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Maryland PSC Advances Alternative Ratemaking Policy

August 9th, 2019 by WCBC Radio

The Maryland Public Service Commission has taken steps to advance an alternative utility rate-setting process known as a multi-year plan. This method would extend a utility’s approved rates several years into the future—in this case, a maximum of three years. The Commission’s use of this methodology, which is used in several other states, is expected to limit the number and frequency of utility rate cases, allow customers to know with certainty the timing and scale of changes in rates, and may also provide incentives to utilities if certain performance-based goals are achieved.

 

Until now, the Commission has relied largely on a traditional form of ratemaking based on a past, or historic, 12-month period as the basis for electric and gas utilities to recover the cost of providing service to customers.  As such, many utilities now file rate cases as frequently as every year in an effort to recover their costs more quickly. The Commission opened a proceeding (Public Conference 51) in February to explore alternative forms of ratemaking, noting how economic changes, state policy goals and grid modernization have impacted utility operations.  The Commission also convened a two-day technical conference in April to hear directly from stakeholders and state utility regulators from across the country with experience using different forms of alternative rate regulation.

 

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