THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY BOSCOLA, FERLO, LOGAN, HUGHES, WILLIAMS, FONTANA, KITCHEN, TARTAGLIONE AND O'PAKE, APRIL 3, 2009

REFERRED TO CONSUMER PROTECTION AND PROFESSIONAL LICENSURE, APRIL 3, 2009  

AN ACT

Amending Title 66 (Public Utilities) of the Pennsylvania

Consolidated Statutes, providing for an extension of rate

caps.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 2804(4) of Title 66 of the Pennsylvania

Consolidated Statutes is amended to read:

§ 2804.  Standards for restructuring of electric industry.

The following interdependent standards shall govern the

commission's assessment and approval of each public utility's

restructuring plan, oversight of the transition process and

regulation of the restructured electric utility industry:

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(4)  The following caps on electric utility rates shall

apply:

(i)  For a period of 54 months from the effective

date of this chapter or until an electric distribution

utility is no longer recovering its transition or

stranded costs through a competitive transition charge or

intangible transition charge and all the customers of an

electric distribution utility can choose an alternative

provider of electric generation, whichever is shorter:

(A)  the total charges of an electric

distribution utility for service to any customer who

purchases generation from that utility shall not

exceed the total charges that have been approved by

the commission for such service as of the effective

date of this chapter; and

(B)  for customers who purchase generation from a

supplier other than the electric distribution

utility, the charges of the utility for non-

generation services that are regulated as of the

effective date of this chapter, exclusive of the

competitive transition charge and intangible

transition charge, shall not exceed the non-

generation charges that have been approved by the

commission for such service as of the effective date

of this chapter.

(ii)  In addition to the rate cap set forth in

subparagraph (i), [for a period of nine years from the

effective date of this chapter or until an electric

distribution utility is no longer recovering its

transition or stranded costs through a competitive

transition charge or intangible transition charge and all

customers of an electric distribution utility can choose

an alternative provider of electric generation, whichever

is shorter] until January 1, 2013, the generation

component of a utility's charges to customers who

purchase generation from the utility, including the

competitive transition charge and intangible transition

charge, shall not exceed the generation component charged

to the customers [that has been approved by the

commission for such service as of the effective date of

this chapter] on December 31, 2007.

(iii)  An electric distribution utility may seek, and

the commission may approve, an exception to the

limitations set forth in subparagraphs (i) and (ii) only

in any of the following circumstances:

(A)  The electric distribution utility meets the

requirements for extraordinary rate relief under

section 1308(e) (relating to voluntary changes in

rates).

(B)  Either the electric distribution utility is

required to begin payment under contracts with

nonutility generation projects that have received

commission orders, has been unable to mitigate such

costs, such costs are not recoverable in a

competitive generation market and such costs were not

previously covered in the competitive transition

charge or intangible transition charge, or the

utility prudently incurs costs related to

cancellation, buyout, buydown or renegotiation of

nonutility generating project obligations of the

utility consistent with section 527 (relating to

cogeneration rules and regulations) and such costs

were not previously covered in the competitive

transition charge or intangible transition charge.

Costs related to cancellation, buyout, buydown or

renegotiation shall be recovered from ratepayers over

a period not to exceed three years, unless the

commission determines within its discretion to

require a longer recovery period due to the magnitude

of such costs, but shall be accounted for by the

utility on a levelized basis over the total period in

which the generation portion of the utility's rates

are capped.

(C)  The electric distribution utility is subject

to significant increases in the rates of Federal or

State taxes or other significant changes in law or

regulations that would not allow the utility to earn

a fair rate of return.

(D)  The electric distribution utility is subject

to significant increases in the unit rate of fuel for

utility generation or the price of purchased power

that are outside of the control of the utility and

that would not allow the utility to earn a fair rate

of return.

(E)  The electric distribution utility is

directed by the commission or an independent system

operator or its functional equivalent to make

expenditures to repair or upgrade its transmission or

distribution system.

(F)  The electric distribution utility seeks to

increase its allowance for nuclear decommissioning

costs to reflect new information not available at the

time the utility's existing rates were determined,

and such costs are not recoverable in the competitive

generation market and are not covered in the

competitive transition charge or intangible

transition charge, and such costs would not allow the

utility to earn a fair rate of return.

(G)  As permitted by paragraph (16).

(iv)  Consistent with the requirements of due

process, the commission may expedite proceedings that

invoke the provisions of subparagraph (iii).

(v)  If an electric distribution utility rolls its

energy cost rate into base rates at a combined level that

does not exceed its combined level of such rates which

have been approved by the commission as of the effective

date of this chapter, the utility shall not be required

to reduce its capped rates below the capped level upon

the complaint of any party if the commission determines

that any excess earnings achieved under the cap are being

utilized to mitigate transition or stranded costs for the

benefit of ratepayers or to offset other known and

measurable cost increases that would be recoverable under

traditional ratemaking but are not included within the

capped rates.

(vi)  This paragraph shall not apply to new services

offered for the first time after the effective date of

this chapter.

(vii)  Notwithstanding the provisions of subparagraph

(ii), if the commission approves an increase in the

generation component of a utility's charge to customers

prior to December 31, 2007, the utility may increase the

generation component charged to customers under the

commission's approval, and such increased charge shall be

capped until January 1, 2013.

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Section 2.  This act shall take effect in 60 days.