Pennsylvania Finalizes Regs for Small Water Utilities

Fortnightly Magazine - February 15 1997
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With doubts resolved over its legal authority, the Pennsylvania Public Utility Commission has issued "final-form" rules (but subject to legislative review) that allow an "operating-ratio" method as an alternate form of rate regulation for small water and wastewater utilities, many of which now face severe financial difficulties.

For added financial aid, the new rules also allow water utilities to create an emergency maintenance and operation fund as well as a reserve account, with both funded as "customer contributions in aid of construction."

Revenues Eaten Up. The PUC embraced the operating-ratio formula method to aid small water companies under financial duress. According to the PUC, many such companies find that their relatively modest requests for rate increases are "eaten up" by the cost of participating in a full-blown traditional rate case.

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