The Pennsylvania House has passed a bipartisan bill to limit the profits utility companies can collect from customers after a surge in energy costs.
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House Bill 2224, which was introduced by Philadelphia Democratic State Reps. Elizabeth Fiedler and Danilo Burgos, passed Monday with a 202-0 vote.
The bill now heads to the state Senate.
The legislation targets the “return on equity,” which is the measure of profit utility shareholders are permitted to receive.
Pennsylvania utilities hold near-monopolies within their service regions, and their rates of return on equity rank among the highest in the nation, according to the lawmakers.
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The state’s Public Utilities Code allows companies to earn a “reasonable return,” but it does not define a specific limit, according to the Pennsylvania Capital-Star.
The legislation would establish a default, market-based rate of return on equity.
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The rate would be tied to the 10-year U.S. Treasury bond yield plus an additional 2 percent.
Proponents said the cap will make sure ratepayers pay what is needed to attract capital investments.
The legislative push comes as Pennsylvania households face an average 60 percent increase in utility bills over the last five years, according to data from the climate-focused newsroom Heatmap News.
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“When you look at your energy bill every month, all the dollars on that bill are not for safe and reliable service or even for the energy itself – some of those dollars are going straight to wealthy shareholders,” Fiedler said, noting the bill could potentially save families hundreds of dollars a year.
Burgos stated that while utility companies should earn a fair return, it “shouldn’t come at the expense of Pennsylvanians who are already struggling to make ends meet.”
According to a press release from Fiedler’s office, the bill would stop excessive windfalls while still allowing utilities to invest in infrastructure.
Funds for upgrades, materials, and worker salaries are compensated as expenses in rate cases, rather than being drawn from shareholder profits, the lawmakers said.
Republican State Rep. Craig Williams, who represents parts of Chester and Delaware counties, added an amendment to eliminate Pennsylvania’s Gross Receipts Tax (GRT) from consumer utility bills.
The elimination of the GRT, which utilities collect monthly and remit to the state’s coffers, would result in an 6.5 percent cut in electricity bills for ratepayers.
GRT revenues fund the state’s General Fund, and the state budget will need to be reduced by a corresponding amount, Williams said.
Williams called the amendment a “two-fold win,” providing immediate relief to electricity customers while forcing cuts to the state budget.
The state budget is due by June 30, but the Keystone State has a habit of turning in late spending plans due to legislative disagreement.
Democratic Gov. Josh Shapiro and a bipartisan group of lawmakers have worked on lowering energy costs, with Shapiro working with President Donald Trump’s administration to rein in costs.
Pressure from lawmakers and Shapiro led to PECO withdrawing a requested rate increase for next year.
PECO, which reported $814 million in profit last year, relented after outcry.
“We recognize that Pennsylvanians are struggling with basic necessities like gas, food, and energy and have decided to withdraw our proposal,” David Vahos, PECO president and CEO, said following the decision.
