements – a lower threshold than “prudent” – when deciding whether to approve an increase. 

“It may be a good business judgement that you make that expense, but is it a prudent spending of the money?” Hansen asked.

Delmarva Power operates as a monopoly gas and electricity distributor in much of the state where it owns power lines, poles and other energy distribution infrastructure. As such, it also is subject to state-imposed limits on how much it can charge and how much it can profit from its operations. 

Hansen’s comments Friday followed a rare investigatory hearing of the Senate Environment, Energy and Transportation Committee that featured lawmakers questioning a Delmarva Power executive about recent electricity bills. It also featured a lively debate between Democrats and Republicans on the committee about the wisdom of state laws that mandate that a portion of electricity that utilities purchase is renewable.

During the hearing, Senate Majority Leader Bryan Townsend – who isn’t a member of the committee – also stood up to speak about what he said was a need by legislators to consider adjusting Delmarva Power’s allowable profits in the state. He questioned why the utility should be allowed to earn nearly 10% return on investments when “Delawareans don’t get to enjoy that level of stability.”

“If you are allowed that year in, year out, month in, month out, no matter what. That might not be the best system,” he said.

Delmarva responds to criticism

Townsend’s and Hansen’s comments are a clear response to a public dissatisfaction with Delmarva Power – the state’s largest utility company – that began in January following what many said were stark and unexpected increases in power bills for electricity and gas used in December.

When asked during the committee hearing why bill amounts had jumped, Delmarva Power Regional Power Phillip Vavala said most of the increase was a result of higher electricity use during a cold January. He supported the assertion by showing data from what he said was his own personal power bill that showed changes from his December bill to his January bill.

It is not immediately clear whether those charges were for energy used in December and January, or for bills sent during December and January, and used largely the previous month.

January was particularly cold in Delaware, with an average temperature of about 30 degrees – 6 degrees colder than the year before – and 17 days below freezing, according to Weather Underground data. However, December was warmer, with an average temperature of 38 degrees and eight days below freezing.

Asked after the hearing why bills might have surged during relatively moderate December temperatures, Vavala said “you have to look at usage on the bill itself.”  He also said that “there were some very cold days in December.” 

Vavala acknowledged that delivery and distribution charges – which are separate from gas and electricity supply costs – had gone up, but he said they had not increased significantly.

Those increases were part of a settlement reached last April by Delmarva Power and state regulators that allowed the utility to increase electric distribution rates by 3.22% on the average customer bill, according to the Delaware Public Service Commission.

“I think it’s important for customers to look at December to December on a comparative basis,” Vavala said.

Still higher costs?

Friday’s hearing came two days after Delmarva Power’s parent company, Exelon Corp., reported earnings in 2024 that the company’s CFO Jeanne Jones said “exceeded expectations.” She also said the company expects to grow its annual profits by at least 5% each year through 2028.

Exelon’s expected profits could occur during a period of rising wholesale electricity costs across the broader mid-Atlantic region. In recent years, at least two separate electricity supply auctions in the region returned historically high rates.

The results of the most recent of those auctions, which occurred last July, sparked a backlash from state governors, consumer advocates and environmentalists who called on the region’s industry-run grid operator to enact sweeping reforms, including faster approvals of proposed wind and solar projects.

Last month, governors in five states, including Delaware Gov. John Carney, sent a letter to the regional grid operator, PJM Interconnection, that spelled out a foreboding future for homes and businesses unless the company urgently acted to “prevent consumers from paying billions more than is necessary.”

The results of recent energy auctions have also fueled the partisan debate over renewable electricity. While Democrats say high wholesale electricity prices show that there is a need for more wind and solar power, Republicans say laws that incentivize renewable energy discourage investments in fossil fuel power plants.