Press Release

PUC Conducts Binding Poll on PPL Rate Increase Request

Published on 12/5/2012

Filed under: Electric

HARRISBURG – The Pennsylvania Public Utility Commission (PUC) today conducted a binding poll on the issues related to the $104.6 million rate increase request by PPL Electric Utilities Corp.

The binding poll is designed to provide a mechanism for the Commission to publically discuss the issues in complex cases where there are questions to be addressed by the Commission and where parties have intervened in the proceeding. Commissioners base their findings on the record developed in the proceeding, the recommended decision from the presiding Administrative Law Judge (ALJ) and the briefs and exceptions filed by the parties in the case.

In this case, the ALJ issued a recommended decision on Oct. 19, 2012, and parties filed exceptions to that decision as well as reply exceptions. All of the documents from the case are available on the Commission’s website. More information on the ratemaking process also is available.    

The positions of the Commissioners presented during the poll are binding. Commission staff will prepare a Final Order based on the results of the poll. The action of the Commission does not become effective until a Final Order is entered by the Commission. A video of the meeting including the binding poll is available online.

The Commission voted 4-1 on a motion by Chairman Robert F. Powelson establishing a rate of return on common equity (ROE) at 10.4 percent, which is based in part on PPL’s need to fund $1.6 billion in infrastructure improvements. The range of ROE recommendations by the parties in the case was 8.38 percent to 11.25 percent. Commissioner James H. Cawley dissented on the motion.

“Rate of return on common equity (ROE) is frequently the most material and most contested item in a base rate case proceeding,” Chairman Powelson said in the motion. “This case is no different, and the setting of ROE is even more critical as our Pennsylvania utilities implement plans to accelerate the much-needed replacement of aging infrastructure.  Attracting capital to Pennsylvania at reasonable rates has never been more important to PPL, its customers, and the Commonwealth.”

The Commission also voted 5-0 to approve a motion by Commissioner Cawley that directed PPL to track all incremental costs, including costs since inception, associated with implementation of its purchase of receivable (POR) service if it desires to seek any further administrative cost recovery in the future. 

Commissioner Cawley issued a statement dissenting on residential rate design; uncollectible account expenses; rate case expense – normalization period; rate of return; and cost of service study/revenue allocation.

Commissioner Wayne E. Gardner issued a statement dissenting on the cost of service study.

On May 21, 2012, the Commission suspended the company’s $104.6 million request for investigation.  According to the original proposal, the average total annual residential bill for customers using 1,000 kWh would increase about $7 (6.3 percent) from $111.60 to $118.59 per month. Because the positions of the Commissioners presented during the binding poll affect the customer bills, the bill impact still must be calculated.

PPL provides electricity to about 1.4 million customers in 29 counties in Central and Eastern Pennsylvania.

The Pennsylvania Public Utility Commission balances the needs of consumers and utilities to ensure safe and reliable utility service at reasonable rates; protect the public interest; educate consumers to make independent and informed utility choices; further economic development; and foster new technologies and competitive markets in an environmentally sound manner. For recent news releases, video and audio of select Commission proceedings or more information about the PUC, visit our website at www.puc.pa.gov.

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Docket No. R-2012-2290597

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