Pennsylvania Continues Moving toward Smarter, Cleaner Electric Grid

Just in time for the hSolar-3-2011_11_17_0003 morgueolidays, the Pennsylvania Public Utility Commission (PUC) quietly gave the gift of more affordable electricity to millions of Pennsylvanians.

PECO Energy Company, a leading Pennsylvania utility, had requested a significant distribution rate increase – meaning higher bills for its approximately 1.6 million electric customers. After months of discussion, last week the PUC approved a settlement with a lower rate increase and a directive for PECO to hold a series of collaborative meetings with all interested parties on revenue decoupling, or separating a utility’s profits from its sales. Decoupling suggests a system in which utilities are rewarded based on the overall service they provide, rather than the amount of electricity they sell.

The PUC’s decision represents a win for grid modernization and distributed energy resources like energy efficiency, energy storage, and rooftop solar in the Keystone State.

PECO settlement encouraging for clean energy

The U.S. electricity system is currently undergoing a major transformation in which more and more people are using less energy or generating their own power. As a result, utilities across the country have been trying to obtain fixed charges – or a set amount all customers must pay each month – to recoup investment and grid maintenance costs.

Higher fixed charges discourage the use of distributed energy resources, because people have to pay a high fee regardless of whether they are conserving or producing their own energy. That’s why the settlement – which reduces PECO’s rate increase request by 33 percent – is good news for small-scale clean energy resources.

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Numerous diverse parties support the settlement, including:

  • Keystone Energy Efficiency Alliance,
  • the Clean Air Council,
  • Natural Resources Defense Council,
  • the City of Philadelphia,
  • Environmental Defense Fund, and
  • many more.

Furthermore, the addition of the decoupling collaborative gatherings reflects a greater trend among Pennsylvania regulators toward building a smarter grid. For example, Commissioner Robert F. Powelson indicated the collaborative is part of a broader discussion, saying, “The time has come to better align rate structures in a way that equally benefits all stakeholders, including ratepayers, utilities and the environmental community.” And Commissioner Andrew G. Place emphasized finding better ways to incorporate distributed energy resources and create a more efficient, reliable grid. Plus, the ruling follows a PUC move earlier this year toward more fairly valuing two key clean energy resources: energy efficiency and demand response.

The PECO decision demonstrates the Pennsylvania PUC is looking forward and creating pathways for a clean energy future – a fine way to ring in the New Year.

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