Bill to allow alternative ratemaking options signed into law

Gov. Tom Wolf signed into law last week a bill that allows utilities to propose alternative ratemaking approaches, which include decoupling, performance-based rates, formula rates, and multiyear rates.

Any changes to existing rate-making mechanisms would require approval by the Pennsylvania Public Utilities Commission (PUC). The law does not require utilities to propose any changes and does not alter the amount a utility is approved to earn or recover from ratepayers or the type of costs that utilities may recover through rates. The law requires that customers be informed of a utility’s application to deploy new types of rates.

“Our energy companies work to make sure our grid is healthy and has enough power,” Rep. Sheryl Delozier (R-Cumberland), who authored the bill, said. “As a regulated industry, they are caught between energy efficiency, maintaining the infrastructure, fulfilling mandated requirements for our low-income residents and promoting energy use, which their earnings are based on. This new law will allow for safe, affordable and reliable service through PUC approved alternative ratemaking options. More than 30 states already offer utilities the option of using some form of alternative ratemaking.”

The law will go into effect 60 days from its signing.