The Public Utility Commission Thursday issued a Final Order that implements portions of Act 11 of 2012, which among other things, provides for a distribution system improvement charge (DSIC) for electric, natural gas, water and wastewater utilities.

“While the DSIC is often considered the cornerstone, Act 11 is a three-legged ratemaking stool that provides a stable regulatory framework needed to support accelerated infrastructure replacement with improved gradualism in rate changes and enhanced oversight and customer safeguards,” said Commission Chairman Robert F. Powelson in a statement.  “The three components – DSIC, a fully projected Future Test Year, and combining water and wastewater rate cases, will work in concert to facilitate investment by mitigating the disincentive and expense of the previously existing ratemaking process…Act 11 gives us the mechanisms to confront our infrastructure challenges now and do so across the board – for gas, electricity, water and wastewater.”

The Commission voted 4-1 to finalize Act 11 initiatives that allow electric, natural gas, water and wastewater utilities to petition for the use of a DSIC to fund infrastructure upgrades. Commissioner Wayne E. Gardner issued a dissenting statement.

The Final Order contains information on:

-- Establishing procedures for implementation of a voluntary DSIC for utilities;

-- Filing long-term infrastructure improvement plans;

-- Establishing procedures for the use of a fully-projected test year in base rate proceedings;

-- Allowing utilities to combine for ratemaking purposes different types of utility service; and

-- Establishing customer protections and notifications;

On Feb. 14, 2012, Gov. Corbett signed Act 11 of 2012, which allows jurisdictional water and wastewater utilities, natural gas distribution companies, city natural gas distribution operations, and electric distribution companies to petition the Commission for approval to implement a DSIC.

Under the law, the DSIC must be designed to provide for "the timely recovery of the reasonable and prudent costs incurred to repair, improve or replace eligible property in order to ensure and maintain adequate, efficient, safe, reliable and reasonable service.”

For more information, visit the PUC’s DISC webpage.

8/6/2012