Pennsylvania HB 2224: An Act amending Title 66 (Public Utilities) of the Pennsylvania Consolidated Statutes, in rates and distribution systems, providing for return on equity; in service and facilities, further providing for billing procedures; and, in restructuring of electric utility industry, further providing for revenue-neutral reconciliation.

Bill Text

PRIOR PRINTER'S NOS. 3414, 3555 PRINTER'S NO. 3646
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 2224
Session of
2026
INTRODUCED BY FIEDLER, BURGOS, PROBST, WAXMAN, HOWARD, HILL-
EVANS, D. WILLIAMS, RIVERA, GIRAL, FREEMAN, BOYD, CIRESI,
CEPEDA-FREYTIZ, CURRY, GILLEN, STEELE, SHUSTERMAN,
HOHENSTEIN, HANBIDGE, HADDOCK, PROKOPIAK, KINKEAD, McNEILL,
SALISBURY, KAZEEM AND KHAN, MAY 18, 2026
AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES,
JUNE 17, 2026
AN ACT
Amending Title 66 (Public Utilities) of the Pennsylvania
Consolidated Statutes, in rates and distribution systems,
providing for return on equity; IN SERVICE AND FACILITIES,
FURTHER PROVIDING FOR BILLING PROCEDURES; AND, IN
RESTRUCTURING OF ELECTRIC UTILITY INDUSTRY, FURTHER PROVIDING
FOR REVENUE-NEUTRAL RECONCILIATION.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Chapter 13 of Title 66 of the Pennsylvania
Consolidated Statutes is amended by adding a subchapter to read:
SUBCHAPTER C
RETURN ON EQUITY
Sec.
1380. Definitions.
1381. Default authorized return on equity.
1382. Competitive equity auction.
1383. Annual reporting and transparency.
1384. Applicability to State-jurisdictional rate base.
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1385. Applicability to ratemaking.
§ 1380. Definitions.
The following words and phrases when used in this subchapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"10-year treasury." The market yield on United States
Treasury securities at 10-year constant maturity, quoted on an
investment basis, as reported by the Federal Reserve System.
"Auction-clearing return." The uniform rate of return
established as the clearing price in a competitive equity
auction conducted under section 1382(e).
"Auction equity interest." The following:
(1) An economic interest issued under a competitive
equity auction under section 1382 (relating to competitive
equity auction). An auction equity interest represents
participation in the financial performance of a specific
regulated service, which carries the auction-clearing return
as adjusted under section 1382(c), and is distinct from the
covered utility's base common stock. The following shall
apply to an auction equity interest:
(i) The authorized return and financial performance
of an auction equity interest shall be determined solely
by reference to the regulated service to which it relates
and shall not be affected by the financial performance
of, or returns applicable to, any other regulated service
or any activity of the covered utility not subject to the
jurisdiction of the commission.
(ii) Except if auction equity interests are issued
by a regulated service corporation established under
section 1382(l), auction equity interests issued directly
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by the covered utility are obligations of the covered
utility and may be subject to all risks applicable to the
covered utility generally, including the risk of
insolvency or bankruptcy of the covered utility.
(iii) If the covered utility has established a
regulated service corporation and regulated service LLC
under section 1382, auction equity interests shall be
issued by the regulated service corporation rather than
by the covered utility itself.
(2) As used in this definition, the term "covered
utility's base common stock" shall mean the stock of the
regulated service corporation retained by the covered
utility.
"Authorized return on equity." The rate of return on common
equity authorized by the commission for ratemaking purposes.
"Competitive equity auction." A process overseen by the
commission in accordance with this subchapter that provides a
market-based determination of the cost of equity for a covered
utility.
"Cost of equity." The minimum rate of return necessary to
attract equity capital to invest in a specific regulated
service.
"Covered utility." An investor-owned electric distribution
company, natural gas distribution company or water or wastewater
public utilities regulated by the commission.
"Default authorized return." The authorized return on equity
determined under section 1381 (relating to default authorized
return on equity).
"Rate period." The time period in which a covered utility
collects rates that are authorized and approved by the
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commission.
"Regulated service." A service provided by a covered utility
for which the commission determines an authorized return on
equity. If a covered utility provides more than one category of
service subject to the jurisdiction of the commission, each
category shall be treated as a separate regulated service for
purposes of this subchapter and consistent with the property
segregation requirements of section 1305 (relating to advance
payment of rates; int