Forward Looking Rate Plan
Frequently Asked Questions
Why are you filing this plan when there is already a rate increase request pending?
We recognize our responsibility to invest in our infrastructure while balancing the needs and concerns of the customer, the Company, the Delaware Public Service Commission and the State of Delaware. Utilizing the plan as an alternative to the traditional rate setting process achieves this objective. We are anticipating that the Delaware Public Service Commission will substitute this request for the pending rate case.
What is the impact of the plan on a typical residential customer?
The customer would see rates increase once each year, resulting in an average increase to the typical monthly residential customer bill of less than $2.40 per month (or 1.75%).
What are the benefits of the plan?
- Knowing in advance how much to budget for electric rates for a four year period;
- Receiving a refund if we do not meet agreed upon system improvement targets;
- Most importantly, customers will benefit from the upgrades to the electric system and knowing that they have a much more reliable electric system.
Why is the plan necessary?
The current rate system is costly (upwards to $1 million per year to file) and it requires us to spend the money first to make the investments. As a result, we, including our customers, are never sure how much the increase will be until after the process is over. The plan proposes that we improve our current reliability standard by at least 35% or more, and backs this guarantee by customer refunds should we fail to meet the more rigorous standards. Additionally, all of the existing Delaware Public Service Commission oversight of our business would continue, while proactively aligning future rates to future spending and reliability levels.
When will the plan take effect?
We are a regulated utility and as such we adhere to the Public Service Commission rate-setting process. The approval for the plan proposal could take between 7 and 12 months or more.
What happens to rates after the initial four years? Will the you go back to filing yearly rate increases?
If we get approval from the Delaware Public Service Commission for this type of forward looking rate case, this will become the new way to file rate cases. After the initial four years, we will look at the infrastructure projects that need to be done and most likely repeat the process again.
What are distribution rates?
Distribution rates cover the cost of delivering power. All electric customers in our service area receive electric distribution service from us, even if they buy their energy from a competitive supplier; therefore, service rates to all electric distribution customers will be affected by this distribution rate request. Distribution rates represent approximately 25 percent of a customer's total bill, depending on the electricity supplier used by the customer.