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Pennsylvania House of Representatives
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House of Representatives
Session of 2017 - 2018 Regular Session


Posted: August 28, 2017 01:34 PM
From: Representative Sheryl M. Delozier
To: All House members
Subject: Alternative Ratemaking Mechanisms
In the near future, I will be introducing legislation to clarify the PUC’s authority to approve, but not require specific alternative ratemaking mechanisms that are petitioned by electric distribution companies (EDCs) and natural gas distribution companies (NGDCs), including but not limited to various mechanisms such as decoupling and performance based rates.

The energy landscape is changing. Customers are demanding new technologies such as solar generation, energy storage and various other forms of onsite energy generation and they are becoming more efficient in their energy usage. These trends are expected to continue and increase, resulting in lower electricity usage over time. The demand is already negatively impacting the financial resources utilities will have available to meet required investments in improving the electric delivery system in order to meet this new customer demand.

EDCs and NGDCs must balance the interest of its customers in providing a platform for the promotion and growth of new technologies while at the same time meeting its obligation to protect the integrity of their distribution network in order to meet their obligation to provide safe, affordable and reliable service.

Under traditional ratemaking mechanisms, utilities recover revenue, expenses and return of and on capital investments through base rate cases, which are timely to litigate and costly to customers. Alternative ratemaking mechanisms would enable EDCs and NGDCs, under PUC review, to make necessary upgrades and improvements to its transmission and distribution system in order to keep pace with the increasing application of new technologies and energy efficiency programs without the need for frequent rate cases.

Introduced as HB1782