Pennsylvania PUC advances proposal to enable exploration of alternative ratemaking methodologies
The Pennsylvania Public Utility Commission (PUC) recently issued for comment a proposed policy statement, which proposes that fixed utilities explore alternative ratemaking methodologies in distribution base rate proceedings.
The Commission approved the motion by Vice Chairman Andrew G. Place by a vote of 5-0. The proposal presents utilities with a range of considerations for developing future rate designs. These considerations include performance-based incentives, various levels of decoupling and variations of demand-based and time-of-use pricing options, such as critical peak pricing.
“Given the evolution of energy markets, I believe it is vital to also evolve approaches to rate design that particularly address energy efficiency trends, as well as increasing demand for electric vehicles, distributed energy resources, such as solar and combined heat and power, and microgrids,” Place said. “Future rate designs should anticipate and support utility technological and economic efficiencies while minimizing long-term rates for customers.”
The motion stated that rate designs should be based on first-order principles that include: supporting efficient use of all energy resources; investment in distribution infrastructure to support a distributed energy environment; encouraging least-cost solutions; embracing new capabilities enabled by smart meter deployment; and minimizing the long-term costs of serving existing and new loads.
“Today the Commission takes its next step in deliberating the future of utility rates,” Chair Gladys M. Brown said in a supportive statement. “The utility landscape is evolving rapidly, none more rapidly than the electricity industry. I am interested in consideration of rates by our electric utilities which can work to increase distribution system capacity utilization in an effort to foster system efficiency, and, insulate customers from rate increases.”
Interested parties have 60 days from the date of publication of the proposed policy statement in the Pennsylvania Bulletin to file written comments or file comments electronically through the PUC’s e-File System.
