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Pa. House bill aims to modernize utility rates for a greener grid

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Pa. House bill aims to modernize utility rates for a greener grid

HARRISBURG — Innovations in the way energy is generated, transmitted and used in Pennsylvania haven’t always led to innovations in the way energy is paid for.

Utility companies are still largely compensated for maintaining power lines and electric meters based on how much energy they sell — despite economic and environmental trends that encourage energy customers to use less.

A bill in the state House of Representatives is designed to make clear that the state Public Utility Commission can review and approve new ways for energy utilities to recover the costs of getting power and natural gas to customers that don’t have to be tied to sales volume.

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Energy utilities and environmental advocates like the idea because it would help encourage the spread of cleaner energy generation, like solar panels, and minimize rate structures that put energy-saving consumers and utilities at odds.

“It is in everyone’s best interest to find a fair way for utilities to earn the amount of revenue they need to maintain a safe, reliable and secure electric gird, while still giving customers the ability to save money when they use less electricity,” PPL Electric Utilities president Gregory Dudkin said during a hearing about the bill on Monday.

There is some debate about whether the utility commission already has that authority — it has been exploring so-called “alternative ratemaking mechanisms” through a public process that began in December 2015 — but supporters of House Bill 1782 say it would remove uncertainty and speed up adoption of new forms of rates.

The idea has raised alarms among consumer advocates who fear it will burden groups as diverse as low-income renters, small businesses and large-scale manufacturers.

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Tanya McCloskey, the state’s acting consumer advocate, said, “Alternative ratemaking mechanisms pose significant risks to Pennsylvania ratepayers” because they guarantee utilities some amount of revenue recovery and shift financial risks from utility shareholders to energy customers.

Competitive energy suppliers are concerned that the bill will allow monopoly utilities to resume generating energy — something that ended with the introduction of Pennsylvania’s competitive energy market two decades ago. They worry it could also give utilities an unfair advantage by allowing them to recover costs to deploy distributed energy resources, such as battery storage, electric vehicle charging stations and solar arrays.

Andrew Place, PUC vice chairman, echoed those concerns and raised others, including about sections of the bill that appear to conflict with both consumer protections in other energy laws and with basic ratemaking principles that require investments to be cost-effective and charges to be fair.

“We are not trying to get utilities back into generation,” the bill’s sponsor, Rep. Sheryl Delozier, R-Cumberland, said. She said she plans to change the bill to make that clear.

Laura Legere: llegere@post-gazette.com

First Published: November 20, 2017, 9:39 p.m.

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