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Utility Dive: Pennsylvania Utilities Push Back on 'Prescriptive' Ratemaking Regulation

Posted by Herman K. Trabish on Nov 6, 2018

This Utility Dive article details the law, the policy and the potential conflict surrounding the passage of Act 58 in Pennsylvania. AEE’s perspective is included, quoting Ryan Katofsky, Vice President, Industry Analysis, and with reference to AEE Institute filed comments. Link to the full article here.

Excerpts of the Utility Dive story are below:    

A combination of legal and regulatory action could move Pennsylvania toward new utility business models, though not without debate.

Pennsylvania lawmakers passed Act 58 (House Bill 1782) into law in June, which allows the Pennsylvania Public Utility Commission (PPUC) to approve rate mechanisms that have been under study in an alternative rate mechanisms proceeding since 2015. The Act allows for more ratemaking flexibility than the proceeding, including revenue decoupling, performance-based rates, formula rates and multiyear rate plans…

The policy statement invites utilities to use their current rate cases to propose incentives for meeting policy objectives and proposes principles to guide utility rate proposals including "variations of demand‑based and time‑of‑use pricing options." It also offers 13 "relevant factors for rates," which include considerations of the utility business model, cost shifting, use of energy efficiency, DER and low-income customer protections…

Outside the proposed statement, the PPUC filing offers lengthier views of "alternative rate methodologies" drawn from stakeholder filings in the docket. Those filings show support for moving to mechanisms that support efficiency programs and DER and protect utility revenue, but "there is no consensus as to which method should be used," the PPUC notes…

Clean energy advocates see the mechanisms as a way to align utility incentives with the policy goal of reducing emissions through increased use of new technologies. And they want to see the commission take charge.

The PPUC should provide "as much detailed guidance as possible to the utilities," according to the Advanced Energy Economy Institute (AEE) filing. The Act described "new opportunities" but does not identify them or prioritize their importance, it adds.

"The guidance would provide boundaries and guidelines," AEE VP Ryan Katofsky told Utility Dive. "That would make addressing each rate case's performance incentive easier."

Putting the policy statement together with the Act opens the door to the utility business model of the future, [said] Katofsky…

PECO, PPL and Duquesne Light all note in their filings that the level of complexity within the policy statement will make it difficult to implement the Act, and utilities want minimal regulatory oversight in their processes to maximize innovation. PECO suggests the commission rework the statement, limiting its specificity and allowing the mechanisms to "reflect each utility's unique circumstances."…

AEE's Katofsky agreed that the policy statement should address "the bigger picture" and how an "evolving business model" can move utilities to "where customers are going" and "where the technology is taking us."

Final comments on the filings that address the policy statement and the Act are due November 20.

See the complete UD story here.


Topics: AEE In The News