Forward Looking Rate Plan
Improved reliability with fixed, reasonable four year rate structure
On Oct. 2, we filed a proposal with the Delaware Public Service Commission called the Forward Looking Rate plan.
The plan is an innovative forward looking proposal designed to improve service and lessen the financial impact on customers by establishing electric delivery rates for a period of four years. Under the proposed plan, customers will know how much to budget for electric rate increases for the distribution portion of their bill for four years into the future. It is a more efficient process compared to that currently in effect. Currently, electric distribution rates are established through a time consuming and expensive litigated proceeding before the Commission each year. Under the Forward Looking Rate plan, the Commission will review our future expenditures while continuing to have all of its current oversight.
The plan also links reliability performance to investments through reliability standards that are at least 35 percent more stringent than they are today. If we don't meet the proposed stricter reliability standards, we will be required to provide refunds to customers.
Because the plan results in a lower than authorized earned rate of return for us and the regulatory filing costs are reduced because of the four year period between filings, the plan will help provide reasonable electric delivery rates for our customers.
Additionally, the plan will create the ability to build, enhance and strengthen electrical infrastructure throughout our service territory. An improved electric infrastructure will help further reduce the frequency and duration of outages, support the state's commitment to emergency preparedness and response, and provide Delaware with the reliable electric grid it needs to be competitive in the modern digital/electronic economy.
If approved, the plan would replace our pending rate case filed in March of 2013. The plan is designed to fund all the capital, operational and maintenance expenses required to meet more stringent reliability standards. A typical residential customer would experience bill increases once per year averaging less than $2.40 per month, which equates to an average total bill increase less than 1.8 percent per year over a four year period.