Pepco asked for and received approval for a rate increase before the D.C. Public Service Commission over a year ago, but now a court has thrown the plan out.

The Office of the People’s Counsel, an independent D.C. government agency that protects consumers, brought the lawsuit, saying the Public Service Commission’s approval came without the type of trial-style hearing required when the facts about the need for a rate increase are in dispute.

The Office of the People’s Counsel said in the lawsuit that the petitioners were entitled to an evidentiary hearing, where the parties would have the opportunity to present expert witnesses and cross-examine adversarial witnesses, before the Commission could approve any multi-year rate plan.

The D.C. Court of Appeals agreed, writing in its order to vacate the rate increase.

“We agree that this was a contested case which required the Commission to hold a trial-type evidentiary hearing.”

Sandra Mattavous-Frye with the People’s Counsel says that any time a regulatory commission is asked to increase utility rates, it is exercising the public trust.

“That trust cannot be satisfied by paper filings and legislative-style hearings alone,” she said. “It requires a thorough development of the evidentiary record—sworn testimony, transparent data, and the opportunity to test claims through cross-examination.”

In a statement, the People’s Counsel said that the Court’s ruling was “a victory for process and a victory for consumers.”

A Pepco spokesman says the company is reviewing the court’s decision and “remains focused on providing safe, reliable and affordable service for customers in the District.”

“We are committed to working constructively with the Commission, stakeholders, and the public to reach an outcome that is fair, transparent, and in the best interest of customers,” Pepco said.

The next step is a full evidentiary hearing before considering any rate increases. It’s unclear of the timing of that hearing.