Pennsylvania votes to reform cost recovery

Pennsylvania Governor Tim Corbett last week signed into law a bill allowing state utilities to gradually recover costs from infrastructure and upgrade projects, rather than subject customers to sudden, large-scale billing increases.

HB 1294 was introduced to amend existing laws governing how utilities could recover costs. Currently, Pennsylvania utilities must wait for approval of a new rate-case in order to recover costs associated with investment projects, which results in higher costs for customers. The new law creates a distribution system improvement charge, essentially allowing cost recovery to be done gradually. 

"We are very pleased that the bill passed," said Terry Fitzpatrick, president and CEO of the Energy Association of Pennsylvania, in an interview with FierceEnergy. "It's been a huge priority of ours to push for this legislation."

Fitzpatrick said that utilities have been working for nearly five years to reform rate recovery regulations.

The bill requires utilities to file a long-term infrastructure investment plan with the Pennsylvania Public Utility Commission (PUC) and should provide needed incentive for utilities working with older infrastructure.

HB 1294 also had the support of state regulators. Jennifer Kocher, press secretary at the PUC, told FierceEnergy that the commission has long been in favor of passing HB 1294.

For each project, utilities must submit a cost recovery petition to be approved by the state utility commission, and the agreement can be terminated if the utility is found to be out of compliance.  Customers will be notified about any new costs through bill inserts.

For more:
-view the full-text of HB 1294

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