Dive Brief:
- A group of industrial electricity consumers has cautioned Pennsylvania regulators to move "deliberately" as the state mulls significant changes to the the utility sector and how it generates revenue.
- In May, the Pennsylvania Public Utility Commission issued a proposed policy statement calling for utilities to "explore alternative ratemaking methodologies" in distribution base rate cases. Consumers worry, however, that new utility methods for earning revenues may result in higher rates.
- Comments were initially due in August, but the deadline was extended until Oct. 22, with reply comments now due Nov. 20. Parties requested additional time after Pennsylvania Gov. Tom Wolf signed legislation also addressing alternative ratemaking mechanisms. One of the first full replies to the PUC's proceeding — the response from the Industrial Energy Consumers of Pennsylvania (IECPA) — recommends the commission look to other states, such as Minnesota for guidance.
Dive Insight:
As more states undertake rate reform or some form of utility sector overhaul, regulators and industry stakeholders are learning from what has been done in other jurisdictions and service territories.
The IECPA recommended the commission "implement a deliberate approach" for utilities to introduce new rate structures, such as Minnesota's proposed a Performance Incentive Mechanism Design Process to develop alternative ratemaking mechanisms.
The process is a seven-step analysis the consumer group said would allow the PUC and stakeholders "to take high-level regulatory goals and transform them into actionable performance metrics that are tied to desired regulatory outcomes."
"A process like the PIM Design Process proposed in Minnesota would be a logical approach that would fit well with the Commission's efforts to install a concrete plan for advancing alternative ratemaking mechanisms in Pennsylvania that also meaningfully protects ratepayers," IECPA said.
The group includes a diverse set of large electricity consumers: AK Steel Corp., Proctor & Gamble Paper Products, United States Gypsum Co. and several others.
Beyond the alternative ratemaking proceeding, Pennsylvania regulators are considering other changes as well. The PUC also launched a study of utility billing practices in January, and in March, regulators proposed new rules governing third party electric vehicle charging.
