PA Public Utility Commission’s Fully Projected Future Test Year Filing Requirements Advance at IRRC

On May 15, 2025, Pennsylvania’s Independent Regulatory Review Commission (IRRC) approved final-form regulations proposed by the Pennsylvania Public Utility Commission (PUC or Commission) regarding the use of a fully projected future test year (FPFTY) in the state’s utility base rate proceedings. IRRC approval was a necessary precursor to publication of the new regulations in the Pennsylvania Bulletin.

The proposed regulations were finalized by the Commission on January 8, 2025 when it released its long-awaited Final Form Rulemaking Order on the use of the FPFTY. The Rulemaking Order sets forth new filing requirements when Pennsylvania utilities file base rate cases utilizing a FPFTY, explaining that the regulations are intended to standardize and streamline filing requirements and develop consistency in filing requirements across utility types.

Compliance with the new rules will be required nine months after the regulations are published in the Pennsylvania Bulletin.

PROCEDURAL HISTORY

The use of a FPFTY was authorized by Act 11 of 2012, signed into law by then-Governor Corbett on February 14, 2012. Act 11 also directed the Commission to adopt rules and regulations regarding the information and data to be submitted when a public utility uses a FPFTY. The PUC first promulgated an advance notice of proposed rulemaking (ANOPR) identifying proposed procedures and filing requirements to be used in connection with FPFTY filings in December 2017. The ANOPR solicited stakeholder comments and began a lengthy stakeholder process that included a series of meetings with PUC Staff and the submission of written comments.

The PUC subsequently entered a notice of proposed rulemaking on June 17, 2021, which was subsequently clarified on August 24, 2022 (the CNOPR). The CNOPR was published in the Pennsylvania Bulletin on October 1, 2022, opening up a public comment period that closed on January 31, 2023. A number of utilities and other stakeholders filed comments. The Rulemaking Order was issued by the Commission on January 8, 2025.

While the IRRC was previously scheduled to consider the proposed final regulations on April 10, 2025, the IRRC tolled consideration of the final regulations on April 7 so that the PUC could further revise the regulations to address a small number of drafting errors and provisions that the IRRC determined could be clarified. The revised regulations were submitted on April 16 and considered by the IRRC at its May 15 meeting.

FILING REQUIREMENTS

The Rulemaking Order includes revisions to 52 Pa. Code §§ 53.51–53.56, including the additions of Sections 53.51a and 53.56a (see Annex A to the Rulemaking Order) and 52 Pa. Code § 53.53, Exhibit E (see Annex B to the Rulemaking Order), which contains the filing requirements applicable to general base rate increases exceeding $5 million in a public utility’s annual revenues.

In response to comments that some of the new filing requirements are burdensome (e.g., some commenters indicated that changes would lead to a 160% increase in data requests), the PUC stated that requirements that were “previously left to discovery are not new burdens”; rather, “[t]he requirements have merely been moved forward to the filing date, thereby easing the burdens and time-compression of asking for, providing, and reviewing the information later in the proceeding.”

The following list includes a summary of some of the new filing requirements set forth in the Rulemaking Order and PUC responses to stakeholder comments:

§ 53.51 (General) and § 53.51a (Definitions)

• Clarified the language regarding the entities subject to the filing requirements and removed references to “canal, turnpike, tunnel, bridge, and wharf companies” due to lack of recent historical rate cases or rate change filings for these companies.
• Expanded existing utility service requirements to include the Office of the Small Business Advocate, Bureau of Investigation and Enforcement, and Bureau of Technical Utility Services and removed the CNOPR proposal to require service on undefined “low-income advocates.”
• Stated the Commission may publish a standard form for use by public utilities to show that the required data has been filed with the Commission. Notice of the proposal of such form will be posted on the PUC’s website and published in the Pennsylvania Bulletin and stakeholders will have the opportunity to comment. Adoption of a standard form will be subject to PUC approval and serve as a checklist of information that must be included for a type of rate filing with the PUC. It would also provide the equivalent of a table of contents for the filing.
• Directed public utility compliance with provisions of this subchapter no later than nine months after the Rulemaking Order’s effective date (i.e., date of publication in the Pennsylvania Bulletin). A public utility may comply earlier, but need not bring a proceeding commenced prior to this date into compliance.
• Added definitions for HTY—Historic test year, FPFTY—Fully projected future test year, FTY—Future test year, and Test year.
• Added a definition of Major rate increase filing, raising the threshold of a “major rate increase” from $1 million to $5 million.

§ 53.52 (Applicability)

• Adopted clarifying edits.
• Declined to adopt an Office of Consumer Advocate proposal to require utilities to show the impact of proposed changes to low-, medium-, and high-usage residential customers. Utilities will continue to be required to show the effect of the change on the public utility’s customers.

