Dive Brief:
- Acknowledging the changing utility landscape, Pennsylvania regulators have launched a proceeding to consider broad changes to distribution rate structures that might move away from one-size fits all solutions.
- The Pennsylvania Public Utility Commission on Friday issued a proposed policy statement that invites utilities to "explore alternative ratemaking methodologies" in distribution base rate cases.
- State regulators have undertaken a handful of electric policy initiatives so far this year. The PUC launched a study of utility billing practices in January, and in March regulators proposed new rules governing third party electric vehicle charging.
Dive Insight:
Pretty much everything else in the utility sector is changing — why not rate designs?
On a motion by PUC Vice Chairman Andrew Place, the commission asked utilities to consider a broad range of concepts, including 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 in a statement.
The next generation of rate designs should "anticipate and support" utility technological and economic efficiencies, he said, "while minimizing long term rates for customers.”
The commission will hold a 60-day comment period.
Regulators say utilities can look to new technologies in developing new rate structures, such as advanced metering, advanced grid monitoring, energy efficiency, demand response and smart thermostats.
In addition to new rate designs, the commission is looking at several changes representative of the evolving utility sector. New rules governing third party electric vehicle charging are meant to bring certainty and clarity to the new industry.
The PUC's draft policy clarifies that third-party electric vehicle charging is not considered resale/redistribution, and directs electric distribution companies to add EV charging tariff provisions.
PUC Chairman Gladys Brown, in a statement supporting Place's exploratory ratemaking initiative, noted the utility landscape "is evolving rapidly, none more rapidly than the electricity industry." She expressed interest in rates that can help to increase distribution system capacity utilization and insulate customers from rate increases.
