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PRINTER'S NO. 2418
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1782
Session of
2017
INTRODUCED BY DELOZIER, GREINER, KAUFER, M. K. KELLER,
MACKENZIE, THOMAS, WHEELAND, CARROLL, SCHWEYER AND ZIMMERMAN,
SEPTEMBER 14, 2017
REFERRED TO COMMITTEE ON CONSUMER AFFAIRS, SEPTEMBER 14, 2017
AN ACT
Amending Title 66 (Public Utilities) of the Pennsylvania
Consolidated Statutes, in rates and distribution systems,
providing for alternative ratemaking for natural gas and
electric distribution companies.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Title 66 of the Pennsylvania Consolidated
Statutes is amended by adding a section to read:
ยง 1330. Alternative ratemaking for natural gas and electric
distribution companies.
(a) Declaration of policy.--The General Assembly finds and
declares as follows:
(1) Innovations in energy and information technologies
are creating new energy options for all customers, and it is
in the public interest for the commission to approve just and
reasonable rates and rate mechanisms to facilitate customer
access to new energy options while ensuring that natural gas
and electric distribution infrastructure costs are reasonably
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allocated to and recovered from customers and market
participants consistent with the use of the infrastructure.
(2) It is the policy of the Commonwealth that utility
ratemaking should encourage and sustain investment in natural
gas and electric distribution systems through appropriate
cost-recovery mechanisms to enhance the safety, security,
reliability or availability of natural gas and electric
infrastructure and be consistent with the efficient
consumption of energy and the deployment of distributed
energy resources.
(b) Alternative rate mechanisms.--
(1) Any provision of law to the contrary
notwithstanding, the commission may approve an application by
a natural gas distribution company as defined in section 2202
(relating to definitions) or electric distribution company as
defined in section 2803 (relating to definitions) in a base
rate proceeding to establish alternative rates and rate
mechanisms, including, but not limited to, the following
mechanisms:
(i) decoupling mechanisms;
(ii) performance-based rates;
(iii) formula rates;
(iv) multiyear rate plans;
(v) cost-recovery mechanisms and rates to support
and fully recover the allocated costs to deploy
infrastructure and distributed energy resources; or
(vi) rates based on a combination of more than one
of the mechanisms in subparagraphs (i), (ii), (iii), (iv)
and (v) or other ratemaking mechanisms as provided under
this chapter.
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(2) An alternative rate mechanism established under this
section may include section 1307 (relating to sliding scale
of rates and adjustments) or 1308 (relating to voluntary
changes in rates) rates and may provide for recovery of
returns on and return of capital investments or, in the case
of city natural gas distribution operations, recovery under
the cash flow ratemaking method.
(c) Construction.--Nothing in this section shall be
construed as limiting the existing ratemaking authority of the
commission or be construed to invalidate or void any rate
mechanisms approved by the commission prior to the effective
date of this section.
(d) Definitions.--As used in this section, the following
words and phrases shall have the meanings given to them in this
subsection unless the context clearly indicates otherwise:
"Decoupling mechanism." A rate mechanism that adjusts or
reconciles authorized distribution rates or revenues for
differences between sales used to set rates and actual sales,
including, but not limited to, customer adjustments or other
adjustments deemed appropriate by the commission.
"Distributed energy resource." Any of the following:
(1) A distributed generation resource.
(2) Energy efficiency.
(3) Energy storage.
(4) Alternative fuel vehicles and associated
infrastructure.
(5) Demand response technology.
"Formula rates." Rates that are periodically adjusted based
on a predetermined formula without the need for a full base rate
proceeding.
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"Multiyear rate plan." A rate mechanism where periodic
changes in base rates are approved in advance by the commission
and without the need for base rate proceedings based on an
approved revenue requirement for the multiyear plan period,
which may include adjustments for inflation during the plan
period.
"Performance-based rates." Rates that are set or adjusted
based on a public utility's financial or operating performance.
Such mechanisms can be part of, or in addition to, existing rate
base/rate of return ratemaking or cash flow ratemaking method
and may include capital costs and return thereon.
Section 2. This act shall take effect in 60 days.
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