§ 53.53 (Information to Be Furnished with Proposed Major Rate Increase Filings)

• Marked Exhibit A (previously directed to natural gas, artificial gas, and steam heat utilities), Exhibit C (previously directed to electric utilities), and Exhibit D (previously directed to water and wastewater utilities) as “Reserved” and added a new Exhibit E setting forth information to be provided to the PUC for all major rate increase filings. Exhibit E provides both generally applicable filing requirements and more limited industry-specific filing requirements.
• Removed the proposed requirement to provide data beyond the FPFTY as unnecessary, but noted that if the particular circumstances of a case require additional information, a party can request such information during discovery.
• Declined to impose additional data requirements proposed by the Coalition for Affordable Utility Service and Energy Efficiency in Pennsylvania, including certain termination, collections, low-income, and universal service information. The discovery process may be used to gain more granular low-income data if relevant. However, the Commission noted that it may evaluate whether industrywide standards are appropriate by future rulemaking for water, wastewater, and stormwater public utilities that do not have distinct universal service proceedings or it “may evaluate programmatic changes on a case-by-case basis, including for changes to existing programs proposed by a public utility or where [the PUC] direct[s] a public utility to provide certain changes and supporting data as part of [its] next general rate increase filing.”
• Rejected a proposal that, if a data request seeks data or information for a test year and does not specify the HTY, FTY, or FPFTY, or specifies a test year other than the test year the public utility is principally relying upon, the data request be deemed to be modified to request data for information for the test year upon which the utility is principally relying. The PUC stated this proposal would have allowed public utilities to only provide data for their elected test year. Instead, the final regulations will allow the utility’s claims to be “evaluated in the context of recent actual experience,” and the additional financial data “may support a public utility’s proposed rates, but it may also illustrate that a public utility’s claims are based on inefficient operations or unusually high non-recurring costs that may be appropriate to normalize or remove for ratemaking purposes.”
• Retained the requirement that filed testimony include a complete explanation and justification of any claims that depart from the unadjusted test year results of operations, including the methodology and rationale.

§ 53.54 (Small Water and Wastewater Public Utilities)

• Adopted clarifying edits.

§ 53.55 (Canal, Turnpike, Bridge and Wharf Companies)

• Deleted these provisions; now marked “reserved.”

§ 53.56 (Supporting Data for Future Test Year)

• Stated supporting data for the FTY must be based on “fully substantiated” estimates.
• Retained and built upon existing requirement to submit data during the course of the proceeding. Specifically, a public utility submitting and using data for a FTY must file and serve the parties of record its actual results in the FTY for each quarter starting with the day following the end of the HTY. Results shall be submitted within 30 days of the end of the quarter or, if not then available, the utility shall file a status report indicating when the results will be available and file the results as soon thereafter as available.
• Added a new provision stating that, following the completion of the rate proceeding, if the public utility’s FTY data forms a substantive basis for the Commission’s final rate determination, the public utility shall file and serve on the parties of record its actual results experienced in the FTY. This data must be submitted within 90 days of the end of the last quarter of the FTY or, if not then available, the utility shall file a status report indicating when the results will be available and file the results as soon thereafter as available. The Rulemaking Order states that this provision applies to all rate proceedings (i.e., those fully litigated and those settled). In finalizing this provision, the PUC rejected a proposal that a just and reasonable rate review proceeding be initiated by the PUC, including a refund to customers and a going-forward adjustment of the public utility’s rates for any overcollection of costs.

§ 53.56a (Supporting Data for FPFTY)

• The changes mirror those made in § 53.56.

§ 53.56a (Supporting Data for FPFTY)

• The changes mirror those made in § 53.56.

Exhibit E

As explained earlier, Exhibit E is a consolidation and revision of filing requirements that were previously housed in separate exhibits. A substantial number of filing requirements were consolidated, revised, and newly established in this exhibit.

We have not endeavored to summarize all changes but note that the new general (non–industry specific) filing requirements now include a requirement for utilities to provide a range of information to bridge from the immediately preceding base case, including explaining any differences in projections and adjustments and potentially providing data for additional historic periods; an obligation to provide, at the time of initial filing, working electronic copies of filing schedules for the HTP, FTY and FPFTY that support the utility proposals; and certain information on projected securities issuances for the public utility and parent for the two years following the end of the test year.

TIMING FOR COMPLIANCE

The Rulemaking Order directed the PUC Law Bureau to deliver the Order to specified legislative committees and the IRRC no later than January 24, 2025. Upon approval of the Rulemaking Order by the legislative committees and the IRRC, the Law Bureau is required to deliver the Rulemaking Order to the Pennsylvania Office of Attorney General for approval and to the Pennsylvania Governor’s Office of the Budget for a fiscal note. After that occurs, the Law Bureau is required to send the Order for publication in the Pennsylvania Bulletin. The final-form regulations will become effective upon publication in the Pennsylvania Bulletin, and compliance will be required nine months after publication.

A utility filing a rate case after publication in the Pennsylvania Bulletin but prior to the end of such nine-month period may file under the new regulations, but the proposed regulations specifically state that utilities that file base rate cases prior to the end of such nine-month period need not bring such filings into compliance with the new regulations.

Further, even after compliance is required, a utility may petition the Commission for a waiver for an extension of the timeline to produce specific elements of data that are newly due as a filing requirement in the new regulations.