DE HB277 | 2009-2010 | 145th General Assembly
Status
Spectrum: Slight Partisan Bill (Democrat 3-1)
Status: Introduced on June 25 2009 - 25% progression, died in chamber
Action: 2010-06-08 - Stricken
Text: Latest bill text (Draft #1) [HTML]
Status: Introduced on June 25 2009 - 25% progression, died in chamber
Action: 2010-06-08 - Stricken
Text: Latest bill text (Draft #1) [HTML]
Summary
This amendment specifies that the standard for assessing whether and to what extent any amount that a public utility seeks to include in its rate base or operating expenses for ratemaking purposes is the “prudent person” standard. This amendment supersedes the Delaware Supreme Court’s opinion in Delmarva Power & Light Company v. Public Service Commission and Application of Wilmington Suburban Water Company, in which the Court established the standard for allowance of all utility expenses for ratemaking purposes as “waste, bad faith or abuse of discretion.” In a competitive industry, the waste/bad faith/abuse of discretion standard of review, of necessity, takes into account the fact that a customer has the option whether or not to patronize a particular company. Thus, the fact that the company does not have a captive customer base acts as a check on the manner in which the company incurs expenses. In a monopolistic market, the same pressures are not present to act as a check on utility management, because utilities recover all expenses from their customer base. Thus, utilities may incur expenses that may not be prudent, but are not wasteful, done in bad faith or an abuse of their discretion. The majority of jurisdictions in this country have adopted a prudence standard with respect to the allowance of public utility expenses for ratemaking purposes, either by legislative codification, judicial decision or regulatory policy. This amendment will bring Delaware in line with that majority of jurisdictions.
Title
An Act To Amend Title 26 Of The Delaware Code Relating To The Standard Used For Cost Recovery For Public Utilities In Proceedings Involving A Change In Rates.
Sponsors
History
| Date | Chamber | Action |
|---|---|---|
| 2010-06-08 | Stricken | |
| 2010-01-14 | Re-Assigned to Transportation/Land Use and Infrastructure Committee in House | |
| 2009-06-25 | Introduced and Assigned to Energy Committee in House |
