PRINTER'S NO.  1461

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

HOUSE BILL

 

No.

1294

Session of

2011

  

  

INTRODUCED BY GODSHALL, PRESTON, AUMENT, BEAR, BRENNAN, BUXTON, CARROLL, CLYMER, D. COSTA, P. COSTA, CUTLER, DALEY, DAVIDSON, DELOZIER, ELLIS, GRELL, GROVE, HARHART, W. KELLER, KORTZ, KOTIK, MANN, McGEEHAN, MILLARD, NEUMAN, D. O'BRIEN, M. O'BRIEN, PAYNE, PAYTON, PEIFER, PERRY, PYLE, QUIGLEY, READSHAW, REICHLEY, SAINATO, SAYLOR, SCAVELLO, SONNEY, VULAKOVICH, WHITE, WILLIAMS, KULA, MILLER, GINGRICH, STEPHENS, DEASY, GIBBONS AND M. SMITH, APRIL 6, 2011

  

  

REFERRED TO COMMITTEE ON CONSUMER AFFAIRS, APRIL 6, 2011  

  

  

  

AN ACT

  

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Amending Title 66 (Public Utilities) of the Pennsylvania

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Consolidated Statutes, further providing for valuation of and

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return on the property of a public utility; and providing for

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alternative regulatory mechanisms.

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The General Assembly of the Commonwealth of Pennsylvania

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hereby enacts as follows:

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Section 1.  Section 1311(c) of Title 66 of the Pennsylvania

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Consolidated Statutes is amended to read:

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§ 1311.  Valuation of and return on the property of a public

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utility.

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* * *

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(c)  Segregation of property.--When any public utility

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furnishes more than one of the different types of utility

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service, the commission shall segregate the property used and

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useful in furnishing each type of such service, and shall not

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consider the property of such public utility as a unit in

 


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determining the value of the rate base of such public utility

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for the purpose of fixing rates. A utility that provides water

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and wastewater service shall be exempt from this subsection and

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may combine all components of its water and wastewater revenue

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requirement for the purposes of fixing rates on a consolidated

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basis.

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* * *

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Section 2.  Title 66 is amended by adding a section to read:

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§ 1329.  Alternative regulatory mechanisms.

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(a)  Declaration of policy.--Many fixed utilities and city

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natural gas distribution operations in this Commonwealth have

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incurred and will continue to incur significant costs to

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maintain, enhance and modernize their physical facilities in

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order to continue to provide customers with safe and reliable

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service. Under traditional regulatory mechanisms developed under

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this title, these utilities and distribution operations

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experience delay in the recovery of the revenue requirements

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associated with those costs. The opportunity for more timely

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recovery of those costs, including the recovery of capital

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costs, including return of and on capital investments, and,

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where applicable, debt service and debt-service coverage, should

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encourage investment to replace facilities for continued

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reliability, should enhance the efficiency of the construction

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cycle and should attract lower-cost debt, which would reduce the

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overall cost of these investments and should create jobs in the

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Commonwealth. Accordingly, it is in the public interest to

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provide for alternative regulatory mechanisms as set forth under

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this section.

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(b)  Authority.--

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(1)  Notwithstanding any other provision of this title,

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including, but not limited to, sections 315 (relating to

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burden of proof), 1307 (relating to sliding scale of rates;

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adjustments), 1308 (relating to voluntary changes in rates)

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and 1315 (relating to limitation on consideration of certain

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costs for electric utilities), the commission shall have the

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authority to approve, but shall not require, additional

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regulatory procedures and mechanisms proposed by a fixed

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utility or a city natural gas distribution operation to

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provide for timely recovery of reasonable and prudently

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incurred costs.

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(2)  (i)  The additional procedures and mechanisms under

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paragraph (1) shall include, but are not limited to:

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(A)  The use of a fully projected future test

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year in a general rate proceeding under section

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1308(d).

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(B)  An automatic adjustment clause to recover

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capital costs and operating expenses related to the

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capital costs.

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(ii)  For purposes of this paragraph, a fully

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projected future test year shall be the 12-month period

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beginning with the first month that the new rates could

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be placed in effect after application of the full

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suspension period permitted under section 1308(d).

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(c)  Construction and interpretation.--Except as otherwise

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expressly provided under this section, nothing under this

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section shall be construed as limiting the existing ratemaking

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authority of the commission, including, but not limited to, the

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commission's existing authority to permit recovery of operating

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expenses through an automatic adjustment clause, or as

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indicating that the existing authority of the commission over

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rate structure or design is limited.

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Section 3.  This act shall take effect in 60 days.

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