Brattle Experts Estimate Benefits of Over $250 Million in Evaluation of PEPCO’s 2026 Investment Planning
Prepared for the Potomac Electric Power Company (PEPCO)
In a recent study, Brattle experts evaluated the benefits of 15 capital projects and programs (referred to together as “Investment Plans”) for the Potomac Electric Power Company (PEPCO). The study finds that the subset of projects evaluated, totaling $38 million of 2026 projected capital investments, will show benefits of approximately $262 million. The study was submitted by PEPCO as part of its 2026 Rate Plan filing with the Maryland Public Service Commission (PSC).
PEPCO’s Investment Plans were developed through the company’s long-term strategic planning process and designed to enhance the PEPCO system so it can accommodate and serve future and evolving customer needs, including some driven by state policies. Potential plan benefits include reducing outage frequency and duration; addressing known reliability issues; and improving reliability, including replacing infrastructure that is at or near the end of its useful life.
For each Investment Plan, Brattle analyzed the following benefits:
- Reliability Benefits, including reduced service interruptions (i.e., outages), assessed using the Value of Lost Load (VoLL) metric.
- Avoided Restoration Costs, including the reduction in restoration costs associated with equipment trouble/failures, such as that of dispatching crews to identify and further address (i.e., fix/remedy) the fault. Also includes estimated labor, material, and equipment costs.
- Avoided Operation and Maintenance (O&M) Costs, including the reduction in O&M costs associated with newer equipment compared to older ones.
Benefits were evaluated in three monetary terms, namely Nominal (in nominal dollars converted using the estimated future inflation rate of 3.4%), Real-Discounted (in real dollars after applying real discount rate of 2%), and Weighted Average Cost of Capital (WACC)-Discounted (in nominal dollars after applying PEPCO’s WACC of 7.13% to the Nominal values). The study confirms each of PEPCO’s proposed Investment Plans’ positive benefits and that for the entire portfolio added to over $262 million in Real-Discounted terms (over $437 million in Nominal terms and $227 million in WACC-Discounted terms) over a 20-year period.
Quantitative Analysis of PEPCO’s Investments was authored by Principal Bruce Tsuchida, Senior Energy Associates Dr. Linquan Bai, Ragini Sreenath, and Goksin Kavlak; Energy Specialist Sylvia Tang; and Senior Energy Analyst Purvaansh Lohiya. The full study is available below.
