Change would result in small increase for company’s customers
PPL Electric Utilities on Thursday (8/28) asked the Federal Energy Regulatory Commission for a change in the way the company’s transmission rates are calculated to support continued investment in its transmission system.
The company asked for permission to switch to formula-based rates, a switch that FERC has encouraged to foster modernization of the nation’s transmission grid.
Under formula rates, a fixed earnings level is set for the utility, and the utility annually adjusts its transmission rates, subject to FERC review. The process offers an opportunity for public input. The new rate design would ensure that there is no over-recovery or under-recovery of the actual costs of providing transmission delivery service.
Transmission rates cover the company’s costs to build, operate and maintain transmission facilities. Transmission lines move bulk electricity across the regional power system to local communities.
While the costs for some transmission lines are paid for entirely by PPL Electric Utilities customers, the costs of regional transmission line projects are shared among all customers in a 13-state region that includes Pennsylvania.
The rate change request, if approved, would result in an increase of $0.74 to the monthly bill of an average PPL Electric Utilities residential customer.
“This is a very small change to a customer’s bill that will enable PPL Electric Utilities to continue to deliver safe, reliable transmission service,” said David G. DeCampli, president of PPL Electric Utilities. “All of our customers benefit from a strong transmission system, and that’s what this request is about.”
The company is requesting that the new rate take effect Nov. 1, 2008. The company’s transmission rate has not changed since 1998.
FERC, an agency of the federal government, regulates and approves rates for electric transmission service. The Pennsylvania Public Utility Commission regulates and approves rates for electric distribution service. Transmission charges represent about 7 percent of the total electric bill for an average residential customer of PPL Electric Utilities.
DeCampli said demand for electricity continues to rise, and aging transmission lines and equipment, much of which were installed decades ago, will need to be prudently replaced. He said the company’s plans include building new transmission lines to serve growing areas, rebuilding aging lines and adding more substations to meet increased demand and give the company more flexibility for rerouting power if problems occur on the grid.
He said the company’s request will help ensure it has the financial resources it needs to continue to provide safe and reliable electric service.
This request would not affect generation charges or distribution rates. The rate change request would result in an annual revenue increase of about $20 million.
PPL Electric Utilities Corporation, a subsidiary of PPL Corporation (NYSE: PPL) that provides electricity delivery services to about 1.4 million customers in Pennsylvania, has consistently ranked among the best companies for customer service in the United States. More information is available at www.pplelectric.com.
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Statements contained in this news release, including statements with respect to future transmission system investment, are “forward-looking statements” within the meaning of the federal securities laws. Although PPL Electric Utilities Corporation believes that the expectations and assumptions reflected in these forward-looking statements are reasonable, these statements involve a number of risks and uncertainties, and actual results may differ materially from the results discussed in the statements. The following are among the important factors that could cause actual results to differ materially from the forward-looking statements: the profitability and liquidity of PPL Electric Utilities Corporation; receipt of necessary government permits, approvals and rate relief; capital market conditions and decisions regarding capital structure; political, regulatory or economic conditions; new state or federal legislation or regulations; and the commitments and liabilities of PPL Electric Utilities Corporation. Any such forward-looking statements should be considered in light of such important factors and in conjunction with PPL Electric Utilities Corporation’s Form 10-K and other reports on file with the Securities and Exchange Commission.